Two summits, both held in Russia this week, signal the collective desire of BRIC countries to rebalance world economic and political power away from the United States in their favour.

One of the summits was the inaugural meeting of the BRIC (Brazil, Russia, India, China) group. The other was the ninth annual meeting of the Shanghai Cooperation Organisation (SCO), which consists of Russia, China, and several Central Asian states. Moscow and Beijing both see the SCO as a means to minimise Western influence in Central Asia and dominate the region’s energy supplies. That’s why China offered US$10bn in loans to the Central Asian states to cope with the global recession.

But how much teeth do these organisations actually have? On paper, quite a lot, since they both include Russia and China, and because India has observer status in the SCO. However, in practice, serious collaboration by the BRICs / SCO to steer the world faces real obstacles. Let me explain:

Russia-China
Although Russia and China have previously proclaimed themselves ‘strategic partners’, both are wary of each other becoming too powerful, especially in Central Asia. Russia has more organic ties with the region, with Russian widely spoken in the ‘Stans’ and significant numbers of Russians still living there. However, China has steadily been strengthening ties with the region’s leaders through energy investment. Meanwhile, Russia also fears that rising Chinese immigration into its sparsely populated Far Eastern regions could prompt China one day to press claims on these territories, which it was forced to surrender to Russia in 1858-1860.

China-India
Despite the now widespread use of the term ‘Chindia’, and the somewhat complementary nature of their economies, China and India are major competitors both economically and geopolitically. In fact, earlier this month, the governor of India’s state of Arunachal Pradesh, which is actually claimed by China, said that New Delhi would boost its military presence in the region. Also, late in May, India’s air force chief said that China is a greater threat to India than Pakistan, its arch-rival. Hardly friendly words! Going forward, China and India are also competing for influence in the Indian Ocean, which is emerging as an arena of Great Power rivalry.

Other Combinations
Among other BRIC combinations, Russia remains on a friendly footing with India, and India with Brazil through IBSA (India-Brazil-South Africa, yet another emerging market alphabet club). Meanwhile, Brazil is becoming increasingly dependent on exports to China, and China is keen to tap Brazil’s offshore oil deposits. However, as I mentioned recently, neither side can easily ditch the dollar in bilateral trade.

USA Can Play BRICs And SCO Against Each Other
Owing to significant competition among the BRIC states, the US can play them off against one another. For example, India has been moving closer to the US in recent years, and Washington sees New Delhi as a potential counterweight to Beijing. Meanwhile, China is too dependent on the US economy to really forge ahead with building a global alliance against America.

So, while I expect BRICs and the SCO to continue holding big summits, their ability to truly rebalance the world geopolitically will be limited. So will their attempts to replace the dollar as a global currency, as I explained previously.

However, there will be some beneficiaries of BRIC and SCO grandstanding. Central Asia, Iran and Sri Lanka can maximise economic concessions from Russia, China and India, as they bid for influence. Iran’s president Mahmoud Ahmadinejad attended the SCO summit, since his country has observer status. Also in attendance was Sri Lankan president Mahinda Rajapaksa, who is eager to attract external support to rebuild his island nation.