Russia, China call on regional security group to combat global financial crisis

Russia, China say will work on financial crisis

BEIJING — China, Russia and other members of a regional security group pledged Wednesday to work together to combat the global economic crisis and find ways to increase cooperation on financial issues.

A document signed at the meeting of the Shanghai Cooperation Organization said the group’s members should focus on a joint response to the global financial crisis and a common post-crisis strategy.

“We must use the potential of our cooperation for post-crisis development,” said Russian Prime Minister Vladimir Putin.

“The crisis has acted like a catalyst for the reform of the international financial system, and our organization must take part in that,” he said.

Chinese Premier Wen Jiabao voiced hope the meeting created “a unique opportunity for exchanging opinions and working out a specific plan.”

“China pays great attention to the Shanghai Cooperation Organization. The meeting has shown that the countries of the region are deeply interested in expanding mutual cooperation for the stake of long-term stable development,” Wen said.

Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan are also members of the group.

The members pledged to create a fund to boost transportation and telecommunication links, although no details were immediately given.

The agreement called for finance ministers and central bank governors from the countries to meet later this year in Kazakhstan to discuss trade and using each other’s currencies in inter-group trade.

Putin was also to confer briefly with officials from Afghanistan, Pakistan and Iran who attended Wednesday’s meeting as observers. His planned meeting with Iran’s First Vice President Mohammad Reza Rahimi comes as Washington and its allies contemplate tough new sanctions on Iran if it fails to come clean on its suspect nuclear program.

Russia and China have resisted Western pressure for stronger punishment when the previous three sets of U.N. sanctions on Iran were passed.

While Moscow and Beijing consider the Shanghai group a counterweight to U.S. influence in the energy-rich, former Soviet states of Central Asia, they also compete fiercely for dominance in the region.

Russia currently controls the region’s gas exports, but Beijing has challenged Moscow’s dominance with a deal in June to buy 40 billion cubic meters of gas annually from Turkmenistan starting next year. Work on building a 4,300-mile (7,000-kilometer) pipeline from Turkmenistan to China is slated for completion later this year.

Meanwhile, Russia has sought to strengthen its role as a dominant supplier of energy and other raw materials to China, including with a framework deal to supply gas signed on Tuesday.

Russia’s cash-strapped energy companies need Chinese funding, while Beijing has welcomed the chance to further diversify sources for energy needed to fuel its fast-growing economy. The global economic crisis have further spurred cooperation as lower demand from Europe has pushed Russia to look for customers elsewhere.

Russia’s state-run natural gas monopoly Gazprom and China National Petroleum Corp. signed a framework agreement Tuesday calling for the supply of about 2.4 trillion cubic feet (70 billion cubic meters) of gas a year, but no price was set and no contract signed, said Gazprom’s chief executive Alexei Miller.

Miller said Gazprom needs no investment for building pipelines but might welcome Chinese investment in processing facilities.

Chinese media reports have said the agreement was expected to be similar to a $25 billion oil-for-loans deal completed earlier this year.

Miller said Tuesday that the gas contract will include a price formula based on Gazprom’s experience in gas exports and principles of international trade — a statement reflecting Gazprom’s push for the same high price it charges its customers in Europe. China has bargained hard for a much lower price.

Putin’s deputy, Igor Sechin, who helped negotiate the gas deal, said Moscow and Beijing are planning to reach an agreement on the gas price by the year’s end and sign a contract next June. Gas deliveries to China may start in 2014 or 2015, he said.