The Role of the Shanghai Cooperation Organisation (SCO) in a Changing World was discussed at the recent Eastern Economic Forum (EEF). This specific discussion is number three on this page, and you can listen to the complete session. https://forumvostok.ru/en/programme/business-programme/?day=06.09.2022

On the eve of the first in-person SCO conference since the start of Covid, and Mr Xi Jinping’s first major trip since the start of Covid, we take a look at some SCO history and what the modern expectations and current status are. SCO has grown and continues to grow in a perceived global reach and creating an impact in the challenge to help evolve a truly multipolar world order.

Topic List:

Eastern Economic Forum Background

SCO Introduction

Size and current makeup of SCO

Anti -Terrorism

Expansion

Focusing on the Challenges

Focusing on the Prospects

Providing stability

Future membership possibilities

Economic Cooperation

SCO Banks

Importance of SCO – Conclusion

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Eastern Economic Forum (EEF) Background

The EEF, was established by an executive order of Russian President Vladimir Putin dated 19 May 2015 to promote the development of the Far Eastern economy and expand economic cooperation in the Asia-Pacific region.” And it is in this meeting that the SCO organization decided to openly introspect in order to be part of, and indeed lead and confirm its own creation as a key pillar of multipolarity.

“The Eastern Economic Forum is a key international venue for creating and strengthening ties between Russian and global investment communities, conducting all-round expert assessments of the economic potential of the Russian Far East, and showcasing its investment capabilities and business opportunities in priority development areas.

Virtually all international institutions have gradually come under Western control. Only the UN Security Council remains independent so far because of the veto power of two of its permanent members, Russia and China.

Xi Jinping will attend the Council of Heads of State of the SCO in Samarkand and pay state visits to Kazakhstan and Uzbekistan at the invitation of President Kassym-Jomart Tokayev of the Republic of Kazakhstan and President Shavkat Mirziyoyev of the Republic of Uzbekistan.

Xi Jinping is bolstering the SCO, which he hopes will serve as a counterweight to Western-led organizations. The Chinese media enthusiastically agrees:

Unlike NATO, SCO is not aggressive, and threatens nobody

Xi to attend SCO summit in first foreign visit since pandemic, showing ‘focus on neighborhood diplomacy’

Mao Ning of the Chinese Ministry of Foreign affairs:

This will be China’s most important event of head-of-state diplomacy on the eve of the 20th National Congress of the Communist Party of China, which shows the high importance China attaches to the SCO and our relations with Kazakhstan and Uzbekistan.

These are then the first puzzle pieces in how the multipolar world will govern itself: SCO, EEF and we will talk about the rest in this series; (BRICS, ASEAN and others)

SCO Introduction

Rapid global changes seldom leave time for introspection but that is exactly what this SCO meeting was about. Introspection while preparing for SCO 2022, starting tomorrow, 15 September. The memorandum on Iran’s accession will be signed in Samarkand. Next will be Belarus and there is a list of 10 countries that have applied for membership of some status within the tiered structure.

This preparatory and introspective SCO meeting on 6 September boasted a lineup of powerful and intelligent heavy weights that most in western climes have never heard about.

• SCO Deputy Secretary-General Grigory Logvinov,
• Kirill Barsky, Ambassador-at-Large of the Russian Foreign Ministry, Acting Head of the Department of Diplomacy at the Moscow State Institute of International Relations, Presidential  Envoy for CIS Affairs in 2011‒2014;
• Sun Zhuangzhi, Director of the Institute of Russian, Eastern European and Central Asian Studies at the Chinese Academy of Social Sciences;
• Rashid Alimov, Professor at the Taihe Institute and former SCO Secretary-General (2016‒2018);
• Sergei Storchak, Senior Banker at VEB.RF;
• Denis Kravchenko, First Deputy Chair of the Russian State Duma Committee on Economic Policy
• Vladimir Ivin, Deputy Head of the Russian Federal Customs Service.

The participants discussed the following issues:

·SCO’s role in the emerging multipolar world;

·Developing economic cooperation within the SCO;

·Contribution of the Arab and South Asian countries to the organisation;

·The SCO’s agenda for countering the unconstructive policy of the unfriendly countries that strive to undermine the organisation’s influence.

With this introspective approach, the upcoming annual summit of the SCO Heads of State Council will be held on September 15-16 in Samarkand. Uzbekistan took over the chairmanship of the organization from Tajikistan on September 17, 2021. My expectation is that we will see a new SCO with the objective of being home to all the other regional and multilateral organizations. It is still the stated plan that the UN is the jurisdictional platform for formulation of international law, the security council will probably increase in size, the G7 will be left behind with only a small role left in the G20, and organizations such as the WTO and the WHO will be reformed and reformatted. The world will turn turtle on us if we do not pay attention and understand the new power and strength that these currently regional, but fast growing new organizational world orders are developing.

Size and current makeup of SCO

• membership of eight countries and growing
• comprises 60% of the Eurasian region,
• is home to almost 44% of humanity with a contribution of  20-25% of global GDP (This GDP number is the formal one, but I question it)
• has a crucial geostrategic position in the Eurasian landmass.
• includes four nuclear powers in one single organization.
• historically SCO’s charter and reason for existence were collectively counteracting terrorism, separatism, and extremism with its core permanent body- Regional Anti-Terrorism Structure or RATS based in Tashkent.

Anti -Terrorism

A look forward, to seeing the fast-moving pieces:

On the sidelines of the SCO, foreign ministers will meet in Tashkent. Foreign affairs minister Jaishankar of India is likely to hold a bilateral meeting with Afghanistan’s foreign minister Amir Khan Muttaqi. Afghanistan is an observer state at SCO. The Taliban government has been requesting the meeting since June.  Jaishankar is expected to keep a strong anti-terrorism stance on the lines of the UNSC Resolution 2593, passed last year at the UN Security Council (UNSC). It was a continuation of efforts to engage with the international community on issues related to Afghanistan. India reiterated its commitment to assist the Afghan people in this difficult time and provide humanitarian assistance. In June 2022, the Indian government reopened its embassy in Kabul when it was shut after the Taliban took over the country in 2021.

India is the current chair of the executive council of SCO RATS. A four-day meeting of SCO’s Regional Anti-Terrorist Structure was held in May 2022 in New Delhi where all the nine member states including Pakistan, China and Russia participated.

The recent SCO meeting stands testament to the fact that, with transforming trends and priorities, conventional ambitions of multilateral forums and organisations also change and are moving towards a world that is beyond the accepted supremacy of the US and the west, as well as that of the US Dollar.

In this runup to the 2022 annual summit of the SCO, a Heads of State Council (HSC) meeting will be held. Uzbekistan will take over the chairmanship from Tajikistan. India’s EAM Dr S Jaishankar is expected to meet his Chinese counterpart, Wang Yi. On the other hand, Muttaqi reportedly met his Pakistani counterpart Bilawal Bhutto Zardari last Thursday.

In other words, the parts of the world that are growing, are meeting. The above points should illustrate the dynamism of this organization.

India and China are solving their border disputes. Generally the interaction in SCO is credited for this. Here is an update and the quote says it all.

There is continuing Western interference in India-China relations and the fact that the government has sequestered the bilateral track with China is not going to be to the liking of the West.

Fundamentally, the contradiction is that without India, there is no “Indo-Pacific Strategy” against China.

Big picture of disengagement in Ladakh

China is decoupling;

China ends UN human rights cooperation. Following the release of its report on alleged human rights abuses in Xinjiang, the Chinese ambassador to the United Nations in Geneva said on Friday. “The office closed the door of cooperation by releasing the so-called assessment,” ambassador Chen Xu said, describing it as “illegal and invalid”. https://www.scmp.com/news/china/diplomacy/article/3192019/china-says-un-report-xinjiang-has-closed-door-cooperation

After 20 years of growth, SCO is solid on the world stage and this is why Xi Jinping is placing his bets on this growing currently regional organization that is fast becoming a growing international organization.

Expansion of SCO

What emerged as a series of border demarcation and demilitarization talks by China in 1996, with its neighbors Kazakhstan, Kyrgyzstan, Russia and Tajikistan in 1996 as the Shanghai Five, has grown into one of the crucial multilateral regional organizations. The group transformed itself into the Shanghai Cooperation Organisation in 2001 with the addition of Uzbekistan as its newest member and also expanded its relations with the UN and other international organizations.

In a historic move in Astana in 2017, India was accorded full membership to SCO with Russia’s support. In the same meeting, Pakistan was given full membership supported by China. Since then SCO has been striving to transform itself into a regional political, economic, and security organization adapting to new challenges and opportunities.

Focusing on the Challenges

Some of the challenges voiced at the meeting:

The past year has exacerbated a difficult international situation to the utmost and the transformation process is acute and painful. Perspective is unavoidable. Established as an organization responsible for providing a force against separatism and terrorism being the major objective of the SCO charter, they soon realized that reinforcing friendship, security and mutual respect are key.

At the outset, SCO was envisaged as a prototype of a multipolar world and is a model for this stucture.

At the turn of century the unipolar world peaked and SCO is a ray of hope. This year’s activities will culminate at the September summit. This summit, against the backdrop of the destructive process in our world will be no ordinary summit.

Key issues of modernity and response of the SCO to international declarations forms part of the discussion. It is expected that SCO will maintain a collective stance. The US could demand SCO countries to join sanctions. On the table currently are: mutual security and respect for one another, how to thrive and how to transform and provide:

an oasis of stability for the bigger eurasion region standing as a positive alternative to the confrontation trends sweeping the western world.

SCO needs to stay away from the confrontation scenarios promoted by the USA and collective west …

Clearly we are looking at further development of this organization and positioning it as a keystone in the modern developing world.

Focusing on the Prospects – Major trends

The SCO leaders see a huge potential in economic, political, cultural, and scientific cooperation not fully harnessed yet, but in place beyond a doubt. SCO envisions itself as the “center of gravity” for Northern Africa, North Western Asia and others. They consider their contribution attractive and for this reason, many more states beyond the current 11 contributing states, have applied for membership and participation .

SCO wants to position itself as a key development partner in a modern stage of development of the planet. They consider that these are tectonic changes that necessitate re-identifying their position and role against a global confrontation process.

SCO is unique in its niche and is positioning as a bulwark of strength and security adding economic cooperation, increasingly of primary importance for most SCO states. Somewhat similar to China’s Belt and Road, more economic cooperation is needed.

The economic agenda in Eurasia must be dominated by integration projects with the most important partner being the Eurasian economic union. If we cast a broad view on the international arena, SCO is the core Eurasian structure where 18 states use the strength of the leading countries in forming agendas of greater Eurasia in a network of partner organizations. SCO is a triumph of broadmindedness and positive thinking throughout

One of the speakers brought to light yet again the old views of MacInder, Spikeman, and Brezinsky, thinking of Eurasia as an object to be acted upon by their respective states. Their dream was a disjointed Eurasia – they wanted Eurasian states to be confined within the continent away from the ocean shores so that the western states could for decades and centuries to come, dominate the world in a global confrontation of land and sea.

SCO has demonstrated that it can triumph over these crazy concepts and provide stability to the world community. India and China are slowly solving their border disputes, India and Pakistan will openly meet at the next SCO meeting,

Providing stability

The world today stands witness to momentous geopolitical changes being put into motion. While the dynamics of how global politics and economics function, are constantly challenged by the transformations in technology, bilateral and multilateral relations as well as events of global significance, the Russia – Ukraine conflict can definitely be identified as the immediate cause of upheaval in established standard procedures of operations. There are also the underlying gradual changes that have been decades in the making including burgeoning economies of the global South, the rise and expansion of the Chinese economic and consequent political influence, and unprecedented advancement in technology.

If Modi holds bilateral meetings with Sharif in Tashkent, it will be the first such engagement between the leaders of India and Pakistan after a gap of almost seven years after his surprise visit to Lahore.  If Modi holds a bilateral meeting with Chinese President Xi Jinping, it will be the first such occasion after the military stand-off along the Line of Actual Control between the two nations in eastern Ladakh started in April-May 2020.

While the SCO preparatory summit was dominated by sea changes mentioned, the evolution of the organization by the numbers is the bigger story.

Future membership possibilities

In 2010, the SCO approved a procedure for admitting new members.

• Mongolia and Afghanistan, which have observer status, have stated their intention to become full members.
• In 2011, Turkey applied for dialogue partner status,
• In 2011, Vietnam expressed interest in obtaining observer status (but has not applied for it thus far).
• In 2012, Ukraine has expressed interest in obtaining observer status (but has not applied for it).
• In 2012, Armenia, Azerbaijan, Bangladesh, Belarus (then a dialogue partner), Nepal and Sri Lanka (then and now a dialogue partner) have applied for observer status. Armenia, Azerbaijan and Nepal obtained dialogue partner status instead in 2016.
• In 2014 or early 2015, Maldives applied for dialogue partner status.
• In 2015, Egypt and Syria applied for dialogue partner status. Belarus obtained observer status.
• In 2016, Israel applied for dialogue partner status.
• In 2017 Bahrain and Qatar applied for dialogue partner status.
• In 2019 Iraq and Saudi Arabia applied for dialogue partner status.
• In 2021, Egypt began the process of finalizing their dialogue partner status.
• In 2022 Myanmar announced its intent to obtain dialogue partner status .
• According to an Izvestia report, in 2022, the United Arab Emirates asked to be immediately admitted to the SCO as a full member, skipping established procedures.
• According to Uzbekistan’s former Minister of Foreign Affairs Abdulaziz Kamilov, during the upcoming 2022 SCO Heads of State Summit, Iran will obtain member status, Belarus will begin the process of obtaining member status, Armenia, Azerbaijan, Cambodia and Nepal will obtain observer status, Egypt, Qatar and Saudi Arabia will obtain dialogue partner status, and Bahrain and Maldives will begin the process of obtaining dialogue partner status.
• Turkmenistan has previously declared itself a permanently neutral country, which was recognized by a resolution adopted by the United Nations General Assembly, thus precluding its membership in the SCO.
• Turkish Prime Minister Recep Tayyip Erdoğan has stated that he has discussed the possibility of abandoning Turkey’s candidacy for accession to the European Union in return for full membership in the SCO. On 23 November 2016, Turkey was granted the chairmanship of the SCO energy club for the 2017 period. That made Turkey the first country to chair a club in the organisation without full membership status. As of 2021, the Turkish government has not applied for SCO membership.

Economic cooperation

Russia, Kazakhstan and Kyrgyzstan are also members of the Eurasian Economic Union.

A Framework Agreement to enhance economic cooperation was signed by the SCO member states on 23 September 2003. At the same meeting the Premier of China, Wen Jiabao, proposed a long-term objective to establish a free trade area in the SCO, while other more immediate measures would be taken to improve the flow of goods in the region. A follow up plan with 100 specific actions was signed one year later, on 23 September 2004.

On 26 October 2005, during the Moscow Summit of the SCO, the Secretary General of the Organisation said that the SCO will prioritise joint energy projects; including in the oil and gas sector, the exploration of new hydrocarbon reserves, and joint use of water resources. The creation of the SCO Interbank Consortium was also agreed upon at that summit in order to fund future joint projects. The first meeting of the SCO Interbank Association was held in Beijing on 21–22 February 2006.

On 30 November 2006, at The SCO: Results and Perspectives, an international conference held in Almaty, the representative of the Russian Foreign Ministry announced that Russia is developing plans for a SCO “Energy Club”. The need for this “club” was reiterated by Moscow at a SCO summit in November 2007. Other SCO members, however, have not as yet committed themselves to the idea. However, during the 2008 summit it was stated that “Against the backdrop of a slowdown in the growth of the world economy pursuing a responsible currency and financial policy, control over the capital flowing, ensuring food and energy security have been gaining special significance”.

At the 2007 SCO summit Iranian Vice President Parviz Davoodi addressed an initiative that had been garnering greater interest and assuming a heightened sense of urgency when he said:

The Shanghai Cooperation Organisation is a good venue for designing a new banking system which is independent from international banking systems.

The address by President Putin at the EEF included these comments:

We now clearly see the defectiveness of the monopoly in world finance and the policy of economic selfishness. To solve the current problem Russia will take part in changing the global financial structure so that it will be able to guarantee stability and prosperity in the world and to ensure progress.

The world is seeing the emergence of a qualitatively different geo-political situation, with the emergence of new centers of economic growth and political influence.

We will witness and take part in the transformation of the global and regional security and development architectures adapted to new realities of the 21st century, when stability and prosperity are becoming inseparable notions.

Member banks

The SCO Interbank Consortium was created during the 2005 SCO Summit. The consortium was among several economic integration projects announced during the summit. The first meeting of the SCO Interbank Association was held in Beijing on 21–22 February 2006.

• Development Bank of Kazakhstan
• RSK Bank (Kyrgyzstan)
• China Development Bank
• VEB.RF (Russia)
• Amonatbonk State Savings Bank (Tajikistan)
• National Bank of the Republic of Uzbekistan for Foreign Economic Activity
• Habib Bank Limited (Pakistan)
• India Infrastructure Finance Company

Observers

• Eurasian Development Bank
• Belarusbank
• Development Bank of Mongolia

Conclusion:  Importance of SCO

SCO is not new to evolution and adaptation to shifting global environments. India has shown its commitment to take a multilateral approach towards issues of regional importance. New Delhi can propose its own strengths to devising solutions and agenda setting for a resilient post pandemic region. The evolution of SCO is in keeping with the transformation that is happening in the world order and one should expect more such transformations in the future.

One aspect keenly discussed is a Digital economy playing an important role in the post-COVID-19 global economic recovery where economies are struggling with inflation, bankruptcy and rising unemployment. India’s consumer digital economy which was pegged at $85-90 billion in calendar year 2020 is expected to become a $800 billion market by 2030, according to reports.

This would also provide an alternate solution to the demand for common currency for trade among SCO members. Iran has proposed a common Eurasian currency for trade among the SCO members. In 2021, SCO members reportedly disclosed a document studying using local currency settlement while exchanging experience in financial areas, a move that experts said will be helpful to fend off US dollar hegemony and not be a target of sanctions. Therefore, there is growing argument about how to de-dollarise the economies to avoid weaponization of American dollars. Digital economies and currencies have to form part of these discussions as we cannot get away from unprecedented advancement in technology. Our money and the use of it will change.

We know now that SCO is deeply embedded with ASEAN. The next in this series is BRICS, so we can trace the connections there.

Today, the SCO family is the world’s largest regional organisation that unites a huge geographical area and about half the population of our planet. The international legal attractiveness of the SCO lies in its non-aligned status, openness, non-targeting against third countries or international organizations, equal rights and respect for the sovereignty of all participants, refraining from interference in internal affairs, avoiding political confrontation and rivalries”. – President of Uzbekistan, Shavkat Mirziyoyev (https://president.uz/ru/lists/view/5495).