Economy

Evolution of Shanghai Cooperation Organisation

Analysis 4 July 2018
Evolution of Shanghai Cooperation Organisation

The 17-year-old Shanghai Cooperation Organisation is the world’s largest regional organisation in terms of geographic coverage and population. It has evolved into a legitimate forum for the political and economic interaction of its members without direct Western involvement.

The 18th annual summit of the Shanghai Cooperation Organisation (SCO) – which took place on 9–10 June 2018 in Qingdao, China – demonstrated both the expansion and consolidation of the regional organisation. After the fall of the Soviet Union, newly independent Central Asian states were keen to establish a new regional order. Along with China and Russia, Kazakhstan, Kyrgyzstan and Tajikistan formed the Shanghai Five grouping in 1996. The SCO was established in 2001, with Uzbekistan joining the Shanghai Five, and becoming the only SCO member state which does not share a border with China.

Turkmenistan, assiduously neutral, has not joined the group. Initially, the SCO aimed mainly to address border security and Uighur separatism. Both issues were legacies of Sino-Soviet disputes in Central Asia originating in the 1960s, when the Soviet Union amassed troops along the Xinjiang frontier separating western China from Central Asia and implicitly threatened to induce Uighurs and other Muslims to revolt. The SCO’s concerns have since expanded. In 2017, India and Pakistan joined the body. At present, its eight members account for 80% of Eurasia's landmass, 43% of the world’s population, and a quarter of the world's GDP. In terms of geographic coverage and population size, it is the largest regional organisation in the world.

Russia and China set the organisation’s agenda, exercising different strengths. Russia takes the lead on politico-military affairs, communications and culture. It also has far greater experience in multilateral activities. China leads on economic development, investment and infrastructure, taking a risk-averse approach. Although Russia aspired to a closer relationship with China after it fell out with the West over the annexation of Crimea in 2014, Beijing was unwilling to alienate the United States and preferred a less committed, though still friendly, partnership. Donald Trump’s accession to the US presidency, however, has made Beijing less sensitive and cautious in this regard.

Security cooperation

Regional security remains the SCO’s primary goal. Its members are concerned that the forces of international jihadism are infiltrating the region, and worry that Islamism could upset the prevailing secular political order. Afghanistan serves as a warning that Central Asia and its borderlands to the south are susceptible to serious instability, which they may not be able to contain unilaterally. The Uighur population in China’s Xinjiang autonomous region, where minority grievances increasingly tilt towards violent extremism, poses a particular challenge for Beijing. The region has produced a large contingent of fighters for the Islamic State, also known as ISIS or ISIL, some of whom have found their way into Afghanistan. Stabilisation there is a key concern. In October 2017, an SCO–Afghanistan Contact Group was formed in Moscow, and held a second meeting in Beijing in May 2018.

“Transnational threats are a major preoccupation of the organisation”

Transnational threats are a major preoccupation of the organisation. The SCO’s objectives include fighting what China describes as the ‘three evils’ – terrorism, separatism and extremism – as well as combatting drugs trafficking and cyber crime. The 2018 summit adopted several key security documents, such as the 2019–21 Programme for Cooperation in Opposing Terrorism, Separatism and Extremism, and approved an Anti-Drug Strategy for 2018–23, along with an action plan to support it.

Joint exercises and counter-terrorism operations, as well as facilitation of intelligence exchanges, are among the SCO’s key activities. In September 2017, China and Tajikistan formally agreed to step up their intelligence sharing. Preventive measures, such as the SCO leaders’ Appeal to Young People – which warned of the dangers of violent extremist ideologies – and an associated youth-employment programme, also form part of the package. Apart from the Secretariat in Beijing, the SCO’s only permanent operational structure is the Regional Anti-Terrorist Structure (RATS) headquarters in Tashkent. The location of RATS in Uzbekistan’s capital, at the heart of Central Asia and in the vicinity of Afghanistan, reflects its perceived importance. In May 2018, Pakistan hosted its first meeting of SCO RATS legal experts and advisers from all eight member states (including India), to discuss regional terrorist threats and measures to address them.

Defence cooperation among SCO members is developing. In 2018, India and Pakistan attended the SCO Defence Ministers’ meeting for the first time. Although most SCO members have bilateral defence relationships with Russia, joint military exercises are among the key tangible outcomes of SCO proceedings. These ‘peace missions’ pose scenarios involving counter-terrorism operations which employ heavy firepower, such as air-to-air missiles. Troops participate in simulated operations to pursue terrorists, repel counter-attacks and take down terrorist networks, testing their combat readiness and propensity for military cooperation.

Given that China has little experience of inter-operability with foreign militaries, Russia typically takes the lead. While Russia holds cultural and linguistic advantages – many Central Asian officers were trained in Russia, and even more have some proficiency in Russian – efforts have been made to integrate China and the new South Asian members into the SCO’s exercises. ‘Peace Mission 2018’, which will be held in Russia’s Ural Mountains in late August and early September, will involve China, India and Pakistan, operating together for the first time. There are also more limited exercises organised by RATS to tackle particular issues, such as anti-narcotics and disaster relief operations. Two joint cyber-security exercises were conducted in 2015 and 2017, and China wants to hold more.

Economic considerations and the Belt and Road Initiative

Economic development in Central Asia is a secondary issue for both Russia and China in the SCO, though they use economic tools to promote core political and security interests. Socio-economic development is viewed as a path to greater stability, as in the long term, fuller employment and improved social welfare will reduce grounds for internal strife. The SCO has the long-term goal of establishing a free-trade zone, an initiative that China strongly supports, and a more immediate ambition to create a fertile environment for trade and investment. Chinese President Xi Jinping launched proposals for a targeted credit line worth about US$4.7 billion, promised to provide 3,000 grants to SCO member states for human development, and said that the SCO should work to reduce its members’ dollar dependency.

These are ambitious and perhaps unrealistic goals. Along a narrower vector, however, there have been some major developments, particularly in the energy sector. Most of Turkmenistan’s gas goes to China, which built a 3,666-kilometre pipeline from the Turkmenistan–Uzbekistan border to Jingbian at a cost of US$7.3bn. In 2013, China agreed with Kyrgyzstan, Tajikistan and Uzbekistan to build a pipeline expected to increase Turkmenistan’s gas-export capacity to China from 55bn to 85bn cubic metres annually. After a number of delays, work resumed on the Tajikistan section of the pipeline early this year, with substantial completion projected for 2020.

China’s commercial stakes in Central Asia are modest. In 2015, only US$12.1bn of China’s US$2.37 trillion in exports went to the five Central Asian countries. Still, Beijing wants to redress inequalities between its poorer western regions that border Central Asia and its richer eastern regions. Integrating the former into Central Asian economies through the Belt and Road Initiative (BRI) could prove a partial solution. In 2014, Beijing adopted three plans to remedy uneven regional development in China. One idea was to make the China–Pakistan economic corridor to Gwadar port in Pakistan an outlet for landlocked Xinjiang (which is some 4,500 km away from China’s coastal ports). The planned corridor has been projected to receive US$46bn in investments and credit lines.

The BRI, however, covers an area much larger than the SCO, as it seeks to expand maritime routes and land infrastructure connecting China with Asia, Africa and Europe. One of the aspects most relevant to the SCO is the China–Mongolia–Russia corridor, which bypasses Central Asia and includes the Trans-Siberian railway. The corridor also features a passage which crosses directly from China into Russia. This route services China’s eastern coast, and facilitates its overland trade to Europe. It is about 13,000-km long, and takes around 16 days to travel. A Chinese-led consortium received a contract worth US$375m in 2015 to build a 770-km high-speed train line between Moscow and Kazan in Russia that would significantly reduce travel time.

The New Eurasian Land Bridge – a set of railways from central China (Wuhan, Chongqing and Chengdu) to Europe via Kazakhstan, Russia and Belarus – helps satisfy transportation requirements from inner China. Northern railway connections to Europe are already in place. The signing of the Eurasian Economic Union (EEU) by Belarus, Kazakhstan and Russia was a major breakthrough for China–European Union trade, reducing delays and costs.

The China–Central Asia–Western Asia corridor follows the old Silk Road through Central Asia, Iran and Turkey to Europe. The first cargo train connecting China and Iran arrived in Tehran in February 2016, as sanctions relief on account of the Joint Comprehensive Plan of Action (JCPOA), better known as the Iran nuclear deal, enabled cooperation between China and Iran. However, the route involves crossing Kyrgyzstan, Uzbekistan and Turkmenistan, countries known for their poor connectivity, inadequate transport infrastructure, border delays and burdensome customs procedures. In addition, the United States’ withdrawal from the JCPOA has dimmed prospects for cooperation.

The trans-Caspian route through Central Asia to Turkey, which bypasses Russia and Iran, is underdeveloped. High costs of the Caspian crossing between Azerbaijan and ports in Kazakhstan and Turkmenistan, inadequate containerisation, and irregular ferry schedules due to weather conditions disfavour that crossing in terms of speed and cost. To become operational, it would require a comprehensive network of infrastructure and harmonised customs and cross-border procedures. At best, it can complement the routes through Russia but cannot compete with them.

Overall, there appears to be little chance that the BRI will displace Russian influence from Central Asia, and Russia itself seems to be approaching the BRI positively. In May 2018, the EEU and China signed a cooperation agreement in Astana, Kazakhstan; Russia and China are also preparing an agreement on Eurasian Economic Partnership to align the BRI with EEU trade, investment and infrastructure plans that will be open to all SCO members. The new opportunities are likely to benefit Uzbekistan in particular, which no longer presents an obstacle to regional cooperation and has engaged in solving border problems with neighbours since the death of its long-serving and famously isolationist president, Islam Karimov, in September 2016.

Benefits and nuances of participation

While Russia and China have largely dictated the overall direction of the SCO, Central Asian states have drawn tangible benefits in the security and economic fields. Moreover, the SCO has made considerable progress in meaningfully integrating those states – which are members of few regional organisations outside of the former Soviet space and have often been treated as junior partners – into the international system. Within the SCO, even though they lack hard or soft power comparable to the main players, Central Asian states are treated as formally equal through, for instance, the rotating chairmanship of the organisation (currently held by Rashid Alimov of Tajikistan). Participation in the SCO enables member states to host SCO summits and channel their officials into positions in other multilateral organisations, and thus affords them a more prominent international platform and profile.

“The idea is to show that there is a different way of doing things than that established by the West”

More substantively, the SCO members have readily aligned with the ‘Shanghai spirit’ embodied in the SCO charter, of ‘mutual trust, mutual respect, equality, consultation, respect for diverse civilizations and pursuit of shared development’. At the same time, the values that bind the SCO together are: respect for national sovereignty and territorial integrity; commitment to upholding social stability; and opposition to liberal interventionism.

The idea is to show that there is a different way of doing things than that established by the West. The EU, for instance, holds aspiring members to tight benchmarks, while the SCO offers a flexible range of options other than eventual membership, such as observer status (granted to Afghanistan, Belarus, Iran and Mongolia) or ‘dialogue partner’ status (held by Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey). Additional countries, including Bangladesh, Egypt, Israel, the Maldives, Qatar, Syria and Ukraine, have expressed an interest in becoming observers or partners.

The SCO, concluding from the EU’s experience that more obligations bring more problems, is loath to advance an institutional agenda that might limit national sovereignty. On that score, Russia appears prepared to do little beyond investing in EEU structures. Within the SCO, efforts are focused on strengthening political and diplomatic capacities to relieve tensions on the external borders of SCO member states, resolve disputes within Central Asia, help stabilise Afghanistan, and ameliorate discord between India and Pakistan.

This last enterprise in particular has proved notoriously fraught, and is likely to test the limits of the SCO’s diplomatic capacity, given India’s strong historical preference for handling its problems with Pakistan on a bilateral basis. New Delhi, for example, has declined to endorse the BRI because one of the proposed routes goes through the disputed Kashmir region. Expanded membership, therefore, has also brought tensions. Even so, SCO leaders have manifested general confidence in their ability to overcome most of them, having adopted 17 documents at this year’s summit, including the 2018–22 Action Plan to implement the 2007 Bishkek Treaty on Long-Term Good-Neighbourly Relations, Friendship and Cooperation.

In addition, cultural diplomacy is a focal point for the SCO. The SCO recently held its first film festival. Russia, however, remains culturally dominant. Many Central Asians have been trained in Soviet institutions, and the Russian language is relatively accessible. Moscow’s ideas of political convergence and ‘civilisational unity’ have gained regional traction, along with Russia’s popular culture and outlook on world affairs. Russian President Vladimir Putin is popular in China – in June this year, he was the first person to be awarded China’s friendship medal – and elsewhere in the region.

Outlook

The SCO has a proactive agenda and has widened its geographic and thematic scope, benefitting from the West’s lack of interest in and limited ability to influence the region. Western nations are disinclined to invest in state-owned enterprises, commit themselves to infrastructure projects or provide cheap and flexible loans in Central Asia. They tend to view Central Asian security challenges with scepticism, and regard the Afghanistan conflict as absorbing most of their regional bandwidth. But the SCO leadership has not forced its members and associates to choose starkly between ‘Western’ or ‘Eastern’ options; they can maintain independent foreign policies if they wish to do so, and some do. Most have political and economic ties with the West, and those of some – for instance, India and Turkey – are more robust than others. Among SCO-affiliated countries, only Iran could be characterised as an isolated state in dire need of friends.

The membership’s ability to meet in a forum in which the West does not play a key role is important, but the SCO’s coolness towards the West should not be overestimated. Reformist as opposed to revisionist, the organisation does not want to radically change existing international rules, but rather aspires to adapt them to the changing geopolitical environment while broadly upholding existing norms. Insofar as Russia and China seek to influence the evolution of the international order, the SCO amplifies their voices and supplements what can be achieved through bilateral cooperation. Widening membership and association arrangements have consolidated general regional support. Criticism of the US has been measured, and the SCO has pragmatically expanded its links with broadly established international bodies such as the BRICS grouping and UNESCO. Nevertheless, the SCO’s geopolitical momentum could well embolden Putin and Xi to use the organisation as a platform for lashing out at the West.

The 17-year-old organisation has come a long way. But the SCO remains more focused on the processes of relationship-building than on concrete outcomes measured by narrowly defined standards of effectiveness. Even prominent regional organisations – including the Association of South East Asian Nations (ASEAN), the Organization of American States (OAS), the Economic Community of West African States (ECOWAS), and the Arab League – are typically fairly weak in terms of what they can accomplish on the ground or with respect to the internal politics of a member state. The EU is an exception, but it is a supra-national institution, rather than a regional intergovernmental organisation. Accordingly, expectations as to what the SCO can deliver should remain modest.

The article was published by our partner International Institute for Strategic Studies.

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