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Looking Ahead
Where does the Shanghai Cooperation Organization stand in its 18th year?
By Han Lu  ·  2019-01-27  ·   Source: NO. 5 JANUARY 31, 2019

Teenagers from Shanghai Cooperation Organization member countries learn paper cutting from a Chinese artisan in Qingdao, east China's Shandong Province, on July 17, 2017 (XINHUA)

Founded with its focus on security, the Shanghai Cooperation Organization (SCO) has developed rapidly. From five, it is now an eight-member international organization comprising China, India, Kazakhstan, Kyrgyzstan, Pakistan, Russia, Tajikistan and Uzbekistan. Today, it also covers economic and other fields of cooperation and is the global organization with the largest area and population in the world.

This year marks the 18th anniversary of the SCO. How has it fared and what are the challenges ahead?

Model of cooperation

The SCO member countries have established a new type of international relations. Guided by the Shanghai Spirit, a code of conduct characterized by mutual trust, mutual benefit, equality, consultation, respect for cultural diversity and pursuit of common development, they have carried out cooperation in various fields, serving as a model of cooperation for countries with different national conditions and political systems.

Security, economic cooperation and people-to-people exchanges are the three pillars of the SCO. Security cooperation is the priority and has become increasingly deeper. Following the new security concept, which stresses common, comprehensive, cooperative and sustainable security, the SCO has established a network to enhance law enforcement and security and achieved results in combating terrorism, separatism and extremism. The members have also successfully fought drug smuggling, transnational crime and crimes in information security. The SCO has made significant contributions to the long-term stability and prosperity of Central Asia and northwest China.

The SCO member countries have also deepened economic collaboration and made substantial progress in trade and investment as well as constructing supporting legal and institutional mechanisms. In 2018, trade between China and the other seven member states reached $211.6 billion, while investment amounted to $85.2 billion. This is a huge leap compared with 2001, when their trade amounted to $12.1 billion.

In 2014, the member states signed the Agreement on Facilitation of International Road Transport to promote regional connectivity and four years later, the China-Kyrgyzstan-Uzbekistan International Highway opened to traffic. Along with transportation, a regional energy network is also taking shape. The China-Central Asia natural gas pipeline and the China-Kazakhstan and China-Russia crude oil pipelines have begun operation.

In recent years, the education, academic, media and environmental communities of the SCO member countries have conducted extensive exchanges. A series of culture, language and tourism promotional programs as well as art festivals also help strengthen mutual understanding and friendship between people in the SCO region.

Challenges and possibilities

Currently, the SCO is at a new development stage full of challenges. The international order has undergone an unprecedented change since the end of the Cold War, and competition between established powers and emerging ones has become increasingly intense. In the U.S. National Security Strategy report released in December 2017, China and Russia were projected as strategic competitors. In addition, the United States has taken a series of measures to contain both.

At the same time, the United States has stepped up efforts to expand its influence in the SCO region. These include the new U.S. strategy for Afghanistan, its Indo-Pacific Strategy and Washington's continued promotion of C5+1 dialogues with the five Central Asian countries of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.

Moreover, surging unilateralism and trade protectionism have unavoidably impacted the SCO.

Internally, India and Pakistan's entry as new members poses new challenges to the SCO's operation model. Since it was founded, the SCO has followed the principle of consensus through consultation. India and Pakistan's entry, given the longstanding disputes between the two neighbors, might make it more difficult for the SCO to reach consensus through consultation, which would impact the efficiency of its cooperation. The two new members are also likely to bring issues unsettled between them into the SCO, which would test the organization's cohesiveness and integration.

On the other hand, there are opportunities as well. The SCO's economic power and cooperation potential have improved after the accession of the two new members. The expansion could lead to regional trade and investment facilitation. For example, the China-Pakistan Free Trade Agreement, which came into effect in 2007, could serve as a model for the SCO's free trade facilitation process.

With the admission of India and Pakistan, the SCO covers four important economic corridors of the China-proposed Belt and Road Initiative—the China-Mongolia-Russia, China-Central Asia-Western Asia and China-Pakistan economic corridors, and the new Eurasian Continental Bridge, which runs from coastal city Lianyungang in east China to Rotterdam in the Netherlands, carrying the cheapest and fastest Asia-Europe rail route. They give Central Asian countries new markets and access to the sea. Also, Central and South Asia can fully utilize their advantages and move toward integration. A trans-regional market and a more comprehensive interconnectivity network are on the cards.

Since the SCO members, especially the relatively underdeveloped economies in the bloc, are all at a critical period of development, they regard stability and development as their top priority and have shown increasing willingness to strengthen economic cooperation inside the bloc.

Vladmir Putin's election in 2018 as president for the fourth time means Russia will maintain economic and political stability.

In Uzbekistan, after Shavkat Mirziyoyev was elected president in 2016, a series of reforms and an opening-up policy have been adopted. The country also took the initiative to improve ties with Kyrgyzstan and Tajikistan, paving the way for addressing some long-existing problems in the region such as environmental degradation and jockeying for water resources.

With the Central Asian countries having stepped up efforts against terrorism and extremism, the ensuing stability in the region has created conditions conducive to economic cooperation.

More importantly, the SCO member countries' concepts and development strategies have changed as they have attached greater importance to institutional arrangements and rules during economic cooperation and realized the urgency to remove barriers to increase the flow of trade.

The Belt and Road Initiative has also played a role in enhancing the SCO's economic cooperation. The initiative has developed transportation, energy and other infrastructure projects, which are also the key cooperation areas of the SCO members. As the Belt and Road Initiative progresses, it will give impetus to regional trade facilitation and infrastructure construction and promote regional integration.

The SCO Summit in east China's coastal city of Qingdao in June 2018 set the direction for the next stage of economic cooperation. The ratified Joint Statement of the Heads of Member States of the SCO on Promoting Trade Facilitation promises to simplify customs procedures, reduce import and export procedures for goods, and improve transparency.

The summit also decided to strengthen support to small and medium-sized enterprises. The member countries will organize seminars, training programs and exhibitions to encourage these enterprises' participation in e-commerce, innovation and research.

At the summit, China announced that a demonstration zone for China-SCO local economic and trade cooperation will be established in Qingdao and a legal service committee for SCO member states will be set up to provide legal support for business cooperation. Chinese President Xi Jinping launched a special lending facility worth 30 billion yuan ($4.4 billion) within the framework of the SCO Interbank Consortium. All these measures will boost regional economic cooperation.

The author is a research fellow with the China Institute of International Studies

Copyedited by Sudeshna Sarkar

Comments to yulintao@bjreview.com

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