Shanghai Cooperation Organization (SCO)

The Shanghai Cooperation Organization is an example of both a ‘Talking Club’ and an attempted ‘Alternative Path’ structure. It started with a security-related agenda, which is still very substantive. Member states then attempted to adapt the organization to the task of advancing economic cooperation in Greater Eurasia. In this economic realm, the RO remains only a ‘Talking Club’.

The origins of the SCO can be traced back to 1996, when the Shanghai Five, the informal international grouping of five countries — China, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan - was established. In 2001, the grouping was transformed into a formal organization - the SCO; Uzbekistan became a member of the group in the same year. In 2015, India and Pakistan joined the SCO after several years of observer status. The current observers include Afghanistan, Belarus, Iran, Mongolia, Sri Lanka, and Turkey, with Iran repeatedly expressing its willingness to become a full-fledged member of the SCO.

The original informal grouping had a singular, but extremely important focus: its aim was to resolve the border disputes between the post-Soviet countries and China. These disputes were inherited from the unresolved border issues of the USSR and China, which in 1969 had led to a short military incident at the Soviet-Chinese border. Negotiations between

China and the USSR on this matter were almost impossible due to deep political, geopolitical, and ideological contradictions. However, the new independent states that emerged after the collapse of the USSR sought to settle their differences with China. A number of regular summits were organized between all countries with a common border to China and China itself. The first two summits took place in Shanghai, which gave its name to the group, followed by Almaty, Bishkek and Dushanbe. The negotiations were extremely successful in settling this complex issue, which was the reason for the members to expand and formalize their organization. In 2001, the annual summit again took place in Shanghai, where it was decided to transform the informal Shanghai Five (after Uzbekistan’s accession, Shanghai Six) into a full-fledged international organization, the SCO.

The Charter of the SCO was signed in June 2002. In May 2003, the Moscow summit of the SCO approved the internal governance structure of the SCO. In 2003, the organization assumed its own economic agenda with the Program of Multilateral Trade and Economic Cooperation. The first budget of the SCO was approved for 2004; and in January 2004, the Secretariat of the SCO started its operations. The institutional design of the SCO is similar to that of APEC in the sense that it includes numerous platforms and forums where member countries can engage in dialogue. At the same time, it is also more formalized as at least some of the members saw the SCO as having the potential to become more than a ‘Talking Club’. We will show this in what follows. Furthermore, the ‘global script’ for the SCO was much closer to the European blueprints than that for APEC, which inherited the tradition of the Asian informal regionalism. The highest body of the SCO is the Council of the Heads of States. The second highest body is the Council of the Heads of Government, which adopts the SCO budget and determines the strategy of multilateral cooperation. Both institutions meet annually; in addition, there are meetings at the levels of: Speakers of Parliament, Secretaries of Security Councils, Foreign Ministers, Ministers of Defense, Emergency Relief, Economy, Transportation, Culture, Education, Healthcare, Heads of Law Enforcement Agencies, Supreme Courts, and Courts of Arbitration and Prosecutors General. The activity of the SCO is coordinated by the Council of National Coordinators (CNC).

Assessment of the tangible progress of the SCO cooperation depends on the area that is at the center of analysis. In the security domain, SCO cooperation is very real; and in the economic domain it remains merely a declared goal and a sincere intention of some of the member states. This is similar to ECOWAS; however, while ECOWAS is primarily an economic organization, which assumed a different agenda over time, SCO emerged with two separate agendas, and merely developed along each of them with different speeds. It cannot therefore be seen as a case of an ‘Alternative Path’ RO. The goals of the SCO include: confidencebuilding among member states; cooperation in economic, political and trade issues; science and culture, joint peace, security and stability efforts; and support of a democratic, just and rational political and economic international order on a global scale.[1] In the security issues, the main focus of the SCO seems to be on what China frequently refers to as the ‘Three Evils’: terrorism, separatism and extremism.[2] In 2004, the SCO set up the Regional Antiterrorism Structure (RATS). The organization puts particular emphasis on both information exchange and cooperation at the level of intelligence and counterterrorism and military cooperation.

Since 2003, numerous military exercises have been conducted within the SCO framework. In 2003, the exercises were conducted in Kazakhstan and in China. Since then, Russia and China conducted military exercises in both countries, sometimes with a substantial involvement of troops and with the participation of other SCO states. For example, the 2005 exercises (‘Peace Mission 2005') involved about

10,000 personnel and took place in both Russia and China; the 2007 exercises in Russia involved about 4,000 soldiers; in the 2010 exercises in Kazakhstan 5,000 soldiers from all SCO countries except Uzbekistan participated. In 2014, it was even suggested to merge the SCO with the Collective Security Treaty Organization (CSTO), the military alliance of post-Soviet countries, including Russia, Belarus, Kazakhstan, Tajikistan,

Kyrgyzstan and Armenia. This project has not been implemented though, but is under discussion.1

Although the SCO frames these exercises as part of the fight against the Three Evils, their focus is typically on more traditional hard security. Their geographical location is used in some cases to deliver a particular political message, or the exercises are used to make large political announcements. The Peace Mission 2007 exercises coincided with the SCO summit, where Putin announced his plans to resume the flights of heavy bombers, which Russia had not done since the fall of the USSR. Some exercises, however, have a clear anti-terror focus. The following exercises simulated a terrorist attack: the Volgograd exercise in 2008 against an oil tanker; the Vostok exercise in 2006 against Uzbekistan’s Institute of Nuclear Physics, which is in possession of a nuclear reactor; and the Novak exercise in 2009 against a chemical factory. Even the more traditional military SCO exercises do not simulate offensive measures, which is one of the reasons to argue that the SCO is not turning into an anti-Western military coalition.[3] [4]

Further security issues tackled by the SCO include the anti-drugs operations, especially important for the member states given their proximity to Afghanistan. In 2010, the RATS established close cooperation with the Central Asian Regional Information and Coordination Center (CARICC), which itself was created in 2006 by Russia, Central Asian states and the UN Drugs and Crime Office. In 2009, the SCO agreed to create a regional anti-drug training center in Tajikistan. One of the forums of exchange of information in the SCO are regular meetings of national agencies of the SCO members combatting drug trafficking; the SCO regularly develops five-year strategies in this respect.

If we consider economic matters, the story of the SCO will turn out to be much more disappointing. When the Framework Agreement of the SCO on economic matters was signed in 2003, the Chinese premier Wen Jiabao suggested setting the long-term goal of creating a free-trade area in the SCO. In 2004, the members signed an action plan containing 100 specific measures to implement economic cooperation. However, the initiative was not pursued further. Here, one has to highlight the strong and unambiguous Russian position, which until recently rejected an FTA with China as it would damage Russia’s own domestic industry. Russian foreign economic policy, on the contrary, has a considerable inclination toward protectionism. This is due to: a conviction by part of the Russian elite that this approach is valid for developing domestic industry; and the strong influence of lobby groups. At the same time, Chinese manufacturing does indeed enjoy significant advantages vis-a-vis Russian producers, which would hardly be able to compete against China in a free trade environment. The Russian position on this topic is occasionally criticized by Chinese observers and experts.

In 2005, the SCO declared its willingness to focus on energy; in 2006, the SCO Energy Club was announced by Russia. This time the Russian idea was not endorsed by other members. In 2005, the SCO agreed to create an Interbank SCO Council, and since then the idea of a joint bank of the SCO has been on the agenda. However, again, due to contradictions between Russia and China, it has never been implemented. By 2015, it appears to be clear that the project will not come to life because Chinese focus is redirected toward new initiatives especially: the Asian Infrastructure Investment Bank; the New Development Bank of BRICS; as well as the Silk Road Economic Belt. In 2009, amidst the global economic crisis, China offered the SCO countries substantial financial support of $10 billion. This plan was announced at an SCO summit in Yekaterinburg, but, strictly speaking, is unrelated to the SCO itself. The financing was provided through bilateral mechanisms, and the SCO served merely as the forum where the idea was suggested and announced.

This does in fact fit the concept of the ‘Talking Club’ we advance in this book. Indeed, the major progress of the SCO in economic matters was achieved precisely when an organization serves as a platform for discussion rather than tries to develop its own binding set of commitments and obligations. These discussions take place not only between politicians, but also between businesses. This is similar to APEC. An example of the latter is the SCO Interbank Association, which was set up in 2005 and includes the largest banks of the member countries. Member countries seem to value the possibility to expand, and to conduct their dialogue on various issues within the diverse SCO framework with multiple forums and initiatives where the exchange can take place.1

The SCO’s use as a ‘Talking Club’ is again consistent with our theory. The SCO has a bipolar structure - with Russia and China as its two key members. This means that neither of them can act as the focal point of interaction. In fact, smaller member countries explicitly appreciate the dialogue involving both large countries, since it protects them from the unilateral dependence on a single key player. To some extent, Central Asian countries are also states engaged in low-intensity conflicts against each other for example: the confrontation between Uzbekistan and Tajikistan about the use of water resources, minefields at borders, and ethnic minorities. However, they likewise exhibit a number of common problems inherited from their common Soviet past. Moreover, for over two decades Russia resisted any deep ‘Alive and Kicking’ integration with China such as a free trade area.

Thus, until recently a ‘Talking Club’ is almost the only format that the countries could have used to discuss economic cooperation. This might be changing now as Russia faces sanctions from the West and continues its new pivot to the East that began in 2014. Systematic negotiations on linking the Eurasian Economic Union and the Chinese Silk Road Economic Initiatives have taken place since 2015. Some of these discussions also involve the idea of enhanced trade and investment cooperation in the SCO area.[5] [6] Occasionally, the SCO is mentioned by analysts studying this dialogue.[7] It appears however to be very unlikely that the institutional structure of the SCO will indeed be used for this purpose - the direct cooperation of the EAEU and China seems to be a more probable scenario.

  • [1] See Kazantsev 2009.
  • [2] 0https://en.wikipedia.org/wiki/Three_Evils, accessed 30 October 2016.
  • [3] On the current interaction of SCO and CSTO see Luzianin et al. 2015.
  • [4] Hessbruegge 2014. See also Libman 2006, who offers a detailed discussion of why SCO shouldnot be perceived as an anti-Western bloc, or anti-NATO.
  • [5] Boland 2011: 20-22.
  • [6] Libman 2016; Vinokurov 2016. On the interaction of the EEU and the SCO see Gatev and
  • [7] Diesen 2016.
 
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