SCO’s Growing Influence in a Multipolar World

As leaders of China, Russia, and India joined new member Iran to huddle together at the Shanghai Cooperation Organization (SCO) summit at Samarkand in Uzbekistan, the West waited on pins and needles to gauge and interpret the outcome.

Chinese President Xi Jinping, Russian President Vladimir Putin, Indian Prime Minister Narendra Modi, Pakistani Prime Minister Shehbaz Sharif and Iranian President Ebrahim Raisi were among leaders of the 15 countries to attend the summit.

SCO summits over the previous two years were held in the virtual format due to COVID-19. This was the first in-person summit since the June 2019 SCO summit in Bishkek, Kyrgyzstan. Last year, the summit was held in Dushanbe, Tajikistan, in a hybrid format.

This was Xi’s first official trip to a foreign nation since COVID-19 broke out. Xi’s trip to Samarkand underlined China’s strategic ties with Central Asian states at a time when relations with many Western nations have come under strain due to China’s neutral position on the Ukrainian issue.

Xi and Putin met on the sidelines of the summit, for the first time since the Ukraine crisis. Xi said China and Russia should expand pragmatic cooperation, while Putin thanked the Chinese leader for his balanced stance on the Ukrainian issue. Putin also expressed Russia’s support for the one-China principle, and denounced U.S. provocations in the Taiwan Straits and its attempts to create a “unipolar world.”

The Samarkand Summit saw agreements on connectivity and high-efficiency transport corridors as well as a roadmap for local currency settlement among member states. It also deliberated on the geopolitical situation arising from the Ukraine crisis. Additionally, the situation in Afghanistan under the Taliban regime was discussed because many SCO member countries neighbor Afghanistan.

After the signing of the Samarkand Declaration, the heads of the SCO countries declared the inadmissibility of interference in the internal affairs of other states under the pretext of countering terrorism. The SCO countries expressed support for the non-proliferation of nuclear weapons and the continuation of nuclear disarmament.

The Samarkand Declaration also termed unilateral use of economic sanctions, except for those imposed by the United Nations (UN) Security Council, is incompatible with international law principles. The SCO countries emphasized the importance of the inclusive reform of the World Trade Organization (WTO) as soon as possible with emphasis on adaptation to current economic realities. The declaration advocated a “commitment to peaceful settlement of differences and disputes between countries through dialogue and consultation.”

To further promote the rich cultural and historical heritage of the peoples and the tourism potential of SCO member states, it was decided to declare the city of Varanasi as the SCO Tourism and Cultural Capital for 2022-2023, the declaration said.

The Mission of SCO

Founded in Shanghai in June 2001, the Beijing-headquartered SCO is a nine-member economic and security bloc consisting of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, India, Pakistan, and now Iran. It has three Observer States interested in acceding to full membership (Afghanistan, Belarus, and Mongolia) and nine Dialogue Partners (Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka, Türkiye, Saudi Arabia, Qatar, and Egypt).

It is a unique plurilateral grouping that holds two summits a year, one at the level of Heads of State and the other with Heads of Government. The presence of India and China, the world’s most populous countries, makes the SCO the organization with the largest population coverage in the world. The SCO accounts for about one-quarter of the world’s land and exports trillions of dollars annually.

The SCO, which grew from the “Shanghai Five” pact of the mid-1990s, is governed by consensus. It also functions as a venue for discussion and engagement in which high-level dignitaries from across the region can gather to confer, rather than an alliance like the European Union (EU), with members sharing a common currency, or NATO. Since its inception, the SCO has mainly focused on regional security issues, and fighting regional terrorism, ethnic separatism, and religious extremism. The SCO’s priorities also include regional development.

The Dushanbe Declaration on the 20th anniversary of the founding of the SCO last year expressed support for Afghanistan as an independent, neutral, united, democratic, and peaceful state, free of terrorism, wars, and drug trafficking. It is critical for Afghanistan to develop an inclusive government involving representatives from all ethnic, religious, and political groups of Afghan society.

The declaration also condemned terrorism in all forms and manifestations. SCO member states reaffirmed the need to increase efforts to prevent terrorism and its financing including by implementing existing global standards on combating money laundering and the financing of terrorism and by suppressing the spread of terrorist, separatist, and extremist ideologies that feed it.

The declaration emphasized the importance of sharing experiences on design and implementation of national development strategies, formulating digital economic growth plans, and adopting innovative technologies. It stressed the need to increase mutually beneficial cooperation in the energy sector, including wider usage of renewable and alternative energy sources.

Inclusion of Iran

The SCO Samarkand Summit was also significant due to Iran’s first attendance as a full member. The decision to admit Iran was made at last year’s Dushanbe Summit, and Belarus submitted a membership application. It was the first expansion of the SCO since India and Pakistan were admitted in 2017.

Iran’s entry into the SCO is its first as a full member of a major regional bloc since the 1979 revolution. Iran’s bid to become a full member of the SCO was approved after almost 15 years. The country had been an “observer state” since 2005. Full membership meant linking Iran to the economic infrastructure of Asia and its vast resources.

Iran is eyeing political and economic gains, especially with China, with which it signed a 25-year comprehensive cooperation agreement in March 2021, and Russia, with which Iran is looking to expand a pre-existing cooperation agreement. Iran could gain significant access to the Central Asian region, which is regarded as a prime market for exports of Iranian goods.

U.S. sanctions could prove a roadblock to achieving all its potential should they persist, but will not halt Iran’s economic progress. Iran and world powers have conducted six rounds of talks in Vienna to restore the country’s 2015 nuclear deal, which, if successful, would see U.S. sanctions lifted.

Iran’s previous bids for SCO membership were blocked because of UN sanctions, and some members, including Tajikistan, opposed it due to Tehran’s perceived support for the Islamic Movement of Tajikistan.

But at the Dushanbe Summit last year, Iran signed eight agreements with Tajikistan. The two countries set a target of US$500 million for annual bilateral trade. During a speech at Dushanbe, Iranian President Ebrahim Raisi denounced “unilateralism” by the U.S. and called for a concerted effort to fight  sanctions. SCO member states have been reluctant to entangle themselves in Iran’s rivalries, so at Dushanbe, they admitted Saudi Arabia, Qatar and Egypt as “dialogue partners” in a balancing act.

The volume of trade with the national currencies of Iran, Russia, and China has been modest even after decades of discussing de-dollarization, and efforts to launch an alternative financial messaging service to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) global financial network are underway.

This round of expansion testifies to the SCO’s rising global influence and the principles of the SCO Charter being widely accepted. The SCO expansion is not akin to that of NATO, which is being expanded in the shadows of the Ukraine crisis. The expansion of NATO is different because the SCO is a cooperative organization based on non-alignment and not targeting a third party, while NATO is based on a Cold War mindset. The SCO believes one should not build its security at the expense of other countries, and NATO is creating new enemies to sustain its existence. SCO members are contemplating ways to adapt to profound global geopolitical changes to make the world order more reasonable.

The process of Belarus’s accession to the SCO has been started at Samarkand Summit. It has had a dialogue partner status since 2010 and observer status since 2015. The new decision does not mean an automatic change in the status of the country. According to the provision on SCO accession of June 11, 2010, an applying country should join around 40 international treaties and make respective changes in the national legislation. It took around two years for India and Pakistan to complete these procedures.

Negotiations will be held on granting the UAE, Kuwait, Bahrain, Maldives and Myanmar the status of dialogue partners.

SCO for India

As a prelude to the Samarkand Summit, disengagement between Indian and Chinese border troops in the area of Jianan Daban opened a window of opportunity for the two sides to engage at the highest level.

India assumed the rotational presidency of the SCO at the end of the Samarkand Summit. Delhi will hold the presidency of the grouping for a year until September 2023. So, next year, India will host the SCO summit. Modi said at the Samarkand Summit that he wants to transform India into a manufacturing hub. He pointed out that there are more than 70,000 start-ups and over 100 unicorns in India, and that the country is one of the fastest-growing economies in the world.

The SCO’s significance for India is heavily based in economics and geopolitics with the Eurasian states. It is a potential platform to advance India’s Central Asia policy. SCO member states are all India’s extended neighborhood where India has both economic and security interests.

The SCO-Afghanistan Contact Group to stabilize the situation in Afghanistan provides India with a vital counter to some other groupings to which it is a member. The SCO provides the only multilateral platform for India to deal with issues related to Pakistan and Afghanistan.

Acknowledging the strategic importance of the region and the SCO, Modi has articulated the foundational dimension of Eurasia as being “secure.” India needs to improve connectivity with Central Asia through the Chabahar port in southeastern Iran, and it seeks to utilize the Ashgabat Agreement to create a stronger presence in Eurasia along with focus on the International North-South Corridor (INSTC).

The Ashgabat Agreement is a multimodal transport agreement between the governments of Kazakhstan, Uzbekistan, Turkmenistan, Iran, India, Pakistan, and Oman to create an international corridor to facilitate transportation of goods between Central Asia and the Persian Gulf. The agreement came into force in April 2016.

India also seeks to use the SCO’s goal of promoting economic cooperation, trade, energy, and regional connectivity to improve its relations with Pakistan and persuade it to unblock India’s access to Eurasia.

Increasing terrorist activities in the region make it imperative for SCO countries to develop a cooperative and sustainable security framework and make the Regional Anti-Terrorist Structure more effective.

A major thorn in India’s engagement with Eurasia remains the denial of direct land connectivity to Afghanistan and beyond by Pakistan. The lack of connectivity has dampened the development of energy ties between the hydrocarbon-rich region and India.

Maintaining its independent diplomacy, India had avoided the trade pillar of the U.S.-led Indo-Pacific Economic Framework (IPEF) meeting in Los Angeles on September 8 and 9. India’s Union Commerce Minister Piyush Goyal cited concerns over possible discrimination against developing economies. India was the only of the 14 IPEF countries, which include Southeast Asian countries, Australia, New Zealand, South Korea and Japan, not to join the declaration on trade. New Delhi is refusing to be cheated so easily by Washington.

Hence, the SCO, like BRICS, is a vehicle for India and China to coexist peacefully in the current era dubbed the Asian Century by many. Towards that goal, the Samarkand Summit is a new milestone.

The author is a business writer at KrASIA and former chief editor of the Indian daily Janmabhumi.