SCO FOR INDIA, CHINA AND THE WORLD

The global order has to be more reasonable

As the leaders of China, Russia, and India, with the new member Iran, huddled 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, Pakistan Prime Minister Shehbaz Sharif and Iranian President Ebrahim Raisi were among the leaders of the 15 countries at the summit.

Both Xi’s and Modi’s presence were closely watched for the possibility of bilateral meetings on the sidelines of the summit. The last time Xi and Modi were face-to-face and in-person and had a bilateral meeting was in November 2019, during the BRICS summit in Brazil. Both met in an informal summit at Mahabalipuram, India, in October 2019, the second one after they met at Wuhan, in April 2018.

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

Modi with Putin and Xi

This was Xi’s first official trip to a foreign nation since COVID-19. Xi’s last official trip to a foreign country was to Myanmar in January 2020. His last trip outside of mainland China was on June 30, 2022, to Hong Kong to mark the 25th anniversary of the city’s return to the motherland in 1997.

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 Ukraine. Putin expressed Russia's support for the one-China principle, and denounced US provocations in the Taiwan Straits and its attempts to create a "unipolar world."

Samarkand summit saw agreements on connectivity and high-efficiency transport corridors and a roadmap for local currency settlement among member states. It deliberated on the geopolitical situation arising from Ukraine. Besides, the situation in Afghanistan under the Taliban regime was on the table as well since many SCO member countries are neighbours of Afghanistan.

After the signing of the Samarkand declaration, the heads of the SCO countries declared the inadmissibility of interference in the affairs of states under the pretext of countering terrorism. The SCO countries supported the non-proliferation of nuclear weapons and the continuation of nuclear disarmament.

The Samarkand declaration also termed unilateral use of economic sanctions, except those imposed by the UN Security Council, is incompatible with international law principles. The SCO countries emphasized the importance of the soonest inclusive reform of WTO with an 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.”

Uzbekistan and China signed agreements worth a total of US$15 billion in trade, investment and financial and technical cooperation. China, Kyrgyzstan and Uzbekistan also signed a trilateral MOU regarding cooperation on a railway connecting the three countries, while a trial run of the multimodal road-rail link from China to Afghanistan is also being planned.

To further promote the rich cultural and historical heritage of the people and the tourism potential of SCO member states, it was decided to declare Varanasi, Modi's constituency, as the SCO Tourism and Cultural Capital for 2022-2023, the Samarkand 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, Turkey, Saudi Arabia, Qatar and Egypt).

It is a unique plurilateral grouping that holds two summits a year, one at the Heads of State and the other at the Heads of Government level. It is seen by the West as an eastern counterbalance to NATO. The presence of India and China, the world’s most populous countries, makes SCO the organization with the largest population coverage. The SCO accounts for about one-third 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 more as a venue for discussion and engagement where high-level dignitaries from across the region can gather to confer, rather than an alliance like the EU, whose members have a common currency, or NATO. Since its inception, the SCO has mainly focused on regional security issues, and its fight is against 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, war and drugs. It is critical to have an inclusive government in Afghanistan, with representatives from all ethnic, religious and political groups of Afghan society.

Summit

The declaration also condemned terrorism in all its forms and manifestations. Member States reaffirmed the need to step up joint 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 the design and implementation of national development strategies, digital economy plans and the adoption of innovative technologies. It stressed the need to increase mutually beneficial cooperation in the energy sector, including the wide use of renewable and alternative energy sources.

The Entry of Iran

The SCO Samarkand Summit also assumed significance as Iran, for the first time, attended as a full member. The decision to admit Iran was made at last year’s Dushanbe Summit and Belarus has submitted its membership application. This was the first expansion of the SCO after India and Pakistan were admitted to the grouping in 2017.

This marks the first time Iran has become a full member of a major regional bloc since its 1979 revolution. Iran’s bid to become a full member of SCO was approved after almost 15 years. The country had been an “observer member” since 2005. Full membership means linking Iran to the economic infrastructures 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 can be regarded as a market for exports of Iranian goods.

U.S. sanctions could prove to be roadblocks on the way to achieving those potentials 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 it was under United Nations sanctions, and some members, including Tajikistan, were against it due to Tehran’s perceived support for the Islamic Movement of Tajikistan.

Article in China-India Dialogue

But at the Dushanbe Summit last year, Iran also signed eight agreements with Tajikistan’s President Emomali Rahmon. The two 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 members are reluctant to entangle themselves in Iran’s rivalries and at Dushanbe, they also 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 as they have discussed de-dollarization for decades, and efforts are on to launch an alternative financial messaging service to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) global financial network.

This round of expansion shows SCO’s rising international influence and the principles of the SCO charter are widely accepted. The SCO expansion is not akin to that of NATO, which is being expanded in the shadows of the Ukrainian crisis. The expansion of NATO is different as 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 while NATO is creating new enemies to sustain its existence. The SCO members are contemplating how to adapt to the profound changes in the global milieu, to make the global order more reasonable.

The process of Belarus's accession to the SCO has been made at Samarkand Summit. It has had a dialogue partner status since 2010 and an 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 11 June 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 carry out these procedures.

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

SCO for India and China

As a prelude to the Samarkand Summit, the disengagement between India and China in the Gogra-Hot Springs region 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, speaking at the Samarkand summit said 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 mainly lies in economics and geopolitics with the Eurasian states. It is a potential platform to advance India’s Central Asia policy. The SCO member states are India’s extended neighbourhood where India has both economic and security interests.

The SCO-Afghanistan Contact Group to stabilize Afghanistan provides India with a vital counter to some other groupings it is a part of. The SCO provides the only multilateral platform for India to deal with Pakistan and Afghanistan.

Leaders at Samarkand

Acknowledging the strategic importance of the region and 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 wishes to utilize the Ashgabat Agreement for a stronger presence in Eurasia along with a 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 for creating an international transport and transit corridor facilitating the transportation of goods between Central Asia and the Persian Gulf. The agreement came into force in April 2016. Ashgabat in Turkmenistan is the depository state for the agreement.

The SCO has also been involved in building the Vladivostok-Chennai sea route. This sea route covers approximately 5,600 nautical miles or about 10,300 km. A large container ship travelling at the average cruising speed of 20-25 knots, or 37-46 km/hour, should be able to cover the distance in 10-12 days. India is building nuclear power plants with Russia’s collaboration in Kudankulam on the sea coast in Tamil Nadu’s Tirunelveli district. The opening of a sea route is likely to help in the project.

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

The 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.

But China is clearly in the strongest position. Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan have signed on to its Belt and Road Initiative (BRI), and those like Kyrgyzstan and Tajikistan are dependent on Chinese investments. China accounts for 45.3 per cent of Kyrgyzstan's external debt, and China has built a military base there recently. It is to be owned by Tajikistan’s Rapid Reaction Group (Special Forces) with the US$10 million costs financed by China. It will be located in the eastern Gorno-Badakhshan autonomous province near the Pamir mountains. Chinese troops will not be stationed there.  

Loans from China account for 16 -17 per cent of the GDP of Turkmenistan and Uzbekistan.

And Kazakhstan, which borders China’s northwestern Xinjiang Uyghur Autonomous Region, traditionally leaned towards Russia – in January it called on Moscow for assistance to quell mass protests – it is also interested in China and its “deep pockets.” Its support, as a Muslim country, is important for China.

On 25 January 2022,  Xi Jinping hosted the five leaders of Central Asia to commemorate the 30th anniversary of diplomatic relations between China and Central Asian countries. In this Summit, China announced to increase in the trade target between China and the region to USD 70 billion by 2030. A provision of USD 500 million was made to assist Central Asian countries over the next three years in their implementation of “socially significant” projects.  The Central Asian region is rich in natural resources: gas in Turkmenistan; oil, gas and uranium in Kazakhstan; uranium and gas in Uzbekistan; hydropower in Tajikistan and Kyrgyzstan.

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

Hence, SCO, like BRICS, is a vehicle for India and China to co-exist peacefully for the current era to be viewed as the Asian century. Towards that goal, the Samarkand Summit is a new milestone.

This article was published in China Pictorial: http://china-pictorial.com.cn/scos-growing-influence-in-a-multipolar-world

China-IndiaDialogue: http://chinaindiadialogue.com/scos-growing-influence-in-a-multipolar-world

© Ramachandran