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4 July 2016

The Eurasian giant. Whose interests does the SCO serve?

What unites three billion people with nuclear weapons

Numerous integrational projects, inspired primarily by Moscow, aimed at preserving its influence on the former Soviet republics were born and died prematurely within the post-Soviet space following the collapse of the USSR. Who still remembers the Central Asian Cooperation Organization (CACO), for example, replaced by the Eurasian Economic Community (EAEC)? When did you last hear about the Union Treaty between Russia and Belarus? All of these organizations turned out to be unsustainable – the Baltic states joined the EU, and Ukraine, Moldova and Georgia are seeking to follow suit. Out of all of these projects, the Kremlin has only been relatively successful in forming and launching the Customs Union (joined by Russia, Kazakhstan, Belarus, Kyrgyzstan and Armenia). However, it has now also withdrawn into the shadow of successes of the SCO (the Shanghai Cooperation Organization). Although the majority of its members represent the former USSR, the driving force behind it is not Moscow at all, but rather Beijing.

The Shanghai Eight

The SCO was formed in the late 1990s as a platform for settling territorial disputes between the Celestial Empire and Russia as well as Central Asian republics. That is why “the Shanghai Five” was its initial incarnation – an organization which consisted of Russia, Kazakhstan, Kyrgyzstan and Tajikistan, bordering on China, as well as the People’s Republic of China itself. Uzbekistan later joined the organization and the SCO existed as “the Shanghai Six” for fifteen years until June this year when the accessions of India and Pakistan were finally formalized during the anniversary summit in Tashkent. New Delhi and Islamabad will participate as full members of the organization at the next meeting of SCO leaders to be held next year in Astana. Iran is the next in line. Afghanistan, Belarus and Mongolia have observer status at the SCO whereas Egypt, Syria and Israel have applied for the status of dialogue partner. Sri Lanka, Cambodia, Nepal, Armenia, Azerbaijan and Turkey are currently dialogue partners.

Given its geographical parameters, the SCO is the largest international organization of its kind today. It spans more than half of the Eurasian continent – the total population of its member states, four of whom have nuclear weapons, comprises nearly half of the world’s population and its total GDP exceeds that of all the EU countries combined.

The 15th anniversary summit in Tashkent, covered by Russian official media who published triumphal reports, coincided with the referendum in which the subjects of Elizabeth II voted in favor of leaving the European Union. This gave Russian media professionals a chance to juxtapose the two events and move “the Eurasian key player” away from Brussels.

The Silk Road works in mysterious ways

But it seems that Moscow does not stand a chance of becoming “the Eurasian key player” although it is the capital of the only SCO country which has not previously been a colony in the past (China of the era of “gunboat diplomacy” can hardly be regarded an independent power). Presumably, the SCO’s longevity has only been possible due to the fact that the organization was built to serve China’s interests in the first place. The only real economic project discussed within the organization which corresponds to its scale today is the establishment of the Silk Road Economic Belt (SREB) which China needs in order to supply goods to the European markets with minimal losses.

Of course, the benefits of the project can be enjoyed by all of the interested parties under certain circumstances, although it remains somewhat unclear what the new Silk Road is going to look like. Back in March of this year, Russia promised to furnish China with a list of its investment projects in Russia developed under the EAEC format and the commencement of joint work in this direction was officially announced in May. However, there had indeed been no alternative to the Russian Trans-Siberian Railway as the main corridor for the supply of Chinese goods to the West until 2015, whereas options such as the Trans-Caspian corridor (China – Kazakhstan – Azerbaijan – Georgia – Turkey – EU member states) and supplies through Iran bypassing the Caspian Sea have since emerged.

The Russian route still appears more attractive today but only as far as its European section goes. Obviously, the Asian Silk Road will traverse the territory of Kazakhstan and not Russia’s Far East and Siberia, contrary to what Moscow believes. The figures confirm this: the volume of transit traffic from the East Asian countries (primarily from China) to Europe via Kazakhstan more than doubled between 2012 and 2014: from 39.1 to 91.5 thousand tons whereas transit via Western Siberia rose by as little as 4.4 thousand tons (from 68.7 to 73.1 thousand tons) and by as little as 0.8 thousand tons (from 4.6 to 5.4 thousand tons) via Russia’s Far East. At the same time, the Russian section of the highway “Western Europe – Western China” remains merely a pipe dream of officials: despite all the bilateral agreements, work on designing the highway is yet to start.

Despite purely geographical aspects, China will focus on the most-favored trade regime for obvious reasons while extending its economic expansion towards the West. Previously, China repeatedly advocated the establishment of a free trade area within the SCO to which Moscow responded by detailing its great reservations. Russia believes it is too early to speak of that, and this attitude is understandable since a cheap Yuan creates competitive disadvantages for domestic producers. On the other hand, Kazakhstan agreed to establish free economic areas in large cities straddling railway lines.

In turn, countries interested in the increased competitiveness of the Trans-Caspian Corridor – Azerbaijan, Georgia, Kazakhstan and Ukraine – also introduced preferential tariffs along this route earlier this year and since Russia is enmeshed in geopolitical projects whereas other countries are building roads and developing new routes in preparation for the flow of goods from the Celestial Empire, Moscow’s chances of securing all of the key sections of the new Silk Road ebb away.

Stability zone

However, interests of SCO countries are not solely limited to economics. The declaration adopted by the participants of the Tashkent summit also reflects purely political issues. For example, the SCO calls for “the speedy establishment of peace and stability in Afghanistan”, “the need to preserve unity, sovereignty, territorial integrity and stability in Syria” as well as “the importance of a political solution to the Ukraine crisis based on the diligent performance of the Minsk accords”. These are generalizations, but they should be pleasing for President Vladimir Putin since they do generally reflect the Kremlin’s stances on the above issues.

It must be added though that those who might be expecting the SCO to somehow defend their stances on the abovementioned issues from a position of strength were discouraged by the host of the summit – the irreplaceable President of Uzbekistan Islam Karimov who, at some point, left the CSTO (the Collective Security Treaty Organization) – the only military bloc created by Russia on the post-Soviet space. Karimov urged members to maintain the non-bloc status of the SCO. His words will presumably only strengthen the status quo. It is simply impossible to imagine that the organization can be transformed into a military-and-political alignment of any kind given its present composition.

First and foremost, China opposes the establishment of supranational EU-like bodies (the European Commission, European Parliament or ECB) and what’s more, the new members of the organization – India and Pakistan – which are in a state of a protracted conflict – are unlikely to want to surrender any sovereignty. Moreover, the SCO Development Strategy for 2025 does not provide for “the formation of a military-and-political union or economic integrational alignment with the formation of the supranational governance institutions” (the organization’s secretariat is the only permanent administrative body as of today).

But even given the territorial issues which complicate relations between New Delhi and Beijing and Islamabad and New Delhi, the SCO countries can be united in one respect – countering the so-called “export of color revolutions” while keeping an eye on developments in Iraq, Afghanistan and Syria. There is great fear concerning possible regime changes which are openly totalitarian in their nature in the majority of SCO countries, and representatives of the member states have repeatedly expressed this fear. Therefore, the notorious “regional stability” of which the SCO wants to become a guarantor can simultaneously constitute grounds for stable economic development in the case of some countries such as India and promote the preservation of the existing systems of power in others (all of the post-Soviet members of the organization). By their nature, such regimes are simply incapable of full-fledged international cooperation based on free market principles since they are, as a rule, mired in corruption and exert huge pressure on their economies and this alone brings the prospects of the organization into question since the majority of its members have not moved beyond the Soviet system of governance.

Incidentally, Soviet-made cars were not allowed to be driven in Tashkent during the summit following a decision by the authorities – most probably in order to avoid embarrassing summit guests with their appearance. This was also perhaps a measure aimed at demonstrating the full might of the contemporary Uzbek automotive industry, famous for its “Nexias” and “Matizes”, which is illustrative of the way issues are settled in the SCO. 

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