Partnership, cooperation for co-prosperity, has been the cornerstone of interaction within the Organisation. In the current conditions of the SCO, it is important not only to preserve this principle, but also to give it additional strength and energy, to move from extensive to intensive development. The current moment requires just such an approach, writes Rashid Alimov, SCO Secretary-General in 2016–2018.
Since the beginning of the 21st century, the world has been changing rapidly, without slowing down even before dangerous turns. The Ukraine crisis and unprecedented political, sanction-related, economic and informational pressure on Russia from the United States and a number of other countries have made these changes irreversible. However, the so-called “end of history” heralded by Fukuyama never came. Instead of the “end”, we are witnessing the beginning of a “new history”. The system of international relations that existed before the crisis is fading away, as is the attempt to recreate a unipolar world. Making predictions about what a multipolar world would be like is a thankless task. Only one thing is clear: the process of its crystallisation will not be easy, and may even be painful. Hope remains that the emergence of a renewed system of international rules and institutions will happen without a worldwide catastrophe. The inadmissibility of such a scenario, in particular, is reflected in the Joint Statement of the Leaders of the Five Nuclear-Weapons States, adopted on January 3, 2022, which states that a nuclear war should not be unleashed, since there can be no winners.
The large-scale sanctions and restrictions which have been imposed against Russia affect not only the Russian economy, but that of the entire world, and threaten the existing system of world trade. The freezing of the assets of the Central Bank of Russia, and earlier of Iran, Syria, Venezuela and Afghanistan, is increasingly pointing to the unreliability of Western financial structures. At the same time, we observe not only the sanctions boomerang effect, but also, in fact, the self-destruction of globalisation. One gets the impression that the initiators of the sanctions, by their illegal actions, are trying to split the world into two blocs, with all the ensuing consequences that are difficult to predict. The current situation poses a number of issues, both tactical and strategic, for each country and international organisations. If the search for answers at the national level is mainly associated with the development of anti-crisis socio-economic measures, then at the regional level it is connected with the need to coordinate joint activity and develop a collective response to new challenges and threats that have arisen in connection with the Ukrainian crisis.
This approach is especially relevant for the Shanghai Cooperation Organisation, which brings Russia, China, India and Pakistan together with Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. In 2021, at the Dushanbe Summit, a historic decision was made to launch the procedure for admitting the Islamic Republic of Iran into the organisation.
There is every reason to expect that in September 2022, at the SCO summit in Uzbekistan, Iran will become the ninth member of the Organisation. In addition, as we know, the SCO “family” includes Azerbaijan and Armenia, Afghanistan, Belarus and Egypt, Cambodia and Qatar, Mongolia and Nepal, Saudi Arabia and Turkey as observers and dialogue partners. The applications of a number of other states for establishing partnership relations with the SCO are in their final stage of consideration. Cooperation between the SCO and the UN and its specialised agencies is developing. Cooperation between the Shanghai Eight, the Eurasian Economic Union and the League of Arab States is being established.
From a geostrategic point of view, the SCO member states are united by a common desire for independent, progressive development amid modern international realities. In addition to various aspects of geopolitical, geo-economic and civilisational factors, the fact remains that out of nine de jure and de facto nuclear powers in the world, four — Russia, China, India and Pakistan — are members of the “Shanghai Eight”. Its global profile and existing potential allow the SCO to play an exceptionally active role in the international arena, including with respect to issues concerning the further improvement of the global economic governance architecture. The statistics confirm this. According to the World Bank, the total GDP of the SCO member states plus Iran in 2020 amounted $19.58 trillion. The share of the Shanghai G8 (plus Iran) in global GDP reached 23.1% in 2020, up 0.7% from pre-pandemic 2019.
It is important to say that the SCO member states stand for the joint formation of an open world economy based on the rules of the multilateral trading system, maintaining the credibility and effectiveness of WTO rules, and preventing any unilateral protectionist activity in international and regional trade. At the same time, much has been done within the framework of the Organisation in its twenty-year history in terms of creating favourable conditions for the development of trade and investment necessary for the gradual implementation of the free movement of goods, capital, services and technology.
There are different ways to assess the SCO goals in the economic sphere. Expectations from the partnership within the framework of the Organisation from the first days of its creation have always been overestimated, taking into account the combined economic potential of its member states. As the SCO transformed from a regional organisation into a transcontinental association and transitioned into being an independent factor in the international arena, hopes for an early “economic miracle” in the SCO region often gave way to pessimistic moods. At the same time, few people noticed that thanks to joint efforts, by 2021 the total trade turnover between the SCO member states plus Iran exceeded $651 billion. Judging by the fact that trade between the SCO countries (plus Iran) accounts for 10.25% of the total foreign trade turnover of the SCO countries, the potential for sustainable development is quite large. At the same time, Russia has been an important trading partner for all SCO member states, and a key partner for its Central Asian countries.
Such results have been largely achieved through the development of transit potential in the SCO space, and the development of an agreed system for managing transportation across the territory of the SCO member states. This complex and capital-intensive work took at least a decade. Purposeful work has been done developing transport interconnectedness and creating effective economic transport corridors, and the formation of an integrated transport management system continues. Along with the development of international highways, the projects for the construction of the Mazar-i-Sharif-Herat and Mazar-i-Sharif-Peshawar railways, as well as an Uzbekistan-Kyrgyzstan-China route proceed; these can become key links in regional routes.
Cooperation in the field of industry and industrial cooperation within the framework of the SCO, as well as interaction between the SCO countries in the field of energy, is gaining momentum. This is a new, but exceptionally important direction for the SCO countries, which received a green light at the Dushanbe summit in 2021. It is worth recalling, for example, that according to OPEC, the oil reserves of the SCO “family” countries amount up to 619 billion barrels, or 40% of all proven oil reserves on Earth. For comparison, OPEC countries account for 79.9% of the world’s oil reserves. The export of crude oil and oil products by the SCO “family” countries is almost comparable to the export of oil by the OPEC countries — 20.3 million barrels / day (29.1% of world exports) against 23.2 million barrels / day supplied by the oil cartel (33.2 % of world exports). At the same time, the SCO is ahead of OPEC in terms of oil production — 43.9% of oil is produced in the SCO “family” countries (37.1% in OPEC). Also, more than 1/3 of the world’s oil refining capacities (34.6%) are concentrated in the SCO “family”, which is almost three times higher than the capacities of refineries in the OPEC countries (12.1%). Not to mention the fact that the SCO countries have half of all natural gas reserves on Earth (50.1%). It should also be noted that 35.1% of the world’s gas reserves or 1.39 trillion cubic meters are produced in the SCO space, and the share of the countries of the “family” of the SCO in the world export of natural gas is 20.9% (259.7 billion cubic metres). In other words, the SCO “energy club” has enormous reserves to support the sustainable development of the vast Eurasian region and the world.
At the same time, it is important to emphasise that the SCO countries are in favour of the widespread use of renewable and alternative energy sources, the use of various cost-effective and environmentally friendly technologies that reduce humanity’s negative impact on the environment and contribute to energy security and the transition to cleaner and more environmentally friendly energy sources.
In the context of the crisis in Ukraine, the question of the coming food crisis is being raised again, now with renewed vigour, at all levels. Moreover, this topic is hotly discussed even in such industrialised countries as France, where they have not excluded the introduction of ration cards. Does this threaten the SCO countries? Objective statistics say the following: according to the Food and Agriculture Organization of the United Nations (FAO), in 2020 the SCO countries produced 4.24 billion tonnes of crops and livestock products out of 11.19 billion tonnes produced worldwide (almost 38%). In particular, the SCO accounts for 53.5% of world rice production, 31.6% of meat (including 23.5% of poultry production, 42.6% of pork, 17.8% of beef), 51.2% of wheat, 29.2% of sugar, sugar beet and cane, 27% of corn, and 10% of soy. The share of the products of the SCO countries in the world export of food products is also quite significant. For example, the share of the SCO countries in world sugar exports in 2020 was 12.5%; they exported 42.9% of rice, and 21.9% of wheat. The numbers speak for themselves, as does the food security collaboration that includes the development of the Concept of interaction between the SCO member states in the field of “smart” agriculture and the introduction of agro-innovations, as well as measures aimed at reducing poverty.
In the current crisis conditions, the SCO faces the need to critically analyse and take a fresh look at the state of cooperation in the trade, economic, banking and financial spheres. First of all, we are talking about increasing the efficiency of the Interbank Association and the SCO Business Council, expanding the possibilities of using national currencies in practice in mutual settlements between the SCO member states, strengthening ties between the financial markets of the countries of the region and international banking institutions, and removing all barriers to establishing business contacts between the business community, especially small and medium-sized businesses. It is important to actively involve the Asian Infrastructure Investment Bank, the Trade and Development Bank of the Economic Cooperation Organisation, the Astana International Financial Center and other financial and banking structures in joint activities, as they contribute and promote sustainable development and the economic integration of the Eurasian region. The illegal sanctions imposed by the United States and its allies against the Central Bank of Russia and other Russian banking structures, their disconnection from international payment systems, and other illegitimate restrictions speak in favour of the urgent need to create our own financial mechanisms within the SCO. Keeping your money in someone else’s wallet is always unreliable, and in modern conditions, as practice shows, it is also dangerous, since the money can be illegally expropriated.
Consultations on the establishment of the SCO Development Bank and the Development Fund (Special Account) of the SCO within the framework of the Organisation have been going on for more than a year. There is a common understanding of their necessity, especially in providing financial support for project activities. All that remains is the political will to ensure that these financial mechanisms are created and begin to operate, which will make it possible to finance multilateral projects. It is worth recalling that it took only three years to create the BRICS New Development Bank: the idea of creating the Bank was put forward by India at the IV BRICS Summit in Delhi in 2012, the political decision to establish the Bank was made at the 5th BRICS Summit in Durban, South Africa in 2013, and the Agreement on the New Development Bank (NDB) was signed on July 15, 2014 on the first day of the VI BRICS Summit in the Brazilian city of Fortaleza. Since the launch of its operations, the NDB has been steadily increasing its project activities and has already allocated about $30 billion to finance projects in the BRICS countries. This example is more than remarkable.
There are other ways. China and the Eurasian Economic Union (EAEU) are consulting on the creation of an independent international monetary and financial system. Saudi Arabia and China are discussing mutual settlements for oil in yuan. India and Russia are exploring the possibility of moving to trade settlements in rubles and rupees, while the Chinese yuan, which since October 1, 2016 has been an integral part of the IMF’s currency basket and is used in settlements around the world, can be used as the base currency. The use in foreign trade (primarily within the SCO) by not one but several currencies, including national ones, may be attractive to all participants in the SCO association. Such an approach will provide not only freedom of choice, but also freedom of action. It’s not about abandoning something that is established and familiar. First of all, we should talk about the adaptation of the SCO to the current situation, which, apparently, will determine the development of the world economy and trade for many years to come. On the whole, it is important to speed up trade, economic and investment cooperation within the Organisation. Only such an approach will ensure the alignment of national development strategies and long-term plans for the stable and accelerated development of the region.
When creating the Organisation, the heads of state identified development through security as a priority area of SCO activity. Achievements here include the existing high level of interaction between the ministries of defence and law enforcement agencies; the growing authority of the SCO Regional Anti-Terrorist Structure and regular joint Anti-Terrorist Exercises. The dramatic developments in Afghanistan, especially after August 2021, have demonstrated how important these aspects of the SCO’s activities are. It is obvious that the Afghan problem will be on the agenda of the SCO for a long time, although against the background of the events in Ukraine, the topic of Afghanistan has disappeared in the news feeds. It is difficult to predict what scenario will develop in this country, when left to the mercy of fate by the United States. The future of Afghanistan is in the hands of the Afghans themselves. However, it is obvious that the Afghan factor will remain an important external link for the development of the SCO for a long time to come.
The complex Afghan problem also has a drugs-related component. This threat is no less dangerous than the terrorist threat emanating from Afghan territory. Political instability in Afghanistan has driven opium prices up, nearly doubling their levels in May 2021. The promises of the new authorities in Kabul to stop the production of opiates turned out to be empty, like many other promises: in 2021, the volume of opium production in Afghanistan increased 8% to reach 6.8 thousand tonnes. According to UN experts, this growth means that 320 tons of pure heroin will reach markets around the world. In 2021 alone, opiate production generated between $1.8 billion and $2.7 billion in profits, and their sale outside of Afghanistan generated even more revenue. Needless to say, the drug threat emanating from the territory of Afghanistan, as another heavy “legacy” of the twenty-year stay of US and NATO troops in that country, requires an additional consolidation of the efforts of the SCO partners. One of these steps could be the creation of a special anti-drug structure of the SCO — a kind of operational headquarters for the fight against narcotics trafficking.
After the events of August 2021, at its summit in Dushanbe (September 16-17, 2021), the SCO clearly and unequivocally expressed its vision for the future of Afghanistan. It is important to say that despite active efforts on a bilateral basis, not a single SCO member state deviates from the developed consolidated political position, which, incidentally, formed the basis of the related UN Security Council resolution, where Russia and China are permanent members. Taking into account the position of the Shanghai Eight, it will create favourable conditions for the involvement of Afghanistan in regional transport and infrastructure projects, which will be an important contribution to ensuring peace and economic recovery in this country.
At the dawn of the 21st century, the realisation of the need for a collective response to transnational threats coming from the territory of Afghanistan led to the creation of the SCO. The crisis in Ukraine, which is of a systemic nature, dictates the need to deeply and comprehensively analyse the whole range of new challenges and threats that may have an impact on the development of the SCO region. The emphasis, as a matter of priority, along with security issues, must be placed on cooperation in the field of economics and trade, so that it meets the new external and internal realities. It is expected that the next SCO summit, which will be held in early autumn this year in Uzbekistan, will become a new turning point in the activities of the SCO, which will continue to make a significant contribution to peace, cooperation and development in the vast region of Eurasia and in the world.
The Shanghai Cooperation Organisation entered its third decade against the background of tectonic shifts in the world. In a constantly changing international environment, the Organisation has always gone its own way, moving towards its goals. From the outside, perhaps this movement might not seem as fast as we would like. At the same time, we should recognise that over the past two decades, the SCO has managed to acquire internal strength and external attractiveness. At the same time, the Organisation has never positioned itself as anti-Western, despite the constant attempts to present it as such. Partnership, cooperation for co-prosperity, has been the cornerstone of interaction within the Organisation. In the current conditions of the SCO, it is important not only to preserve this principle, but also to give it additional strength and energy, to move from extensive to intensive development. The current moment requires just such an approach.