the SCO is witnessing increasing interest from the developing nations and one of the near-term issues concerns the possible expansion in the organization’s membership in the coming years as well as the possible creation of SCO development institutions. Valdai Club Programme Director Yaroslav Lissovolik writes on the SCO’s transition of the SCO towards a more economy-focused organization.
In the first half of 2022 the focus of the developing nations was mostly centered on the issues around the expansion of the BRICS grouping, with a number of large developing nations expressing the desire to join the BRICS bloc. There was also significant progress in advancing the BRICS+ initiative with the BRICS summit bringing together a record number of countries as participants in the BRICS-plus format. In the second half of 2022 the focus is shifting towards Eurasia and the discussions within the Shanghai Cooperation Organization (SCO). As was the case with BRICS earlier this year, the SCO is witnessing increasing interest from the developing nations and one of the near-term issues concerns the possible expansion in the organization’s membership in the coming years as well as the possible creation of SCO development institutions.
In terms of the expansion in the ranks of SCO one of the most significant additions in the near term will be Iran that is expected to become a full-fledged member of the organization during the 2023 India’s chairmanship. Another potential member in the process of accession is Belarus. There may also be an elevation in the membership/partnership status of countries such as Turkey, Sri Lanka, Cambodia, Nepal, Azerbaijan and Armenia (currently dialogue partners of the SCO) – some of these countries may acquire observer status in the organization. Furthermore, the status of SCO dialogue partners may be accorded to countries such as Saudi Arabia, Qatar and Egypt in 2022, while the launching of procedures related to granting such status to Bahrein and Maldives may also take place this year.
Looking further ahead there may be a need for the SCO to forge closer ties with countries from South-East Asia, most notably ASEAN. Closer cooperation with such heavy-weights as Indonesia, Vietnam and Malaysia would notably boost the economic potential of the organization. There may also be a rationale for creating a separate track within the SCO for building ties with the regional integration groups and development institutions of Eurasia such as GCC, BIMSTEC, EAEU, ASEAN, etc.
The creation of several such tracks of partnership could be brought under the umbrella of SCO+ format, that could provide flexible modalities for Eurasia’s developing economies to build cooperative ties on the basis of “country-to-country” or “region-to-region” partnerships. The SCO+ format could also transcend the limits of Eurasia and include partnerships between SCO economies and the regional groups and countries from other continents.
Apart from the expansion in membership the SCO is to undergo a transformation towards an international organization that is more focused on economic cooperation. It needs to allow for economic alliances to be forged by developing economies across the wide expanses of Eurasia – this could enable the SCO to become the key platform for the assembly of the Greater Eurasia.
To facilitate this transition towards a more economy-focused organization the SCO needs to explore the possibility of creating its own development institutions such as the SCO development bank. This would enable the SCO to play a crucial role in financing infrastructure connectivity projects that are sizeable in scale and indispensable for the many land-locked economies of Eurasia. Indeed, of all of the continents Eurasia harbors the greatest number of landlocked economies, some of which such as Kazakhstan, Mongolia, Afghanistan are among the largest landlocked economies in the world.
The SCO development bank could work closely with other regional development institutions in Eurasia such as the Eurasian Development Bank as well as the BRICS New Development Bank. The latter has several regional centers in Eurasia that could actively cooperate with the SCO development bank in building joint portfolios of infrastructure projects. The expansion in the membership of the SCO development bank could constitute part of the SCO+ formatalong the same lines as the rising membership in BRICS NDB may be considered as forming part of the BRICS+ process. Perhaps most importantly, the creation of a SCO development bank could provide an important platform for boosting the use of national currencies in mutual trade and investment among the Eurasian developing economies.
In the end, the assembly process of partnerships and alliances across Eurasia within the SCO framework is clearly picking up speed. Strategically, it will be important to bear in mind the benefits of synchronization in the development of the BRICS/SCO and the BRICS+/SCO+ frameworks. Compatibility between these tracks – a global platform for developing economies (BRICS+) and a Eurasian platform (SCO+) – will serve to render the “alliance assembly” along these tracks mutually reinforcing.