Shanghai Cooperation Organization (SCO): A Potential Source of Regional Economic Integration

The Shanghai Cooperation Organization (SCO), widely regarded as Alliance of the East, is an intergovernmental organization established in Shanghai on 15 June 2001. The SCO at present comprises of eight Member States including China, India, Kazakhstan, Kyrgyzstan, Russia, Pakistan, Tajikistan and Uzbekistan, four Observer States including Afghanistan, Belarus, Iran, and Mongolia and six “Dialogue Partners” including Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey. In the recent decades, Globalisation has appeared as the major trend in international relations and keeps on deepening the relations between countries as well as regions of the world. The speedy growth of contemporary technologies in areas of transport, communications, and information delivery and diffusion is contributing to the formation of a unified international community of states. Collectively the states can fight together to cope with the challenges. In the same way, Regionalisation, the stable procedure of structuring the new forms of dealings between the states by involving the world’s macro-regions, has also appeared to be another primary trend in the growth of global order.

With the passage of time while realizing the need of the time more countries are determined to structure a system of steady ties with their neighbours. This trend and formulation not only enhance their own potential but also facilitate the regional entities by searching out the solutions of the emerging challenges. All Such regionalisation has taken gradually more varied forms. Regional integration is one of the more evident purposes of all such forums. This regional integration includes institutionalization of supranational regulatory systems, more stretchy models of collaboration in a range of areas that advance at diverse speeds and at different levels as well as new varied type models of partnership. The aims and objectives of such partnerships are scrutinized first and foremost by the requirement to deal with the regional tribulations by paying attention to the frequent desire for dialogue. This way the regional entities can find out the ways and approaches to attain equally advantageous and sustainable development for the whole region.

It is imperative to highlight that partnership within the SCO vary from a conventional coalition. One of the most significant consequences of the SCO summit in Astana in June 2017 was the appointment of India and Pakistan as full-fledged SCO members. This way, both countries became unconditional signatories to all documents of SCO and are committed to contribute productively to strengthen the cooperation within the framework of the Organisation. Altogether with the inclusion of four nuclear powers China, Russia, Pakistan and India, the SCO has become a forum to support for maintaining international strategic stability. On the other hand the forum is also known as a foundation stone of the Eurasian continent.

SCO is an influential transcontinental organization extending from the Arctic in the north to the Indian Ocean in the south, and from Lianyungang, China in the east to Kaliningrad, and Russia in the West. This also shows the impact which this organization has with regards to geographical boundaries. The SCO was initially envisaged as a multifaceted organization with three levels of collaboration which are the foundations of this forum. These include cooperation in politics and security, cooperation in trade and economic activity, as well as cooperation in the development of cultural and humanitarian ties.

SCO’s ultimate goal is the growth and prosperity of the population living under the jurisdiction of this organization.

As the world is experiencing major reconfigurations at the financial fronts and the international economy has a direct link with the mounting instability and doubts, SCO need to come forward with a more productive role in order to produce tangible results. SCO member states jointly have a huge market. The member states have a major portion of the world’s mineral resources, as well as a huge industrial base. Both these fields are highly imperative and helpful while implementing successful and mutually beneficial trade and economic projects. The legal framework of the organization consisted of 122 documents associated to the economy. The major purpose of these documents is to facilitate communication between the states on trade, banking, financial and investment activities, manufacturing, agriculture, transport, telecommunications, customs, and the progress of tourism.

To further enhance the trade and financial activities substantial efforts are needed under the umbrella of this forum to guarantee the projects related to Multilateral Trade and Economic Cooperation of the Member States. The member states have already signed numerous international agreements regarding banking and financial activities and the improvement of business, agriculture, as well as tourism. The Organisation is also emphasizing on the formation of SCO Development Bank as well as a Special Account that would offer financial help for project activities. With the inclusion of Pakistan and India, the two important Asian states,

SCO has become the world’s leading trans-regional alliance in terms of the total area, population, and monetary prospective of its member states. The entrance of the new and influential states unlocks the door extensively to new prospects.

All these prospects are basically additional support to further augment development of the infinite potential of the “Shanghai Eight” in all areas of life pertaining to mutual interest within the organization as well as in the international arena. The SCO has around 30 diverse mechanisms that have developed over the years with the help of the founding members and the support of those included later. It is also pertinent to mention that SCO put together all of its resolutions through consensus. Become accustomed to these beforehand recognized formats and operational methods of communication is not an effortless task, it also requires alteration and evaluation with the passage of time while adapting the contemporary trends.

In 2018, with the joint efforts of the member states the “Big Eurasian Eight” has revealed that SCO is competent enough to develop and progress in retort to the necessities of the time, altering realities, and objective needs. The SCO has evidently been growing the economic aspect of its cooperation in recent years. The 2018 summit in Qingdao confirmed this tendency. The Organisation is vigorously increasing support related to trade and investment, transport, infrastructure, agriculture, as well as custom services. Without any doubt the organization is amalgamation of manufacturing clusters, including high-tech and science-intensive centres.  The member states hold the full range of mineral affluence. This further makes it easy for SCO to formulate any type of production cycle, from the removal of raw materials to their processing with a high degree of additional value.

The notion of collaboration of the SCO member states in the field of environmental protection was agreed by the Council of Heads of State, is an imperative step to enhance cooperation in the field of environmental administration.

Due to their geographic proximity, the economies of the SCO member states affect one another as their regional economic agreements and shared programs within the Organisation’s framework are the basis of their progressive combined growth. This year marks the 20th anniversary of the founding of the Shanghai Cooperation Organization (SCO), and the intergovernmental organization is anticipated to see another expansion by giving way the status of dialogue partners to Saudi Arabia and Egypt, a verdict that was agreed at the recent meeting of the SCO Council of Foreign Ministers in Dushanbe, Tajikistan.  Financial cooperation is one of most significant pillars of the framework, through which regional security can also be successfully endorsed. Amid hasty withdrawal of US and NATO forces from Afghanistan and the ongoing spread of the coronavirus as well as the West’s speedy hegemony, it is vital for SCO members to hasten the layout of collaboration for mutual development and progress the industrial chain association of the region. SCO has contributed immensely in the areas of economy and trade. In 2018, the total trade volume among the member states reached 255 billion US dollars, a year-on-year increase of 17.2 percent.

Furthermore, in the 2019, China’s total investment in SCO member states exceeded 87 billion U.S. dollars. Numerous large-scale energy-related, mineral and industrial manufacturing projects have made advancement.  According to the IMF report, in the next five years (up to the year 2023), the economic potential in the SCO region will exceed that of the G7 economies. During the first five months of 2021, trade between China and Central Asian countries remained $16.86 billion, up 24.5 percent year-on-year. A multimodal transportation center in Qingdao confirmed 297 trips by China-Europe freight trains, among which 243 connected China and Central Asian economies, up 57 percent. The freight trains also opened a portal for SCO members to enter the Asia-Pacific market.

Beside the endorsement of Belt and Road Initiative (BRI), investment among the SCO member stated has also increased.  For example, China has become the chief source of investment for Tajikistan, with a cumulative investment exceeding $2 billion.  More prominently, the economies under the SCO have enormous potential to further discover collaboration in rising areas, such as new or green energy, digital trade as well as the health sector in contemporary scenario.  During the pandemic, the e-commerce among the member countries extended quickly in the region. Profound transformative procedures are visibly unfolding in this remarkable Eurasian region. The development of Asia will further strengthen the trend towards the structuring of a regional system based on economic interrelations and mutual interests.

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About Saima Zaman 40 Articles
Writer is the Assistant Editor ‘Mélange int’l Magazine’, ‘The Asian Telegraph’ & Project Coordinator (COPAIR); a degree holder in communication & media sciences.