The Shanghai Cooperation Organization - Regional Security and Economic Advancement

von Dr. Gudrun Wacker
Working Paper Nr. 8, Peking 2004, Chinesisch, 5 Seiten.


Although many outside observers proclaimed a premature death of the SCO after September 11, these predictions have turned out to be false. On the contrary: we have witnessed an accelerated process of institutionalisation of the SCO since early 2002. And we can interpret the SCO summit in Tashkent this year as the end of one important phase in the SCO’s development. With regular meetings on the ministerial level and the major institutions now in place, namely the Secretariat in Beijing and the Regional Anti-terrorism Structure in Tashkent, the phase of consolidation of the SCO is now completed. The question now is whether the SCO can live up to its ambitious agenda and deliver on its promises.

The focus of my paper will be on the two aspects of the SCO as a regional organization furthering cooperation in the fields of security and economy. So far, the Shanghai-Five (S-5) and its successor organization, the SCO, have devoted most of their efforts to the first field, that is regional security. Enhancing economic cooperation between member states has been on the agenda ever since 1997, but it has not been the major focus of this organization. So the main part of my paper will concentrate on the security issue.

1.From Shanghai-Five to SCO: An evolving agenda

1.1.Territorial conflicts and border delimitation

From the genesis of the S-5/SCO and the development this organization went through, it is clear that border security was the initial motivation for establishing this mechanism between China and those republics of the former Soviet Union that shared a common border with China. To negotiate conflicting claims on the borders and to reduce the costs for securing the borders in terms of human resources (military personnel) and financial means were in the interest of all states involved.

One of the positive results I see, therefore, is that border agreements between China and the former Soviet states have been negotiated and signed over the years after 1992. Even if these agreements did not address and solve all issues of border delimitation left over by Russia’s and China’s Imperial past, the progress that has been made in this respect would have been unthinkable even in the early 1990s. The approach to solving conflicts over border delimitation between China and the states of the former Soviet Union could indeed be considered as a model for other states. Even if no solution was found for the entire border, agreements were signed for those sections where consensus could be reached. The solution for problematic sections was left to later negotiations. In sum, this “piecemeal” approach to solving border problems was rather successful.

1.2.Confidence building measures and troop reduction

The two agreements that were signed during the first and second summits in Shanghai and Moscow – and which marked the real beginning of what was called Shanghai-Five at the time – concerning confidence building measures in 1996 and concerning troop reductions and disarmament along the common borders in 1997 were quite important: Not only did they intend to reduce tension in the border areas, but they were also declared by all sides involved a »model« for the wider Asian region and a modern form of a security arrangement which no longer followed the pattern of the Cold War. It was at the time presented by the S-5 as a “counter-model” to NATO’s eastward expansion and to the renewal of the US-Japanese security alliance which were going on at roughly the same time. Maybe we could say that plans for NATO expansion acted as an external catalyst that accelerated the preparations of these two agreements of the S-5.

For implementing the second agreement, a control mechanism was put into place. I would be interested to hear from our colleagues from the original S-5-countries how they would assess the implementation and effectiveness of this control mechanism over the years.

I would see, however, one central weakness of these two basic agreements: They do only apply to the border area between China and its direct former Soviet neighbours, but they have no effect on the borders between the Central Asian Republics or between Central Asia and Russia. For Uzbekistan, which joined the SCO on the 6th summit in Shanghai, for example, this implies that it committed itself to two agreements which have no consequences at all for Uzbekistan.

Border security can hardly be enhanced by unilateral actions (e.g. by closing borders, erecting fences or mining the border area). Issues of border security should be addressed in a cooperative way(1). It would be a positive development if Central Asian states started to address their border issues by enhancing cooperation along their common borders in a comprehensive way. This could be done within the SCO framework or at least in the "Spirit of Shanghai".

1.3.Fighting the “three forces”

The so-called “three forces” of terrorism, separatism and religious extremism have been on the agenda of the S-5 since the summit meeting in Bishkek in 1999. Afghanistan was identified as a major external source of instability in the region at an early date – long before the terrorist attacks of September 11 in New York and Washington drew the attention of the rest of the world to the situation in Afghanistan.

But despite this fact, the S-5/SCO was in a way caught unprepared by the events of September 11. With none of the planned SCO structures in place, it was not capable to play a decisive role in guaranteeing regional security. Here again, I would see external events as a catalyst that sped up the process of institutionalisation of the SCO: If China and Russia did not want to lose the initiative to the United States, more concrete steps to enhance regional security cooperation had to be taken fast.

Joint military manoeuvres started on a bilateral level 2001 with Kyrgyz and Chinese participation. In August 2003, the first cross-border exercises in Kazakhstan and Xinjiang with broader SCO participation took place. This was the first time for foreign troops to be invited to participate in exercises on Chinese territory(2). Although these exercises were considered a success, there were contradictory statements from commentators from Russia and from other SCO-countries as for the future of these joint manoeuvres(3).

Military exercises of the SCO – as well as those of the Collective Security Treaty Organization (CSTO)(4) – have targeted at large-scale terrorist incursions. But if tactics of the terrorists change to small-scale attacks on buildings and suicide attacks, exercises of military and security forces have to be adapted to the new situation.

The RATS (Regional Anti-terrorist Structure), which had been originally planned to be located in Bishkek, was officially opened earlier this year in Tashkent. It remains to be seen whether it can develop into an efficient instrument to address the security challenges in the region.

A critical note from an outside, or rather Western, perspective: It seems that within the SCO no qualitative difference is made between the so-called “three forces”. In my view, however, it is necessary to discriminate between terrorists on the one hand, and people who pursue a political agenda by peaceful means – even if this agenda happens to be political independence – or who merely express their dissatisfaction by peaceful demonstrations on the other hand. If all these different groups are treated more or less alike and are criminalized, I would see the danger that this will create sympathy and solidarity among the larger population. In the longer run this could bring about a radicalisation of all groups in society. After all, if you are treated in the same way no matter whether you are truly a terrorist or simply express your dissent with official politics, you might as well join ranks with more radical and violent groups.

Moreover, there seem to be different interpretations among the SCO member countries on the issues of terrorism, separatism and religious extremism(5). Does this have to do with the fact that the member states of the SCO are confronted with the “three forces” in quite different ways or is this a sign for the lack of a common vision?

1.4.Fighting narcotics trafficking and arms smuggling

Drugs and arms smuggling as well as other trans-national criminal activities and illegal migration have also been on the agenda of the SCO for some time. At the Tashkent summit in June 2004, an agreement was signed on fighting narcotics trafficking.

Narcotics that are smuggled from Afghanistan through Central Asia, Western China and Russia have led to growing numbers of drug addicts and HIV infections in the SCO member-states. This problem, however, does not only affect the SCO states: Drugs from Afghanistan are ultimately going to the European market(6). This is an issue that can only be addressed by international cooperation and it is also an issue where the SCO and the European Union could look for ways of cooperation since their interests strongly overlap.

1.5.The SCO's relations with other powers, international and regional organizations in the region: Rivalry or cooperation?

One important issue for the future fate of the SCO will be how this organization relates to other powers present in the region, most notably the United States, and how it will shape its relations with other regional and international organizations like the CSTO, NATO or the OSCE.

Observers in the U.S. have usually interpreted the S-5 and the SCO as an effort to counter U.S. influence in Central Asia and in general as an organization with an anti-American stance. And if we look at earlier summit declarations, we can indeed find statements directed at the United States, even if they were not mentioned explicitly: A passage against hegemony and power politics was usually included and – depending on actual developments – there were also critical remarks concerning NATO’s eastward expansion, the unilateral abolishment of the ABM Treaty by the United States or Missile Defence.

However, anti-American rhetoric has disappeared from the declarations issued by the heads of state in the last years. This is certainly due to the events unfolding after the terrorist attacks of September 11: Immediately after September 11, relations between the United States and the Central Asian states improved, Russian President Putin and U.S. President George W. Bush seemed to have become intimate friends and China improved its own relationship with the United States by becoming a member of the coalition against terrorism.

Underlying this trend on the Chinese side are more fundamental changes in foreign policy: Fighting “hegemony and power politics” is no longer topping the list of China’s foreign policy priorities. China seems to have accepted the fact that the world will remain “unipolar” for the time being and to have come to the conclusion that it makes no sense to invest a lot of energy and resources in trying to counter this predominant position of the U.S. Instead, China has started focusing more on its direct neighbours and has launched positive regional initiatives in Southeast-, Northeast- and South-Asia as well as within the SCO framework. These initiatives are also aiming at countering the notion that China’s economic and political rise poses a threat to its neighbours. The strong U.S. (military) presence in Central Asia which was built up after September 11 with Russian consent is – at least officially – not seen as part of an effort to encircle China.

Among Chinese scholars, however, anti-American attitudes have not disappeared. At least, some still interpret the U.S. strategy in Central Asia as an effort to control the region and its energy resources in particular(7).

From the perspective of the Central Asian states, the SCO might be important because it is not clear how sustained U.S. engagement in the region really turns out to be. The U.S. might withdraw from Central Asia after the end of the military campaign in Afghanistan(8), but Russia and China will remain its two big neighbours.

If we look at Central Asia, there are quite a number of regional initiatives with overlapping membership and agendas. In addition to that, international organizations are present in some form or other in the region. Therefore, one question to be raised is how these different organizations interrelate and what the role of the SCO will be within this web of sometimes alternative or even competing organisations. For example: What will be the SCO’s relation with NATO? All member countries of SCO except China are in the NATO Partnership for Peace. The Collective Security Treaty Organization CSTO of the CIS seeks a partnership with NATO(9), while there have been only cautious first contacts between NATO and China. CSTO, in which Uzbekistan does not take part, has a vastly overlapping agenda with the SCO with an anti-terrorism centre in Bishkek and a Rapid Deployment Force in the making(10). All Central Asian states as well as Russia are members of the OSCE, while China is not. How should all these organizations interact in order to enhance the security situation and stability in the region?

2.Economic cooperation: modest beginnings

Starting in 1997, promoting economic cooperation between member countries has been on the agenda of the S-5. The SCO even aspires to develop over time into a regional answer to the challenges of economic globalisation. The SCO envisages a free trade zone for the future. To bring economic prosperity to the region is also seen as a means to fight non-traditional security threats: If one root cause of terrorism and extremism is poverty, fighting poverty will also remove the breeding ground for the "three forces".

Drafting a programme for improving economic cooperation within the SCO rests with the prime ministers of the member states. The first meeting of the prime ministers took place in September 2001 and a memorandum on the basic direction of cooperation(11) was signed. At their meeting in 2003 the prime ministers agreed on a long-term programme "Outline for multilateral economic and trade cooperation of the member states of SCO", identifying the major fields of cooperation as

  • Energy
  • Information
  • Telecommunications
  • Environmental protection
  • Comprehensive utilization of natural resources

Trade and investment facilitation is also high on the agenda to improve cohesiveness of the SCO.

Development of trade between China and the Central Asian republics after 1992 has been very uneven. Russia and China are the two most important trading partners for Kazak hstan (and expected to remain so). If we look at customs statistics, bilateral trade between Kazakhstan and China is a manifold of Chinese trade with all other Central Asian states taken together. As for China’s trade with Russia: Although trade volume has continually gone up in the last years and reached 15 billion $ in 2003, this is still way behind the 20 billion US-$ that had been announced by former presidents Jiang Zemin and Yeltsin as the aim for the year 2000. It has to be noted, of course, that Russia has become the most important source of military equipment for China and thus the main contributor to the modernization of China’s navy and air force.

Meetings of the ministers of communication (as in September 2003), and of foreign trade etc. are supposed to work out concrete projects which would fall under the broad directions of the “Outline” signed in September 2003. Moreover, at the summit in Tashkent in June 2004 it was decided to establish working groups on e-commerce, customs, quality inspection, investment promotion and transportation facilitation(12). In addition to that, an agreement was reached on the future creation of the SCO Development Fund and Business Forum(13).

In general, it can be stated that China is more important as a trading partner for the other SCO member states than the other way round – the U.S., Japan and the EU are the three largest trading partners of China.

Although volume of trade between SCO member states might look quite modest, the share of trade of each Central Asian republic with the other SCO member states constantly ranges between 40 and 60 % up to the year 2003.

On the regional level, the most important thing to do seems to be trade facilitation. Building infrastructure – roads, railroads etc. – as well as harmonizing customs and tariffs will of course take time. The volume of trade between Kazakhstan and China, which are connected by the only railroad between China and Central Asia so far, demonstrates the importance of infrastructure. A “regional transportation pact” would improve the prospects of regional economic integration. At this year’s SCO summit, the presidents of China and Kyrgyzstan discussed road and rail links between their countries. Kygyzstan is willing to open its territory for a railway connecting China’s Pacific coast to Iran’s Gulf coast via Afghanistan(14). An agreement on rail and road construction connecting China, Kyrgyzstan and Uzbekistan was signed in 1998. The project of a highway between China’s Xinjiang (Kashgar) and Tajikistan would also connect Uzbekistan(15).

A recent Chinese article listed several obstacles which are hindering economic integration of the SCO: Besides an unstable security environment and domestic situation in Central Asia, differences in local conditions, in banking systems, in hard currency management and in laws as well as territorial issues and conflicts over water usage were mentioned(16).

Since the broad outline for intensifying economic cooperation within the SCO framework has only recently been finalized, it is still too early to assess the prospects of economic integration. The question here is whether the SCO member states are willing and capable to deal with economic and environmental issues on the regional level instead of bilaterally, especially where competing and conflicting interests are involved.

3.Concluding remarks

With the judicial and institutional framework of the SCO more or less in place, it will now be important to fill this framework with substance. Whether this will be possible depends on many different factors like sufficient financial means(17) or a certain degree of independence of the SCO Secretariat from the foreign ministries(18).

But the most decisive factor will be whether the involved parties see it in their interest to overcome mistrust, to address conflicts in a peaceful way and to develop a common vision for the region’s future development.


  • (1) The latest developments seem to offer a ray of hope: During the meeting of the security ministers in early June 2004, Kazakhstan approached Uzbekistan about an incident at their common border, and as a reaction, the head of the Uzbek Border Service was sacked.
  • (2) Chinese troops did, however not participate in manoeuvres outside Chinese territory.
  • (3) Russian comment: Joint exercises will not become a regular event. Kazakh Defence Minister: Exercises will be held twice annually for interested member countries. See Malia K. Du Mont: „Cooperation 2003“: Style, Substance, and Some Surprises, in: China-Eurasia Forum (online), (September 2003).
  • (4) CSTO: Established in May 2002 (origins: Collective Security Treaty of CIS), charter in force since Sept. 2003, joint headquarters in Moscow, already developed rapid deployment force (1500 troops from 4 battalions) and held several military exercises and anti-drug raids Nov. 2003, registered with UN). See Malia K. Du Mont: That other Central Asian collective security organization – the CSTO, in: China-Eurasia Forum (online), (January 2004), pp.11-14. Moreover: CSTO-NATO interaction easier due to PfP.
  • (5) One example is the different treatment of suspects (Uzbekistan: harsher punishment of suspected members of Hizb-ut-Tahrir (5000 prisoners; Kazakhstan: only 10). See Marat Yermukanov: Uzbekistan conspicuously absent from Central Asian Security Summit, in: Eurasia Daily Monitor (Email), 1 (5 August 2004) 67.
  • (6) It is estimated that up to 90 % of the heroin in Europe comes from Afghanistan now. See A. Jamali: Afghanistan's drug problem requires an international solution, in: Eurasia Daily Monitor (email), 1 (6 August 2004) 68.
  • (7) E.g. Liu Xuecheng: Zhongya diyuan zhanlüe diwei de yanbian yu meiguo de zhengce Evolution of the geo-strategic position of Central Asia and U.S. policy, in: Guoji Wenti Yanjiu, (2004) 4, pp. 46-49.
  • (8) Statements of the U.S. on the duration of their stay have been quite vague so far. See e.g. Roger N. McDermott: Washington vague on U.S. basing plans in Central Asia, in: Eurasia Daily Monitor (email), 1 (6 August 2004) 68.
  • (9) This was announced at the CSTO summit, held on June 18 and 19 in Kazakhstan.
  • (10) In 2004 China and Uzbekistan sent observers to the military exercises of the CSTO for the first time. See Aziz Soltobaev: Collective Security Exercises in Central Asia: Wrong medicine? , in: Central Asia – Caucasus Analyst (online), May 19, 2004.
  • (11) “Memorandum between the governments of SCO member states on the basic objectives and direction of regional Economic cooperation” and “Initiation of the process of trade and investment facilitation”.
  • (12) See: Hu proposes SCO focus on security, economy, in: China Daily (online), June 17, 2004.
  • (13) 20 million $ devoted to 140 projects to enhance infrastructure for economic cooperation. The decision on projects will be made at the next meeting of prime ministers in September 2004. The funds are supposed to come from business circles.
  • (14) See: Hu leads Central Asia security bid, South China Morning Post (online), June 18, 2004.
  • (15) See Sultonbek Aksakalov: A New Silk Road? Tajikistan-China Border Crossing opens, in: Central asia – Caucasus Analyst (online) June 2, 2004.
  • (16) See Chen Yurong: Zhongguo yu Zhongya diqu jingji hezuo China’s economic cooperation with the Central Asian Region, in: Guoji Wenti Yanjiu, (2004) 4, pp. 50-52, 56; here: p. 56. The article also stressed as a factor hampering cooperation that Central Asia is at the centre of competition for oil and gas, and that the U.S. try to control Central Asia's oil and gas resources.
  • (17) The operational budget of the SCO with 3.1 million US-$, of which 2.6 million are for Secretariat, appears to be quite modest.
  • (18) Matthew Oresman: SCO Update: The Official Launch of the Shanghai Cooperation Organization, in China-Eurasia Forum (online), (January 2004), Special SCO Launch Double Issue.

!The Author

Ms. Gudrun Wacker is the head of the research group for Asia at SWP (Stiftung Wissenschaft und Politik-

Deutsches Institut für Internationale

Politik und Sicherheit).