Background

The Shanghai Cooperation Organization (SCO) is an intergovernmental organization founded on June 15, 2001 in Shanghai, by the People's Republic of China, Kazakhstan, Kyrgyz Republic, Russia, Tajikistan, and Uzbekistan. In 2017 India and Pakistan also became members. 

Together the group accounts for almost half the world's population, one quarter of the world's GDP and about 80 percent of Eurasia's landmass. 

The main goals of the SCO are: 

i.strengthening mutual confidence and good-neighborly relations among the member countries 

ii.promoting effective cooperation in politics, trade and economy, science and technology, culture as well as education, energy, transportation, tourism, environmental protection and other fields

iii.making joint efforts to maintain and ensure peace, security and stability in the region 

iv.moving towards the establishment of a new, democratic, just and rational political and economic international order.

Its governance is by consensus and eschews the corporate voting model favored in the West. It makes movement slower, but less fractious. This aspect of governance is difficult for most in the West to understand, as it seems like an open invitation to block anything that goes against self-interest. There is not much understanding of the nuances of "face" and peer pressure that are integral to the Asian sense of negotiation. Be aware, this applies more to the way seasoned political leaders act, not hard driving Asian entrepreneurs. 

Security

To date, much of the foreign perception of the SCO has focused on its military exercises and regional anti-terrorism, separatism and extremism activities. Alarmist suggested that the SCO was attempting to create a new counterweight to NATO. Others have said it's an extension of the Russia and China power relationship, aimed at carving up interest areas, or a deadlocked organization which has outgrown its focus. 

None of these explanations seem to explain the reality of the SCO, especially as it embraces India and Pakistan. So, while there have been five joint military exercises since 2005, there have been none since 2010; more emphasis has been on the intelligence sharing and anti-terrorism, which, according to The Diplomat as of 2017, has foiled 600 terror plots and extradited 500 terrorists. There will be a September 2018 joint military exercise in the Ural Mountains of Russia, but it seems aimed primarily at getting India and Pakistan to work together.  

Stability

As actions speak louder than words, this indicates a clear de-emphasis of the SCO as an offensive, or defensive, military bloc, in favor of its anti-terrorism, separatism and extremism activities. But this is only half the story. Ultimately, it is understood and agreed by all members that the key to regional stability is regional prosperity. A vast area with rich resources and 45 percent of the World's population has only 25 percent of its GDP, 10 percent if you take out China. 

This year the 13th SCO summit in Qingdao will emphasize the fight against terrorism, separatism and extremism, but the long term solutions to this struggle will be settled, not on the battlefields, but in the pockets of consumers and the cash registers of supermarkets and grocery stores. Their future will depend in turn on trucks, trains, ships and airplanes. 

The trade and logistics of the SCO

In 2017 SCO members signed an intergovernmental agreement on facilitating international road transportation which will allow physical access to SCO member countries. As all members have already ratified the UN TIR Convention, this means that bonded sealed containers can now traverse the new roads and rails being built for the Belt and Road Initiative, free from unnecessary inspections and delays. Studies have indicated it could decrease transportation times by 80 percent and cut down on transport losses significantly. So, while China continues its infrastructure investments in its Belt and Road Initiative, the SCO is the means by which goods will be transported to Asia and Europe.

TIR (Transports Internationaux Routiers) is a global customs transit system for moving goods across international borders. For more than 60 years it has been supporting trade and development, by allowing customs-sealed vehicles and freight containers to transit signatory countries with minimal border checks. It is governed by the United Nations TIR Convention and managed by the world road transport organization, IRU. China joined in 2016, and its national issuing and guaranteeing association is the China Road Transport Association, and it  began TIR issuing and guaranteeing activities on  May 18, 2018.

Modi-Xi meeting

While the SCO's quiet advances in trade will be in the background, the foreground will be dominated by the sideline meeting between Xi and Modi, the next chapter of China and India's "informal" visit. The various ministries from both sides have been working overtime and there is expection for a stronger expression of cooperation, as these two consumer market giants realize their interests are more aligned than divided. There may be announcements about the Nuclear Suppliers Group and a rail connection through Nepal, which would link Asia to East Africa and the Middle East.

Summation

Driving this, ironically, is the growing uncertainty about the U.S. administration's direction and policies, as it tries to "Make America Great Again." Unilateral trade tariffs against friends and foes, hostility towards the world's existing order and the lack of clear policy goals, linked to means and methods, have left countries from North America, Central America, South America, Europe, the Middle East, Africa and Asia scratching their heads. 

As business and diplomacy depend on predictability it seems increasingly the rest of the world is forming new political and trade linkages. It is a kind of political and economic realism which is pitting Sino Synthesis, a non-ideological process based approach that uses physical linkages and trade as the basis for stability vs. American Exceptionalism, an ideological tautology which insists on one nation's hegemony.  The SCO is just one part of a new picture that is emerging from the post-Cold War era. It appears to be a multilateral reality which will be an adjustment for some, but hopefully an opportunity for many.

Einar Tangen is a political and economic affairs commentator, author and columnist.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.

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