Shanghai Cooperation Organization and Caspian Development
Erica Johnson
Co-director and Managing Editor of of Eurasia Policy Studies
The National Bureau of Asian Research
Executive Summary
March 2002
Topic
The states of Central Asia and the South Caucasus have development challenges that demand intra-regional cooperation, and they require the participation of major regional powers such as China and Russia to provide much-needed investment, technology, and access to markets. Territorial disputes among ethnic groups and the resulting refugee movements, increasing narcotics and weapons trafficking, water shortages, and terrorism create the imperative for cooperation across segments of society throughout Central Asia and the South Caucasus. At the same time, the unequal distribution of oil and natural gas wealth creates incentives for cooperation, as well as competition, within the region, especially because the states that are richest in energy resources are landlocked and their export routes must traverse the territory of their energy-poor neighbors to reach international markets. The dynamics of cooperation and competition among the Caspian states-on the official and nongovernmental levels-have clear economic, political, and cultural implications that will vitally condition sustainable development in the region.
Yet, in the past decade, the success of formalizing this cooperation has been marginal at best. The Confederation of Independent States, the Central Asian Economic Community, the Eurasian Economic Community, the Conference on Interactions and Confidence-Building Measures, and the Shanghai Five, now the Shanghai Cooperation Organization, are among the organizations that have been established to facilitate regional cooperation and promote mutual trust. For the most part, these organizations have limited influence in regional policymaking, or are now defunct. The Shanghai Cooperation Organization (SCO), however, has emerged as an especially intriguing case, with implications for both regional and global stability.
Founded in 1996 as the Shanghai Five, the forum evolved from efforts to develop confidence-building efforts and settle border disputes between China and the Central Asian states of Kazakhstan, Kyrgyzstan, and Tajikistan. Although Russia was officially a member of the organization, the Central Asian states were wary of Russia's intentions and most border negotiations took place bilaterally between the individual Central Asian states and China. As the mechanisms for developing dialogues and contacts were tested, the member states became increasingly willing to expand contacts beyond military ties, and, at the group's third meeting in July 1998, cooperation was expanded to include economic and political issues as well. The July 1998 meeting was also pivotal because it was the first time the organization took on a truly multilateral nature. For the next three years, promoting peace, stability, and development and combating terrorism, drug trafficking, and other criminal activities in the region were stated as important goals of the organization.
In June 2001, with the addition of Uzbekistan as a member, the Shanghai Five was formalized and renamed the Shanghai Cooperation Organization, with the expressed goals of encouraging effective cooperation in politics, trade and economics, continuing confidence-building in the military arena, combating the destabilizing forces of radical Islamic movements, and maintaining peace, security, and stability in the region. Although members of the group are quick to point out that the Shanghai Cooperation Organization is not an alliance and is not aimed at any third parties, the formalization of the group in June 2001 in an effort to construct a Russia-China bloc that would limit U.S. activity and influence in the region and statements against the U.S. deployment of a national missile system raised questions about the shifting balance of power in Eurasia, especially as India, Pakistan, and Iran were considered for membership.
In its first five years of existence, the Shanghai Five/SCO proved itself to be an effective forum for increasing communication among the region's heads of state and officials in various offices and at various levels within their respective governments. It also proved effective at consolidating activities among member states. The forum achieved remarkable success at delineating territorial borders, which historically is a major cause of conflict throughout the world. In all, 7,000 kilometers of borders were resolved quickly and smoothly through the mechanisms of the Shanghai Five. While little change in the region's bilateral trade has occurred in the organization's history, deeper economic integration will ultimately result from improved governmental and nongovernmental ties and will increase the prospects for stability in the region. Likewise, improved energy and transportation routes are likely to result from increased cooperation, which is imperative for the landlocked energy-rich Caspian states.
Since the September terrorist attacks on the United States and the resulting U.S. military presence in Central Asia, the future of the SCO is in question. All the SCO member states are on board as partners in the U.S.-led war on terrorism, but, despite the fact that combating terrorism was identified as one of its primary goals, the SCO has not been evoked in the war efforts. The SCO states, and especially the Central Asian countries, now have unprecedented access to bilateral ties with the United States, and interregional ties to Russia, China, and other Caspian neighbors pale in comparison to the promise of U.S. investment capital and other resources. In addition, domestic weaknesses facing each state prevent a more determined commitment to the collective goals. Nevertheless the accomplishments of the SCO to date, and the challenges to development that continue to necessitate those regional ties, give optimism that the SCO will continue to evolve-at least until a new, more effective multilateral regional structure is developed to replace it.
Methodology
Aside from a spattering of reports in the media, few in-depth studies have been conducted on the nature of the Shanghai Cooperation Organization and its implications for regional development or U.S. policymaking. Media reports have ranged from dismissing the SCO as a loose alliance against U.S. plans to develop a national missile defense system to allegations that it is a Chinese-led anti-U.S. axis, but little has been done to assess the type of cooperation that has manifested, the types of competition and internal challenges that remain inherent to the organization, the resulting changes in trade volumes between member states, and the remaining obstacles to greater regional cooperation, especially as additional countries are considered for membership. A comprehensive examination of the SCO is timely and essential.
To inform this analysis, I have predominately used media reports from American, Russian, and Chinese (in English translation) newspapers. In addition to occasional newspaper articles directly addressing the SCO, I relied on the extensive body of scholarly literature examining Russian-Chinese relations and the relations of Russia, China, and western countries with the individual states of the Caspian region. These analyses, however, primarily focus on bilateral relations between Russia, China, or western countries and the states of the Caspian region rather than multilateral efforts at regional development. Finally, a great deal of valuable information comes from websites devoted to Caspian region development and international relations (such as Eurasia.net and Harvard University's Central Asia Conflict Prevention Initiative.) In addition, the website of the Shanghai Cooperation was an important resource. Future work on this topic will benefit from interviews with leaders in the member, and potential member, countries.
Policy Recommendations
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Although the differences among the member states, and among the members and would-be members, may prevent the organization from becoming more like an alliance, the accomplishments of the SCO to date have proved that it is capable of efficiently and effectively enhancing communication and consolidating activities among members. Although the SCO has not been evoked in the U.S. efforts against terrorism, the organization should not be dismissed as ineffective or defunct.
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The biggest weakness faced by the SCO is the internal instability and weakness of its member states. Domestic problems impede the members' abilities to focus on collective stability. Nevertheless, the SCO has the potential to be an effective multilateral instrument to promote regional development and stability. U.S. policy should therefore cautiously encourage continued regional cooperation through the SCO or other multilateral efforts.
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To some extent, the Shanghai Cooperation Organization is further manifestation of the emerging Russia-China "strategic partnership." Although both Russia and China recognize the need for solid relations with the United States, scenarios could arise in which Beijing and Moscow use the SCO to militate against U.S. political and economic interests in the Caspian region. If, as Beijing stated in summer 2001, the SCO is an effort to construct a Russia-China bloc in Asia and if an anti-U.S. sentiment is consolidated within the group, U.S. policymakers must consider the shifting balance of power in Eurasia.