Security group stumbles forward

Nov. 11, 2011 - Robert M Cutler - atimes.com

MONTREAL - The Shanghai Cooperation Organization (SCO) summit in St Petersburg this week concluded with only a little progress in advancing a key infrastructure development project for Afghanistan - a US$2 billion electricity transmission project - and even less on expanding the group through the upgrading of four observer states to full membership.

The heads of government from the six members - China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan - were in attendance, along with representatives from the four official observer states - India, Iran, Mongolia and Pakistan. Two "dialogue partners" - Belarus and Sri Lanka - were also represented, along with Afghanistan, which was given the status of "special invitee".

The SCO-Afghanistan Contact Group was established in 2005 for the purpose of assisting in reconstruction and assuring stability in Afghanistan. The meeting's concluding joint communique emphasized "the need to pay priority attention to sorting out the socioeconomic issues in Afghanistan, including the reconstruction of communications and public infrastructure."

Russian Prime Minister Vladimir Putin announced, in the run-up to the summit, that an "Energy Club" would be established inside the organization; but no such new formal structure was announced. According to Putin, the club would concentrate on projects such as the proposed 1,000-megawatt Central Asia-South Asia (CASA-1000) electricity trade and transmission project, which would construct a power transmission line from Tajikistan and Kyrgyzstan into Afghanistan and Pakistan. He pledged Russia to supply one-quarter of the estimated $2 billion cost of this project.

For the realization of such projects, all parties are awaiting what Russian President Dmitry Medvedev earlier called "necessary organizational decisions" on the part of the two South Asian countries.

The CASA-1000 project would provide electricity from hydropower sources to Pakistan and Afghanistan mainly in the summer, with Pakistan receiving about three-quarters of the total. In this context, Russia also appears willing to help with the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline - Gazprom has in the past expressed interest in assisting in its construction.

SCO economic cooperation has not moved forward on CASA-1000 until now due to a conflict between China and Russia over the means for promoting it, Russian newspaper Kommersant reported last week. China has sought to create a special fund inside SCO; Russia wishes to promote the instrumentality of the Eurasian Development Bank (EDB).

The EDB is a nominally self-standing international institution established in 2006, headquartered in Almaty, with as members Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan - that is, all five members of the Russian-led Eurasian Economic Community (EurAsEC) plus Armenia.

In the event, the summit's final communique reported that the SCO members "confirmed [their] support for establishing [both] the SCO Special Account and [an] SCO Development Bank", without giving further details. This finely worded statement stops short of declaring either of these instrumentalities to have been actually established.

The SCO's Business Council and its Interbank Consortium were also mentioned in the context of implementing multilateral development projects and increasing financial cooperation. Agreement among the members on the modalities for proceeding remain under dispute. "Consideration of possible funding mechanisms for such projects will be expedited", the communique said, signifying the absence of agreement as of yet.

Reading between the lines, no autonomous cooperation on finance and trade among the SCO countries is foreseeable in the near future, as the parties agreed only to continue "using various [other] international economic platforms" for "the practice of staging special events under the SCO auspices".

The SCO's Interbank Consortium, rather than being a cooperative private-sector entrepreneurial organ, is very likely instead the "interstate reserve bank" proposed by Kazakhstan, that is, an instrument for cooperation among the central banks of the organization's member states. As the communique put it, agreement was reached "to consolidate financial and monetary systems among member states [so as] to increase the state-owned finance institutions' capital adequacy ratio and liquidity".

Expectations in various quarters that any of the four observer countries would be co-opted into full membership of SCO were not met. The joint communique at the end of the meeting revealed that the current members of the SCO remain unable to agree the financial and administrative prerequisites and juridical bases for co-opting new members.

Although it "called for further expansion of cooperation with the SCO observer states", representatives of the organization's two most influential members, Russia and China, said independently in the margins of the conference that they did not foresee any cooperation with the United States in the SCO context.

Bearing in mind that at present the main global conflict is geo-economic rather than purely power-political, the SCO is not far from giving itself the vocation to consolidate a revisionist bloc in the classical diplomatic sense, that is, a bloc seeking revision of the status quo that emerged from the end of the Cold War.

It is not, however, by any means a defensive alliance (which by definition requires a ratified treaty naming a potential aggressor), although it has some aspects of a Sino-Russian entente. China's position is complicated, like the USSR's during the Cold War, by the fact that it also has a stake in the preservation of at least some significant aspects of the existing international order, which it would like nevertheless to transform.

The revisionist aspect of the SCO's overall present profile, however, emerges also from inspection of the short list of other international organizations with which it has sought and signed memoranda of understanding for cooperation: aside from the Association of Southeast Asian Nations and the United Nations Economic and Social Commission for Asia and the Pacific, its links with other international organizations are, with one exception, exclusively with institutions of the Commonwealth of Independent States family. The one exception is the 10-member Economic Cooperation Organization, headquartered in Teheran.

Dr Robert M Cutler (http://www.robertcutler.org), educated at the Massachusetts Institute of Technology and The University of Michigan, has researched and taught at universities in the United States, Canada, France, Switzerland, and Russia. Now senior research fellow in the Institute of European, Russian and Eurasian Studies, Carleton University, Canada, he also consults privately in a variety of fields.

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