On 8-9 June, the 18th Summit of the Shanghai Cooperation Organization (SCO) was held in Qingdao, China. As a result, the leaders of participating countries adopted a declaration consisting of 17 documents. The summit was marked by the fact that India and Pakistan participated for the first time as full-fledged members of the organisation.
The SCO was founded as a permanent intergovernmental international organisation, which currently includes eight countries: China, India, Kazakhstan, Kyrgyzstan, Pakistan, Russia, Tajikistan, and Uzbekistan. There are four observer states, six dialogue partners, and four guest attendances. The Declaration on the creation of the SCO was signed by the initial six members in Shanghai on 15 June 2001.
The main aims of SCO are:
• To fight terrorism, separatism and extremism;
• To engage in energy partnerships;
• To engage in economic, scientific, and cultural partnerships;
• To foster stability and safety.
Joint Comprehensive Plan of Action (JCPOA)
The events of recent months have demonstrated a significant increase in global tension regarding nuclear weapons issues. The first is connected to the US withdrawal from the ’Iran nuclear deal’ or Joint Comprehensive Plan of Action (JCPOA) endorsed by UN Security Council in 2015. The second is associated with nuclear tests in North Korea. The positive results of the US-North Korea summit (12 June 2018) inspired confidence in peaceful development related to North Korea, but the Iranian deal remains in uncertain. When addressing global security and peaceful development it is necessary to take into account economic reasons for preserving the JCPOA. The US’s decision to withdraw made some European companies leave the Iranian market to avoid facing US regulations and sanctions.
EU Foreign Affairs Representative, Federica Mogherini, said that “This deal is not a bilateral treaty. It’s a UN Security Council Resolution and it belongs to the entire world,” and continued “It is exactly when the things don’t go well that rationality, calm, predictability, respect, dialogue are the most needed to avoid the worst-case scenarios, to avoid conflict to spiral out of control” during a meeting with British, French, German, and Iranian foreign ministers in Brussels on 10 May 2018.
The participation of Iranian President Hassan Rouhani at the 2018 SCO Summit was aimed at saving the JCPOA and developing a comprehensive strategic partnership with China in the fields of energy and infrastructure, which ended with the signing of the bilateral MoU within the framework of the Belt and Road Initiative. Included in the MoU was the agreement to use national currencies in trade exchanges.
World Trade Organization Rules
Chinese President Xi Jinping said that the countries of SCO are against trade protectionism and support the strengthening of a transparent and non-discriminatory multilateral trading system. In 2017, China proposed to focus on financial sectors, trade, and the creation of an SCO free trade zone. In Xi’s opinion, every member of the SCO should support the credibility and effectiveness of WTO rules. He added:
“All parties will continue to work in line with the principle of mutual benefit to improve regional economic cooperation arrangements, enhance the Belt and Road cooperation and complementarity of our respective development strategies, deepen cooperation in business, investment, finance, connectivity and agriculture, advance trade and investment facilitation, and foster new prospects for integrated development of the region to deliver benefits to our people and add fresh impetus to global growth.”
The prospects for the creation of an SCO Bank
In 2010, China put forward the idea of establishing an SCO bank. If the SCO sets up its own Development and Investment Bank, it will help members of organisation meet their countries’ funding needs. According to Liu Huaqin, Director of the Chinese Academy of International Trade and Economic Cooperation under China’s Ministry of Commerce – “SCO member states have reached basic consensuses in setting up the bank, like what the BRICS did. The only difference now is on its operation model and they will ultimately clinch an agreement”.
During a meeting of the regional security bloc of the SCO, Xi announced that China would offer the equivalent of 30 billion yuan ($4.7 billion) in loans under a framework of the Inter-Bank Consortium of the Shanghai Cooperation Organization (SCO).
The Quigdao Summit is not an isolated event in Xi’s strategy for international economic cooperation. Some of the initial steps took place at the Davos Forum in 2017 and continued with Boao Forum for Asia 2018. In addition to the economic factor, Xi laid the theoretical foundation for cooperation and promoted the ideas of “a new type of international relations” and “a community with a shared future for humanity”.
A road map for action
Following the SCO Summit, the heads of state adopted the Qingdao Declaration. The Declaration contains 17 documents that relate to cooperation between members states and combatting the drug trade, epidemics, and pollution. Among the documents is the Action Plan for 2018-2022, focused on the implementation of the terms of the declaration, including long-term ‘neighbourliness, friendship, and cooperation’. Another of the documents addressed cooperation in fighting terrorism, separatism, and extremism in 2019-2021.
Special attention was paid to economic cooperation between the SCO countries in the declaration. The countries plan to examine the prospects of expanding the use of national currency in trade and investment activities. The SCO summit participants also signed a memorandum agreeing to mutual understanding to promote cooperation in the field of micro, small, and medium-sized businesses. The members of the organisation also intend to develop cooperation in the field of tourism.
All members of the SCO agreed to turn theoretical strategies into action. Xi Jinping noted the strength of unity and mutual trust amongst member states, respecting each other’s chosen paths of development and accommodating each other’s core interests and major concerns. He stressed that collaboration and discussion are the key points in the development of the SCO’s economic component, which has become more vital.