The SCO — the largest union in Eurasia

Russian President Vladimir Putin, as part of his speech in Samarkand in 2022, noted that “today the SCO is the world’s largest regional organization”, which “does not stand still and continues to develop progressively…”

What is the SCO

The Shanghai Cooperation Organization is a permanent intergovernmental international organization, the establishment of which was announced on June 15, 2001 in Shanghai (PRC) by the Republic of Kazakhstan, the People's Republic of China, the Kyrgyz Republic, the Russian Federation, the Republic of Tajikistan, the Republic of Uzbekistan. It was preceded by the Shanghai Five mechanism.

In 2002, at a meeting of the Council of Heads of State of the SCO Member States in St. Petersburg, the Charter of the Shanghai Cooperation Organization was signed, which entered into force on September 19, 2003. This is the basic statutory document that fixes the goals and principles of the organization, its structure and main activities.

Currently, the SCO in various statuses includes:

• 9 member states: India, Kazakhstan, China, Kyrgyzstan, Pakistan, Russia, Tajikistan, Uzbekistan, Iran (joined the SCO in July 2023).
• 3 countries have observer state status — Afghanistan, Belarus, Mongolia.
• 9 countries are SCO dialogue partners — Azerbaijan, Armenia, Egypt, Cambodia, Qatar, Nepal, Saudi Arabia, Turkey, Sri Lanka.

In 2022, at the Samarkand SCO Summit, a procedure was launched to join the Organization in the status of a dialogue partner state with respect to Bahrain, the Maldives, the United Arab Emirates, Kuwait, and Myanmar. It was also announced the start of the procedure for granting full membership to Belarus.

The SCO has established partnerships with such international organizations and structures as the CIS, ASEAN, CSTO, APEC, ESCAP, UNODC, IWC, UNESCO, OCHA, FAO, CICA, WTO (World Tourism Organization), EEC, LAG.

The SCO+ format was initiated by the United Russia party; in October 2020. This format includes inter-party interaction not only of the countries of the Shanghai Cooperation Organization (members, observers, candidates), but also of the CIS and BRICS countries. The format was first used during the international inter-party forum SCO + "Economy for the people" October 22 & 23, 2020. The forum was attended by speakers from 25 countries, ministers of the SCO countries, ambassadors and diplomats of the CIS and BRICS countries.

The territory of the SCO covers both the European and Asian continents, the region is rich in colossal reserves of natural resources, and after the accession of India and Pakistan, the Organization, uniting 44% of the world's population and 2/3 of the territory of Eurasia, has also become the most capacious consumer market in the world .

Main goals of the SCO:

• Strengthening mutual trust, friendship and good neighborliness between Member States;
• promotion of their effective cooperation in the political, trade, economic, scientific, technical and cultural fields, as well as in the field of education, energy, transport, tourism, environmental protection, etc.;
• to jointly ensure and maintain peace, security and stability in the region;
• moving towards the establishment of a democratic, just and rational new international political and economic order.

Acts on the basis of the SCO Charter.

Control structure

The supreme body — Council of Heads of State — members of the SCO. In addition, there is a Council of Heads of Government. The mechanisms of meetings at the level of heads of the following ministries and departments are used: security agencies, ministries of foreign affairs, defense, economy, culture, health, education, transport, emergencies, science and technology, agriculture, tourism, industry, energy, poverty reduction , sports, law enforcement and judicial authorities. Coordination within the framework of the SCO is carried out by the Council of National Coordinators. The organization has two permanent bodies — The SCO Secretariat in Beijing and the Executive Committee of the SCO Regional Anti-Terrorist Structure in Tashkent, whose leaders are appointed by the Council of Heads of State for a period of three years.

SCO: economic cooperation

Despite the fact that initially the "Shanghai Five" was formed solely to ensure security in the border regions, already in 1998 at the summit in Alma-Ata, the parties to the negotiations announced the need to strengthen and encourage cooperation between the member countries of the organization in all spheres of the economy. And in the declaration on the creation of the SCO in 2001, the expansion of economic cooperation was already singled out as one of the priorities of the organization. In order to develop regional trade and economic cooperation, in the same year a memorandum was adopted on the goals and directions of cooperation between states in the field of economy and on the beginning of creating favorable conditions in the field of trade and investment. The importance of cooperation in this area was also emphasized in the 2002 SCO Charter.

In 2003, the program of trade and economic cooperation of the SCO member countries was adopted, which determined the goals and priority areas of economic cooperation within the organization. In the short term, it was planned to increase the flow of goods in the region and create favorable conditions for investment, and as a long-term goal, the idea of ​​creating a free trade zone on the territory of the SCO was put forward.

In 2004, an action plan for the implementation of this program was approved, highlighting specific projects for economic cooperation within the organization. Transport, energy, agriculture were named priority areas for the development of cooperation.

At the summit in 2005, special attention was paid to the need for cooperation in the development of oil and gas fields and the construction of gas and oil pipelines.

In 2006, the SCO Business Council was established, which brings together representatives of the business community of the organization's members to stimulate economic cooperation by establishing a dialogue between the financial circles of the SCO member states and promoting international economic projects. In the same year, the Interbank Association was established, which included the Development Bank of the Republic of Kazakhstan, the Settlement and Savings Company of the Republic of Kyrgyzstan OJSC "RSK Bank", the State Development Bank of the People's Republic of China, Vnesheconombank of the Russian Federation, the State Savings Bank of the Republic of Tajikistan "Amonatbonk" ; and the National Bank for Foreign Economic Affairs of the Republic of Uzbekistan, in June 2018, Khabib Bank Limited became a member of the IBO. (Pakistan, since 2015 had the status of a partner bank), in June 2019, the Indian Infrastructure Finance Company (IIFCL) joined the Agreement.

The main areas of activity in the format of the Interbank Association were the provision of financing for the implementation of projects focused on infrastructure construction and export-oriented sectors of the economy and the promotion of economic ties between SCO members. Projects implemented within the framework of the Interbank Association are both proposed at the government level and initiated by the banks themselves. Moreover, almost all projects are carried out on a bilateral basis.

The Intergovernmental Agreement on Cooperation and Mutual Assistance in Customs Matters, adopted in 2007, provides for:

• simplification of customs clearance of goods and movement of vehicles;
• recognition of customs means of identification (seals, seals, stamps) and forms used by each other's customs documents;
• mutual simplification of the procedure and conditions for the transit movement of goods and vehicles through the territories of the SCO states.

The 2019 Memorandum between the customs services of the SCO member states on the mutual integration of national transit systems will make it possible to unify the principles of functioning of national control systems for transit goods, which will significantly speed up the implementation of customs operations. In pursuance of this document, Russia and China have introduced a mechanism for mutual recognition of the results of customs control, and have established the exchange of images from inspection and screening complexes. The plans include organizing the exchange of information on the customs value of goods.

Also, Russia in a bilateral format implemented with Tajikistan, Uzbekistan and China one of the advanced customs technologies — "Simplified customs corridor". In the future, the possibility of launching a similar project with India is being considered.

One of the latest documents regulating the transport sector was the Program of Multilateral Trade and Economic Cooperation of the SCO Member States until 2035, which implies the achievement of the task of balanced development of an efficient transport infrastructure and expansion of the scope of digital technologies and intelligent systems in transport.

SCO Energy Club

In 2006, Russia initiated the creation of the SCO Energy Club.

"The participation of such key members of the Organization of the Petroleum Exporting Countries (OPEC) as Saudi Arabia and Iran in the activities of the SCO and their recent decision to resume bilateral diplomatic relations may contribute to the transformation of the SCO Energy Club into a global player, which is an additional stabilizing strength in the international oil market, — notes Professor NRU HSE Shamil Enikeev. — This becomes especially true in conditions when the countries — members of the G7 trying to change the market mechanisms of oil price formation in their favor by setting artificial price ceilings for energy resources».

Thus, by now, the Business Council and the SCO Interbank Association have been established within the framework of the SCO, favorable conditions have been provided for economic, trade and investment cooperation of the SCO member countries.

The size of the economies of the SCO member countries is about 30% of world GDP, and about 40% of the world's population lives on their territory. As noted by the Chinese edition of Global Times, from 2001 to 2021, the total GDP of the member countries of the organization grew by almost 13 times. The total volume of foreign trade of the SCO member states as of 2021 amounted to $6.6 trillion, which is 100 times more than in 2001. It is expected that by 2030 this figure may increase to 35-40% of global GDP.

One Belt, One Road

One of the important economic projects for the SCO countries was the Chinese initiative "One Belt and One Road"; (OPOP). The project involves the "revival" the historical Silk Road from Asia to Europe, integration and development of regions through the creation of large-scale infrastructure.

"One Belt, One Road" — a transcontinental long-term policy and investment program aimed at developing infrastructure and accelerating the economic integration of countries located along the path of the historical Silk Road. The initiative was introduced in 2013 by Chinese President Xi Jinping.

Silk Road Economic Belt

The Silk Road Economic Belt represents a long-term vision for the development of infrastructure, interconnections and economic cooperation of Eurasia and covers six corridors, namely:

1. Economic Corridor — New Eurasian Land Bridge (NELBEC)
2. China Economic Corridor — Mongolia — Russia (CMREC)
3. China Economic Corridor — Central Asia — Western Asia (CCWAEC)
4. China Economic Corridor — Indochinese Peninsula (CICPEC)
5. Bangladesh — China — India — Myanmar Economic Corridor (BCIMEC)
6. China Economic Corridor — Pakistan (CPEC)

Maritime Silk Road of the 21st century

The 21st century Maritime Silk Road connects China with Southeast Asia, Indonesia, India, the Arabian Peninsula, Somalia, Egypt and Europe, spanning the South China Sea, the Malacca Strait, the Indian Ocean, the Bay of Bengal, the Arabian Sea, the Persian Gulf and Red Sea.

Polar Silk Road

On January 26, 2018, the Information Office of the State Council of the People's Republic of China released a document called China's Arctic Policy, which calls for active participation in Arctic affairs. The document is a blueprint for China's Arctic strategy and its ambitions to develop the "Polar Silk Road".

According to the concept, the One Belt, One Road initiative is based on five priority areas of cooperation:

1. Policy coordination (promoting intergovernmental cooperation, multi-level intergovernmental mechanism for macro policy exchange and communication)
2. Communication of buildings and facilities (improving the relationship between infrastructure construction plans and technical standards systems)
3. Free trade (reducing investment and trade barriers, promoting regional economic integration)
4. Financial integration (monetary policy coordination and cooperation, creation of financial institutions)
5. Connections between people (cultural and academic exchange and dialogue, cooperation with the media).

"Participation in the implementation of the One Belt, One Road Initiative" allows the SCO countries to match also the strategies of national socio-economic development — with a strategy for regional and global development. The Belt and Road, according to experts, can beneficially link the platforms of the SCO, ASEAN, the EAEU and the European Union into a single regional territory of prosperity, — said SCO Secretary General Vladimir Norov in 2019.

Thus, the SCO — it is a global player in the global economic arena. Buying or selling your business in the SCO countries is an easier and more cost-effective way to enter international markets, as business in these countries will develop rapidly. However, before making such a purchase or sale, a thorough analysis and assessment of all risks and opportunities should be carried out, and this work should be entrusted to the appropriate specialists. One of such professional teams operating in the international market, — this is Russian-Eurasian Business Broker (REAB).