Posts Tagged ‘shanghai cooperation organization’

As usual have been delinquent in posting here. First up in my latest wave of material, a longer piece that has been in the works for a while with the wonderful Niva from the OSCE Academy in Bishkek for my old institutional publication the RUSI Journal. It explores the idea that China might be finally realizing its economic dreams for the Shanghai Cooperation Organization (SCO) through the Digital Silk Road.

Paving the Digital Silk Road with the Shanghai Cooperation Organisation

Largely disregarded or derided in the West, the Shanghai Cooperation Organisation (SCO) has grown since its humble beginnings into an important vehicle for Chinese digital and technology penetration in Central Asia. Raffaello Pantucci and Niva Yau show how China has managed to realise some of the economic goals that Beijing has long envisaged for the organisation, even if it has often found itself stymied by other members. In much the same way as the region has been a testbed for Chinese foreign policy approaches, the SCO now appears to have become a key locus for implementation of the Digital Silk Road.

When the Shanghai Cooperation Organisation (SCO) was founded in 2001, it was widely seen as an organisation focused on countering terrorism. Transformed from the ‘Shanghai Five’ to the SCO in 2001, and followed rapidly by the establishment of the Regional Anti-Terrorism Structure (RATS) in Tashkent, the organisation seemed of its time, reflecting the Global War on Terror launched by the US in the wake of the 9/11 attacks. Yet, while counterterrorism may have been interpreted as the organisation’s initial guiding rationale, each of the members had their own reasons for joining.

While China was clearly interested in the counterterrorism goals linked to Xinjiang that the SCO helped Beijing to achieve in Central Asia, its vision for the organisation was always grander. China’s longer-term aim was to transform it into a body which would aid its own economic, social, security and political penetration across the Eurasian landmass. Through the SCO, China would normalise its role as the major player in Eurasia, something Beijing was most keen to undertake in the economic domain.

Early statements about the SCO and its predecessor, the Shanghai Five, show the importance of the organisation in Beijing’s mind as more than simply a security institution. Seen through China’s eyes, the trajectory of the Shanghai Five to the SCO was one that started with border delineation, but ended with much wider ambitions, including economic goals that extended to realising a new ‘Silk Road’.1 This built on a visit to the region by Premier Li Peng, who in 1994 laid out a vision of infrastructure and economic links tying China to its Central Asian neighbourhood.2 But China has always struggled to realise these goals outside rhetorical statements. Initially, resistance came in the form of neglect, with the others refusing to take the organisation as seriously as China did. Over time, this turned into a more active sense of concern as the other members grew fearful of Chinese dominance – something that became even more acute as the Chinese economy boomed to become the second largest on the planet.

Guests take part in a documents exchange ceremony during the Thematic Forum on the Digital Silk Road, Beijing, April 2019. Courtesy of Xinhua / Alamy

Economic relations are increasingly front and centre with Central Asia and China. The SCO continues to exist but has changed over time. Most recently, it has grown into the digital domain, through which China has managed to dramatically expand its reach. The Belt and Road Initiative (BRI) emerged from the same strand of Chinese policy thinking that created the SCO, and built on a history of Chinese engagement with Central Asia. Starting in Central Asia (where President Xi Jinping gave the speech which inaugurated the concept in 2013),3 the BRI has now grown into a global vision for Chinese foreign policy, which has also landed on the idea of developing a Digital Silk Road (DSR). While the many strands of the BRI continue to exist, it is the DSR which is increasingly seen as the focus of China’s global struggle.

The SCO has also been caught up in this, increasingly moving into the digital domain. As with many other global trends, the coronavirus pandemic has sped up this process. Chinese firms and institutions have increasingly developed their links, interests and influence in this space. It has also provided an interesting set of new conduits to advance China’s attempts to turn the SCO into an economic actor. Pre-pandemic, the SCO was already moving its discussions towards e-commerce and digital and tech engagement, bringing itself into one of the increasingly central spaces of modern societies. Through digital technology, the SCO is at long last appearing to live up to the economic ambitions that China has harboured for it. This article is an attempt to sketch out the evolution of the SCO’s economic role, and to show how China’s Central Asian economic dreams and goals for the SCO are being realised through the DSR.

A New Multilateral is Born

The abrupt collapse of the Soviet Union in 1991 surprised leaders in Beijing, who quickly realised the need for border delineation with several newly independent neighbours. Always a contested space due to its remote and sparsely populated nature, the 3,000-km-long border China shares with the Central Asian states was of particular priority to Beijing as it defined a region, Xinjiang, with which it has a long and difficult history. In 1996, the first significant border security treaty between China, Russia, Kazakhstan, Kyrgyzstan and Tajikistan was reached, a group later termed as the Shanghai Five.4 A year later, China’s concerns about potential separatism in Xinjiang were brought to life when large-scale protests broke out in Ghulja (or Yinning).5 Its proximity to the border with Kazakhstan and the ethnic and community links that spanned the Kazakh–Chinese border highlighted the risks of uncontrolled borders.

While the focus on security and borders was the principal pragmatic concern for China in the Shanghai Five process, Beijing’s long-term strategy in Central Asia was already focused on building a strong economic presence and links. Then Chinese Premier Li Peng had already promoted the idea of reviving the old Silk Road during his tour of Central Asia in April 1994, when he stopped at all the capitals except war-torn Dushanbe. Travelling with Premier Li were a number of Chinese entrepreneurs, who were being encouraged to invest and look at opportunities in the region. Among the most prominent were engineers and executives from the oil and gas sector, who initiated negotiations to develop a natural gas pipeline to bring Turkmen gas across China to Japan, something Premier Li was regularly talking to Japanese officials and executives about back in Beijing.6 The importance of this economic agenda with Central Asia was later highlighted by the announcement in 1999 of the Great Western Development Plan, which sought to develop China’s western regions and boost trade with neighbouring countries.7

In 2001, the Shanghai Five evolved into the SCO, and expanded to include Uzbekistan. Tashkent had remained an observer until that point, lacking the same border delineation logic with China that determined membership of the Shanghai Five. Uzbekistan was also among the most fiercely independent of the Central Asian states, eager to avoid joining any regional or international security institutions. However, a series of terrorist incidents in 1999 and 2000 – which included cross-border attacks by Islamic Movement of Uzbekistan (IMU) militants into Uzbekistan, as well as a series of bombings in downtown Tashkent8 – highlighted the regional nature of terrorist threats to Uzbekistan in particular. This helped to change leader Islam Karimov’s perspective, as well as shape the budding organisation. Initially, the newly minted SCO seemed principally focused on security affairs, with the most visible first practical step being the establishment of RATS in Tashkent in 2004 (after some initial discussion about housing it in Bishkek).9 Counterterrorism provided a useful banner for the region’s leaders to gather around.

However, from a Chinese perspective, economics was always important. Speaking at the SCO’s founding conference, then Chinese President Jiang Zemin spoke of economic and trade cooperation as an important area of activity for the newly born international organisation.10 In 2003, Premier Wen Jiabao again stressed the importance of economic and trade cooperation in the SCO region, and went even further, proposing an SCO free trade zone and various initiatives to rid the region of trade barriers.11 After identifying 127 investment projects to boost regional trade in September 2004, China also proposed financing mechanisms such as an SCO development fund and bank.12

Yet, while the security side of the SCO thrived,13 most of China’s economic initiatives failed to move forwards. Initially, Russia and Uzbekistan were wary of these Chinese projects, fearful of how they could alter regional economic and trade dynamics. Russia was worried about losing influence and markets that it had traditionally controlled, while Uzbekistan under Islam Karimov was a deeply inward-looking power, sceptical of Chinese and Russian initiatives. The other Central Asian powers engaged in the SCO were more welcoming of Chinese economic engagement – Kazakhstan embraced Chinese investment, while traditional aid recipient countries Kyrgyzstan and Tajikistan saw Beijing as simply another source of much-needed aid and investment.

For Russia, resisting China’s greater economic presence meant pushing towards an integrated Eurasian economic bloc that sustained the existing regional dynamic. Initially, Moscow was resistant to such ideas in the chaotic disintegration that came after the collapse of the Soviet Union. Fearful of the economic burden of carrying former Soviet states, Moscow was eager to separate itself from its former dominions in the mess that followed the collapse of the Soviet Union. This was met with pushback from the newly liberated Central Asian countries in particular. While the western-facing part of the Soviet Union was keen to break away, the eastern-facing part was less so. For example, Kazakhstan resisted these efforts, with former Soviet-era leader and then President Nursultan Nazarbayev proposing in 1994 the establishment of a Eurasian Union to continue the economic links across the former Soviet space and avoid the complete collapse of the intra-regional economies that existed.14

A year after Premier Li’s talk of reviving the Silk Road, the first agreements on establishing a unified customs union between Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and Russia were reached.15 However, very little progress was made after this. It took almost two decades for these early treaties to materialise into more specific action, when Moscow saw the value of revitalising them to try to stymie China’s regional economic initiatives and restore some Russian primacy in the region. The result of this belated push has been that China’s regional economic initiatives must work with the Russia-led economic bloc, leading to the cooperation agreement between the Eurasian Economic Union (EAEU) and China in 2018.16 This was largely pushed through by Russia in direct talks between President Vladimir Putin and Xi, with no consultation from the other EAEU members.

All the Central Asian states were sceptical of China’s grand economic proposals to some degree. Kazakhstan, which over time became more confident in building its path to independence from Russia, sought to lead a Central Asian Union. China was seen as an opportunity in this regard, and Astana worked closely with Beijing to quickly finalise the Kazakhstan–China oil pipeline to secure an alternative source of income from the country’s rich energy reserves.17 However, at the same time, Kazakhstan opposed a completely open-door policy to Chinese investments. In 2003, when British Gas decided to sell its portion of the giant Kashagan oil field to CNOOC and Sinopec, KazMunaiGas (KMG), the Kazakh government’s representative in the consortium running the project, blocked the sale. It bought most of the share itself, and divided the rest among other consortium members.18 Kazakhstan has also refused repeated requests to grant Chinese nationals a visa-free regime,19 and has imposed strict employment quotas, joint venture requirements for projects and more – though some of these policies have been loosened over time.

Uzbekistan’s isolationist policy during the Karimov era stood directly against China’s regional economic initiatives, and created direct blocks on some of the proposed initiatives. For example, the Central Asia–China natural gas pipeline from Turkmenistan to China was first proposed in 1994, and it took Uzbekistan (a transit country on the route) until April 2007 to sign up.20 By the early 2010s, Uzbekistan’s perspective was gradually changing. It sought ways to take advantage of the Chinese economic boom, while still retaining tight reins of control. This resulted in some illicit or grey trade, while the government slowly allowed China into some market sectors.21

Kyrgyzstan and Tajikistan have always maintained a certain level of ambivalence, although they have tended more towards seeking to attract Chinese money. On the one hand, as poorer countries, they were grateful for any investment and economic attention, while on the other, they were wary of the unfettered flow of Chinese products, recognising the resultant impediments it would create to domestic economic development. Some Kyrgyz experts and officials favoured joining Russia’s economic bloc to help to better manage the flow of Chinese products, blaming it for the poorly developed Kyrgyz manufacturing industry as it encouraged unsustainable reliance on re-export revenue.22 A similar sentiment is evident in Tajikistan, where local traders and producers have been squeezed out by Chinese products and traders.23

This set of tensions prevented China’s grand regional economic initiatives from coming to life. The proposals of an SCO free trade area, an SCO development fund and bank have all largely stalled – although the development bank idea is periodically raised by the Kyrgyz and Tajik governments, as well as Beijing.24 Instead, China has been restricted to bilateral economic engagement, and the SCO economic initiatives that did take off were confined to promoting dialogue, with regular meetings between economics and trade ministers, banks and business associations through the SCO Interbank Association and SCO Business Council. What trade promoting measures the SCO was able to advance, such as the SCO ‘Agreement on Facilitation of International Road Transport’ that was signed in 2014 and entered into action in 2017, are widely unknown on the ground.25

This narrative has changed in recent years with the arrival of China’s BRI, which has increasingly subsumed and co-opted the SCO’s economic side. When talking about the transport agreement, then Secretary General Rashid Alimov stated that ‘the Agreement is the SCO’s practical contribution to the development and implementation of the Silk Road Economic Belt project’.26 This narrative, where anything economic within the context of the SCO is rephrased to include Silk Road terminology, is increasingly common and has been highlighted once again by the arrival of the DSR.

Approved in 2015 by Chinese President Xi to be part of the BRI, the DSR aims to facilitate information and commercial connectivity through optical cables, satellite passageways, hardware and software, all alongside a long-term interdependence through e-commerce, tech-enhanced security measures and more. Legislation and standards are being increasingly harmonised as the SCO slowly turns digital. Since starting the SCO e-commerce working group in 2004, China’s push for digitalisation in the region has grown in leaps and bounds. In 2009, a unified electronic signature system to ease cross-border trade was developed;27 in 2010, an SCO e-commerce online trading and investment platform was set up;28 and in November 2017, the proposal of an SCO e-commerce industry trade association was made by a delegation including several Chinese e-commerce leaders.29 A month later, for the first time, the development of a regional digital economy joined the list of important tasks identified by SCO heads of state in the joint communiqué released after the 2017 summit in Sochi, Russia.30 After three years of negotiations, cooperation in the digital economy was agreed at the 2019 summit in Bishkek, Kyrgyzstan. Moreover, in the online Moscow Summit of November 2020, the heads of state grouping issued a communiqué on harmonisation and cooperation across the digital domains for commerce,31 IT security32 and counter-radicalisation.33 E-commerce had gone from being a marginal activity to the basis of a core agreement at the organisation’s most senior summit.

Digitalisation: China Builds and Builds

The SCO developed alongside the world’s digital transformation. And, like many SCO activities, security came first. After pinning the 2005 Tulip Revolution in Kyrgyzstan on an alleged US disinformation campaign,34 the SCO issued a statement during its June 2006 summit in Beijing, highlighting the role of information technology in ‘affecting all aspects of national security, including politics, economy, national defense, social culture, as well as the entire international security and stability system’.35 Specific measures were laid out in an SCO Agreement on Cooperation to Guarantee International Information Security, which was signed into action by members in 2009.36 At the same time, the RATS Center in Tashkent had sought to pioneer work on questions around online radicalisation and data protection. Data from member states on terrorist groups and threats was gathered, translated and disseminated.37 Actions included the establishment of a working group targeting cyber security and online radicalisation, which would hold conferences and training sessions, and ultimately led to the first SCO cyber-terrorism exercise in Xiamen in 2015, of which more have occurred bi-annually since.38 All of this took place at a moment when Central Asia started to take cyber security questions more seriously, with both Kazakhstan and Uzbekistan drastically improving their Global Cybersecurity Index score, from 0.19 to 0.79 and 0.17 to 0.68 respectively between 2014 and 2018.39 Exactly what role the SCO played in this is unclear, but it certainly takes place in parallel.

As a landlocked region disconnected from the large international fibreoptic cables, broadband in much of Central Asia is extremely expensive. China has done a great deal to change this. Chinese tech companies are often the most affordable in the region – in part due to Chinese government subsidies to the companies back in China – and have rapidly gained a large presence in Central Asia. It should be noted they were early movers into the region, with Huawei and ZTE having been longstanding players in the region’s digital hardware. Huawei entered the region through Kazakhstan in 1998.40 In 2000, Turkmenistan used ZTE to establish its first dial-up service.41 In 2001, Kyrgyzstan was given $10-million worth of free ZTE equipment via an intergovernmental gift to install a telephone network for 10,000 subscribers in Bishkek.42 By 2002, ZTE was installing a wireless telephone system for Kazakhtelecom, while the Kazakh company chose to use Chinese cables to upgrade its Europe–China internet cabling systems.43 More awkwardly, both ZTE and Huawei signed contracts (likely as part of a wider agreement between the government and local authorities) with the Taliban government in Afghanistan in the late 1990s to establish a digital phone system in Kabul and Kandahar.44

From this early start, they have made dramatic inroads. In Turkmenistan, where there are fewer than 10 operational Chinese companies in total, Huawei has provided around 45% of the country’s telecommunications infrastructure.45 According to StatCounter, an online service that tracks internet usage, Chinese mobile phone providers have made considerable inroads into Central Asian markets. Samsung remains the dominant provider across the region, but Chinese manufacturer Xiaomi has grown to take an ever-increasing market share. In January 2020, the Chinese manufacturer overtook Samsung in Kyrgyzstan, and now controls around 45% of the local market (in comparison to 34% for Samsung, 10% for Apple and 6% for Huawei).46 In all the other markets, Samsung is dominant, with Xiaomi and Huawei together supplying between a quarter and a third of the rest of the market, while Apple and other providers tend to make up the rest.47 This metric is significant when one considers the Western push to reject all Chinese technology.

Looking to the internet and cyber storage infrastructure, companies such as Huawei and ZTE provide a growing proportion of today’s cloud and internet capacity in Central Asia. In 2014, Huawei entered into an agreement with the Karamay local government to create a cloud ‘model city’ to help establish a base for Xinjiang and Central Asian cloud services provided by the company.48 In 2021, ZTE handed a SDM (Subscriber Data Management) platform to Uzbekistan’s

Bee­line, a data centralisation tool that allows for generating analytics, data sharing with third parties, monetisation and many other cloud-based functions.49 Both firms have built large sections of the region’s new cyber infrastructure (3G, 4G and now 5G networks), including establishing factories regionally to build and sell home internet equipment.

Going beyond this, Russia and Central Asian states have in recent years welcomed China’s tech-driven approach to security by, for example, adopting ‘Smart City’ development models and projects with hundreds of cameras in their capitals.50 Some of these deploy Chinese facial and numberplate recognition technology, and all rely on Chinese software and hardware. Some projects, such as Dushanbe’s traffic system, are implemented using official Chinese loans disbursed through the SCO mechanism to purchase Chinese products.51 These local network systems are also offered in didactic institutions, with Huawei in particular offering them to schools and universities across the region.52 While tools such as these are increasingly ubiquitous in major cities around the world, the key question is where the data that is being collected is being stored and how it may be used for China’s national security purposes.

Beyond networks, China has also recognised the role of digitalisation in developing an advanced economy. China’s domestic digital economy is among the biggest in the world, with giant national firms that have increasingly moved outside China. Russia and Central Asian states have also found this increasingly attractive, and have come to favour e-commerce cooperation with China. Alibaba reached more than 20 million active buyers from SCO-participating states in 2017.53 AliExpress Russia, a joint venture between the Russian sovereign wealth fund (Russia Direct Investment Fund (RDIF)), Alibaba Group, MegaFon and Mail.Ru, was set up in October 2019 to smooth access to one another’s e-commerce markets and encourage cross-border cooperation.54 In 2019, Alibaba founder Jack Ma declared that his company planned to generate some 100 million jobs and support 10 million small companies over the next few years, with a particular focus on the SCO area.55 In 2021, a group of Chinese e-commerce experts and practitioners trained Uzbek governmental officials and businesspeople on managing the e-commerce space.56 A growing number of smaller Chinese and Central Asian traders have also gone online in the past few years. The drastically improved e-commerce infrastructure in Central Asia has resulted in a significant increase in the region’s Business-to-Consumer E-Commerce Index score between 2015 and 2019, jumping from 25 to 35 for Kyrgyzstan, 26 to 45 for Uzbekistan and 37 to 69 for Kazakhstan.57

Chinese and Central Asian companies have set up middleman websites to allow locals to purchase Chinese products more easily and cheaply online, while bilateral governmental efforts have been made to grant Central Asian products access to the Chinese market directly. This includes an official flagship store for Uzbekistan on Alibaba’s Taobao mall (also known as ‘Tmall’). With a large section of Uzbek confectionary, the store gained over 5,000 followers within a year of its opening in November 2019. According to Tmall data analysis, Russian sweets, Indian eyebrow powder, handmade dolls from Uzbekistan, dark chocolate from Kazakhstan and vodka from Kyrgyzstan are the favourite imported products for Chinese consumers.58 These products now travel on the DSR, while the traditional large in-person trading markets in Dordoi and Barakholka are slowly being replaced by online malls.

Following the inclusion of the digital economy in the SCO list of ‘important tasks’ in 2017, as well as the SCO digital economy cooperation agreement in 2019, Chinese e-commerce leaders have found themselves at meetings with senior SCO figures. Alibaba CEO Jack Ma met Vladimir Norov, SCO Secretary General, for the first time in August 2019.59 While the world was busy combating a pandemic in 2020, Norov had at least nine prominent public meetings with leaders of China’s tech world, including e-commerce giants such as Alibaba, Jingdong and Pinduoduo.60 The timing coincided with a visible SCO push into the e-commerce space. In August and November 2020, two SCO experimental policy zones were opened in China: a Cross-Border E-Commerce pilot zone in Lianyungang and the Qingdao Development Center. Exact details on both are not very clear, except that they are intended to be major boosters to commerce and trade using online technology. First announced during the SCO Summit in Qingdao in 2018, the Qingdao Development Center was opened with typical Chinese speed two years later.61 The companies Norov met with all played a constructive role in pushing the SCO’s e-commerce agenda forwards. For example, Jingdong has committed $1.5 billion to build a smart industrial park within the Qingdao Development Center using advanced cloud computing to showcase China’s first-class supply chain technologies for cross-border e-commerce.62 In 2021, Kyrgyz officials proposed to open an e-commerce experiential logistics zone at the Qingdao Development Center for the export of Kyrgyz agricultural products to China, South Korea, Japan and ASEAN.63 It is unclear what representation the other SCO member states might have at these institutions, although there was some suggestion that Kazakh companies were using the Lianyungang port already.64

Unlike many of their counterparts in traditional industries, these Chinese tech giants seem to more actively recognise the merits of engaging in soft power building abroad. This is something they have all done globally, but in particular in Central Asia and often through SCO structures. Huawei, ZTE and Weidong Cloud Education began donating information technology tools to classrooms in Central Asian high schools and universities across the region in the early 2010s. Huawei’s own overseas academy, with Huawei lecturers and its own curriculum, opened in Uzbekistan in 201665 and Kazakhstan in 2017.66 In just two years, the Kazakh branch had trained over 400 computer science students.67 Huawei’s flagship ‘Seeds for the Future’ programme, a study and work programme for foreign computer science talents to spend time in China, is one of the most attractive programmes offered to Central Asian youth. Including travel and training in China, it is seen as guaranteed to offer good employment opportunities for graduates. The programme opened in Tajikistan in 2016,68 Turkmenistan and Uzbekistan in 2017,69 and Kazakhstan in 2018.70 It is not clear whether it has been established in Kyrgyzstan, although the company has had a footprint and staff there since at least 2001.71

All these initiatives are fostering the next generation of Central Asian tech experts in Chinese standards and practices, and will inevitably strengthen China’s norm-making position in the digital industry within the region. There has already been something of a push towards Chinese standards and norms through various SCO working groups and engagement structures. Previously, there has been engagement in the cyber security domain on how countries could share best practice to stop the spread of extremist ideas online. There has also been some discussion about harmonisation in the digital commerce domain, including efforts to focus on making legislation compatible and learning from one another. The training programmes offered by Huawei and others provide a further point of engagement and influence. China is not only building, but also shaping, the future of the cyber and digital world in Central Asia (and further afield).

These companies have further continued this soft power push and increased their links and visibility alongside the SCO during the coronavirus pandemic. For example, Alibaba, Weidong Cloud Education and others continued to reach out to regional youth and political leaders using the digital space, and helped to organise a number of seminars and joint online events with the SCO. For example, Alibaba set up online COVID-19 treatment courses and engagements between Chinese doctors and their Central Asian and SCO counterparts.72 Moreover, Weidong’s contribution to helping children under lockdown to continue to receive teaching received a personal ‘thank you’ from SCO Secretary General Norov.73 This work came in parallel with a substantial push by China to provide online health support and services, with doctors regularly holding online forums and videoconferences to exchange ideas and experience.74 For example, in April 2020, a telemedicine system was set up in Uzbekistan between Jiangxi and Tashkent.75

They also offered more classical forms of support. Alibaba, for instance, has been implementing further measures to help bring Central Asian products to the Chinese market.76 In the backdrop of all this activity, there were dozens of medical donations from many of the leading Chinese tech companies to the region. Jack Ma’s personal foundation, for example, sent planeloads of aid publicly to all the countries except Turkmenistan.77

What Next?

Chinese tech companies have emerged as leaders in advancing China’s goal to have the SCO become a regional economic force. From basic hardware such as fibreoptic cables and telecoms towers, to everyday smartphones and critical storage infrastructure such as cloud systems, they have made significant inroads across Central Asia, building a DSR through the region. Chinese online sales and payment platforms have followed, meaning China is building and delivering the region’s digital economic future. Throughout this process, the SCO has played an increasingly important role in facilitating and strengthening this push, finally living up to the hopes first articulated for the group by Jiang Zemin. As digitalisation proceeds with Chinese tools, Beijing is becoming a crucial player across the region’s critical sectors including security, trade and education.

Digitalisation is recognised by all member states of the SCO as an important step to development. China’s eagerness to share and sell its tech-driven practices and insights has thus been welcomed by SCO member states. Kazakh President Kassym-Jomart Tokayev has made digitalisation one of his most urgent tasks since taking office in spring 2019,78 and he has focused on emulating the Chinese model. At a meeting on Kazakhstan’s future development, Tokayev praised China’s success. Pointing to a specific Chinese company, Hikvision, he said the company’s techniques ‘have gone far ahead, they deeply digitalized all major cities. You click on the screen, the data on the person comes out, including literally everything. When he graduated from university, where he goes in his free time, and so on … We need to go in this direction. This is a global trend. I set this task just before our capital’s leadership’.79

Digitalising economies is a top priority for SCO leaders. In January 2021, as part of a push for country-wide digitalisation, Uzbek President Shavkat Mirziyoyev set a deadline: ‘by the end of this year, every industry and regional leader must make a radical turn in the digital economy’. He offered a 30% salary boost for those regional officials who improved digitalisation in their spheres of work.80 It is highly likely that he intended them to use some of the Huawei technologies he had been introduced to during his visit to the company’s innovation centre and meeting with founder Ren Zhengfei in April 2019 on the fringes of the Belt and Road Summit.81

Digitalisation in Central Asia, as in many other developing regions, is centred on adopting existing technologies rather than developing indigenous ones. While domestic firms are preferable, these take time to develop and the marketplace is increasingly full of cheap, readily available options. Since the beginning, China has offered a cheap option that is easily accessible and often provided with loans. Having established a foothold, it will continue to be a dominant supplier of both hard and soft technology in the region. This means China will also end up exporting its norms and practices that govern the digital space. Given the growing digitalisation of entire economies and societies, China will also export norms in other areas such as security and trade. In these key sectors, Central Asian countries are set on a long-term path of reliance on Chinese technologies, with limited development of local capacity. In a worst-case scenario, this reliance – combined with a lack of local capacity – exposes Central Asian countries to deep potential national security problems, with little domestic capability to manage these things themselves. For example, a global attack on Chinese tech and tools could have catastrophic consequences regionally.

The dangers go in other directions as well. The dramatic and abrupt assault on Jack Ma brought his financial technology company Ant Financial’s huge initial public offering to a grinding halt and raised questions about the company’s future.82 This was a reminder of the Chinese Communist Party’s ultimate control over the country’s private sector, and a salutary notice to economies in which these companies are deeply enmeshed. Central Asia has already watched as other Chinese companies that had invested heavily in the region suddenly fell foul of authorities at home – the case of energy firm CEFC is instructive in this regard. After a sharp ascension around the world acting as a major player along the Belt and Road, the company was brought down dramatically in 2018 through anti-corruption investigations that have swept up CEO Ye Jianming.83 Kazakhstan lost a $680-million investment, while Russia’s Rosneft lost a $9-billion investor. The Czech Republic found itself suddenly losing an investor that had purchased ‘the country’s oldest football club, Slavia Praha; a brewery; a share of the Travel Service airline group; a publishing house; a neo-renaissance building; a stake in the investment bank J&T Finance Group; and a building in the Czech capital Prague’.84 These are stark reminders that over-reliance on Chinese firms can come with deep and unpredictable political risks and real economic repercussions.

Another curious risk was raised more recently with the expulsion from China of its cryptomining firms, which led to a large number choosing to relocate to Kazakhstan. While the Kazakh government initially seemed happy with this development, it has abruptly become a huge drain on the national electricity grid and is causing all manner of problems as a result, including forcing the country to renegotiate its electricity purchases from Russia. This unintended consequence of shifting Chinese domestic digital economies is another way in which the region is finding itself tied to China.85

A further danger is posed by the global clash between the West and China, which has increasingly focused on the digital and tech sector. As the US and its Western partners push sanctions on Chinese firms, this will complicate the latter’s viability and the operating spaces they are in. It will also start to complicate relations between the West and third countries, such as those in Central Asia, where Chinese technology companies are a major provider. This is a wicked problem for some of the countries in Central Asia – while they might prefer the Western alternatives, these are simply too expensive, and they are limited in other possible options. And, at this point, they already have the Chinese hardware installed, meaning a cost should they want to completely remove it. The Chinese vendor thus becomes the most attractive, despite the potential consequences that come with it.

Russia’s tech sector lags behind China’s innovative applications. Leading Russian tech companies are confined within the post-Soviet space. Rostec, Russia’s military technology conglomerate, while underfunded, has tried to enter commercial markets where there is high Chinese competition. In June 2021, Rostec secured a deal in Uzbekistan to provide basic urban planning technologies for the advanced stages of its smart city.86 However, Rostec is unlikely to be a serious rival for Chinese tech companies without Russian subsidies and loans. Ozon, which could be seen as Russia’s Amazon or Alibaba, had a market capitalisation of $2.4 billion at the time of writing (as compared to Amazon at $1.46 trillion and Alibaba at $249.64 billion)87 and is inefficient in comparison to its international competitors that compete with it at home. The recent invasion of Ukraine has served to isolate Russia and its firms from the world, making them even less competitive in some ways.

Russia’s homemade consumer electronics have failed to penetrate even the post-Soviet market. Russian mobile telephone providers Beeline and MegaFon may be able to continue to dominate regional telecoms provider services, but their hardware is usually not Russian-made. Russian smartphone manufacturers Yota and Sitronics are almost unheard of. Furthermore, Russia’s country-wide adoption of Huawei’s 5G networks and Chinese technology more broadly will only further weaken the Russian tech sector in the years to come. India offers another possible option, but technology providers there are still very heavily focused on their own domestic market and trying to consolidate in the wake of the government’s vociferous expulsion of Chinese technology.88

Russia and India offer another potential problem in geopolitical terms for Central Asia. Both are SCO members, but they have different relationships with China. India’s approach to China has long been two-sided, where on the one hand it is facing off near conflict, while on the other it is eager to engage. At the time of writing, confrontation over technology is at the forefront of the clash between the two countries, with India banning swathes of Chinese applications and seeking to curtail investment by Chinese companies such as Alibaba, Huawei and Xiaomi.89 Russia has a warmer relationship with China, but it is one with tensions below the surface. There are, for example, growing concerns in Moscow about the country’s increasing over-reliance on Chinese investment, economic growth and technology (notwithstanding the growing push together as a result of the invasion of Ukraine). This presents Central Asia with problems in terms of potential alternative partners, as well as the SCO’s pre-eminence in this Chinese push. The potential exists for these broader geopolitical tensions to undermine the relationships built through the SCO and to create future problems for those in Central Asia that have enthusiastically embraced the organisation and the Chinese technology that comes with it.

Conclusion

As soon as the Soviet Union collapsed, China activated an effort for economic, social, security and political penetration across the Eurasian landmass. These goals were products of domestic concerns and a desire to define relatively opaque borders, and were initially delivered through the first international security organisation that China helped to create. The SCO provided a vehicle through which Beijing could build its relations with its Eurasian neighbourhood, starting with a security framework, but with an underlying economic and broader intent. However, realising these broader goals has proved challenging. China’s position in the world has transformed since the early 1990s, when the country was just escaping the shadow of the Tiananmen Square massacre and its economy was opening up. At the time, the SCO region was largely uninterested. Now, China is the world’s second-largest economy and a crucial trading partner for all SCO member states. But it has struggled to translate its economic dreams within the SCO into reality.

This has now changed through the DSR. As early movers in the region and supercharged under the broader Belt and Road vision, China’s tech giants have built a strong presence in Central Asia and are now increasingly engaging with the SCO, helping it to realise China’s longer-term economic ambitions. This new approach has seemingly managed to overcome previous concerns about China-led economic initiatives, but is laying the foundations for deep Chinese influence long into the future. The SCO might finally be helping China to fulfil its economic ambitions and checkmate the activity of others in Central Asia. As with much of China’s foreign policy approach to Central Asia, what Beijing has advanced and tested in this area is likely to be exported elsewhere. Learning from how the SCO has gone digital will help to create a wider understanding of how the DSR may play out in other contexts as well.

Additional information

Notes on contributors

Raffaello Pantucci

Raffaello Pantucci is a Senior Fellow at the S Rajaratnam School of International Studies in Singapore, a Senior Associate Fellow at RUSI and author of Sinostan: China’s Inadvertent Empire (Oxford University Press, 2022, with Alexandros Petersen).

Niva Yau

Niva Yau is a Senior Researcher at the OSCE Academy in Bishkek and Fellow at the Eurasia Program of the Foreign Policy Research Institute in Philadelphia.

Notes

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24. CGTN, ‘SCO Development Bank: Prospects of the SCO Development Bank’, 6 June 2018, <https://news.cgtn.com/news/7a517a4d32454464776c6d636a4e6e62684a4856/share_p.html>, accessed 14 August 2022; Xinhua, ‘SCO Plans to Enhance Financial Cooperation, Continue Consultations on Establishing SCO Development Bank’, 1 December 2020, <http://www.xinhuanet.com/english/2020-12/01/c_139555549.htm>, accessed 14 August 2022.

25. Shanghai Cooperation Organisation (SCO), ‘SCO Promotes Transport Links’, July 2017, <http://eng.sectsco.org/news/20170706/306862.html>, accessed 14 August 2022; author interview with logistics experts in Osh, Kyrgyzstan, 2019.

26. SCO, ‘SCO Promotes Transport Links’.

27. SCO, ‘Shànghǎi hézuò zǔzhī mìshū zhǎng zài 2009 zhōngxī nányà qūyù jīngjì hézuò lùntán shàng de zhìcí’ [‘Speech by the Secretary-General of the Shanghai Cooperation Organisation at the 2009 Central and Southwest Asia Regional Economic Cooperation Forum’], 4 September 2009, <http://chn.sectsco.org/news/20090904/16988.html>, accessed 14 August 2022.

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32. SCO, ‘Zayavleniye soveta glav gosudarstv-chlenov Shankhayskoy organizatsii sotrudnichestva o sotrudnichestve v oblasti obespecheniya mezhdunarodnoy informatsionnoy bezopasnosti’ [‘Statement of the Council of Heads of State of the Shanghai Cooperation Organisation on Cooperation in the Field of International Information Security’], 10 November 2020, <https://sco-russia2020.ru/images/108/46/1084605.pdf>, accessed 14 August 2022.

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68. Huawei, ‘Tǎjíkè sītǎn’ [‘Tajikistan’], <https://www.huawei.com/cn/sustainability/win-win-development/social-contribution/seeds-for-the-future/tajikistan>, accessed 14 August 2022.

69. Huawei, ‘Tǔkùmàn sītǎn’ [‘Turkmenistan’], <https://www.huawei.com/cn/sustainability/win-win-development/social-contribution/seeds-for-the-future/turkmenistan>, accessed 14 August 2022. Huawei, ‘Wūzībiékè sītǎn’ [‘Uzbekistan’], <https://www.huawei.com/cn/sustainability/win-win-development/social-contribution/seeds-for-the-future/uzbekistan>, accessed 14 August 2022.

70. People’s Daily, ‘Huá wéi zhōng yà chuàngxīn rì huódòng zài hāsàkè sītǎn jǔxíng’ [‘Huawei Central Asia Innovation Day Held in Kazakhstan’], 15 November 2017, <http://world.people.com.cn/n1/2017/1115/c1002-29648654.html>, accessed 14 August 2022.

71. As highlighted in note 41.

72. SCO, ‘With SCO Support, the Alibaba Group Hosted a Workshop on Countering the Spread of the Novel Coronavirus Infection’, May 2020, <http://eng.sectsco.org/news/20200514/647237.html>, accessed 14 August 2022.

73. SCO, ‘President of the Weidong Group Visits SCO Secretariat’, April 2020, <http://eng.sectsco.org/news/20200411/642503.html>, accessed 14 August 2022.

74. Raffaello Pantucci, ‘Beijing Binds: COVID-19 and the China-Central Asia Relationship’, Central Asia Program Paper No. 232, 19 June 2020, <https://www.centralasiaprogram.org/wp-content/uploads/2020/06/Beijing-Binds-COVID-19-and-the-China-Central-Asia-RelationshipCAP232.pdf>, accessed 14 August 2022.

75. Xinhua, ‘China-Uzbekistan Telemedicine System Put into Operation’, 25 April 2020, <http://www.xinhuanet.com/english/asiapacific/2020-04/25/c_139007696_2.htm>, accessed 14 August 2022.

76. UzDaily, ‘Chinese Platform Alibaba Simplifies Registration for Uzbekistan Merchants’, 10 August 2020, <<http://uzdaily.com/en/post/60623>, accessed 14 August 2022.

77. Raffaello Pantucci, ‘Beijing Binds: COVID-19 and the China-Central Asia Relationship.

78. Republic of Kazakhstan Presidential Palace, ‘Glava gosudarstva provel soveshchaniye po realizatsii Gosudarstvennoy programmy «Tsifrovoy Kazakhstan»’ [‘The Head of State Held a Meeting on the Implementation of the State Program “Digital Kazakhstan”’], 4 March 2020.

79. Kursiv, ‘Tokayev poruchil perenyat’ u Kitaya opyt tsifrovizatsii grazhdan’ [‘Tokayev Instructed to Adopt the Experience of Digitalisation of Citizens from China’], 8 October 2019.

80. UZA, ‘Prezident: Bez tsifrovoy ekonomiki net budushchego u ekonomiki strany’ [‘President: The Country’s Economy Has No Future Without the Digital Economy’], 22 September 2020.

81. Republic of Uzbekistan Presidential Press, ‘Prezident posetil Tsentr innovatsiy kompanii «Huawei»’ [‘The President Visited the Huawei Innovation Center’], 25 April 2019.

82. Jing Yang and Serena Ng, ‘Ant’s Record IPO Suspended in Shanghai and Hong Kong Stock Exchanges’, Wall Street Journal, 3 November 2020.

83. Ji Tianqin and Han Wei, ‘In Depth: Investigation Casts Shadow on Rosneft’s China Investor CEFC’, Caixin, 1 March 2018, <https://www.caixinglobal.com/2018-03-01/investigation-casts-shadow-on-rising-oil-star-101215272.html>, accessed 14 August 2022.

84. Jenni Marsh, ‘The Rise and Fall of A Belt and Road Billionaire’, CNN, 4 December 2018.

85. Paul Bartlett, ‘Kazakhstan’s Crypto Mining Boom Fizzles Over Power Supply Strain’, Nikkei Asia, 28 December 2021, <https://asia.nikkei.com/Spotlight/Cryptocurrencies/Kazakhstan-s-crypto-mining-boom-fizzles-over-power-supply-strain>, accessed 14 August 2022.

86. UzDaily, ‘Rostec to Take Part in the Project of the First “Smart City” in Uzbekistan’, 6 April 2021, <<http://uzdaily.com/en/post/64650>, accessed 14 August 2022.

87. Data from <http://finance.yahoo.com>, accessed 14 August 2022.

88. Sayan Chakraborty, ‘India’s Reliance Jio Takes Center Stage in Nation’s First 5G Auction’, Nikkei Asia, 29 July 2022, <https://asia.nikkei.com/Business/Telecommunication/India-s-Reliance-Jio-takes-center-stage-in-nation-s-first-5G-auction>, accessed 14 August 2022.

89. Sahkalp Phartiyal, ‘Firms in India Downplay Chinese Links Amid Wave of Anti-China Sentiment’, Reuters, 30 June 2020.

Its been a busy week on various fronts, but in particular in work on China-Afghanistan. But it seems apt given the SCO celebrated its second decade. Have a couple more pieces to post from the week, but for the time being here is a piece for the excellent Oxus Society (established by Edward to whom I am very grateful for publishing this) which draws on my various experiences meeting with the Organization over the years. You will find a lot more of this coming in the book which is due out early next year, but for the time being enjoy. As ever comments, criticisms, corrections welcome.

The SCO Turns Twenty

The Shanghai Cooperation Organization (SCO) was born almost exactly two decades ago, on June 15, 2001 at a glittering event overlooking the Huangpu River in Shanghai. Celebrating the birth, President Jiang Zemin articulated a vision for the organization that spanned everything from counter-terrorism, regional trade agreements, to pragmatism, solidarity, a pioneering spirit and openness. The last was delivered without a sense of irony to a room of leaders who (for the most part) had taken power with little public ratification. The key, President Jiang said, was to maintain the ‘Shanghai Spirit’ that had brought them all to where they were today.

This was very different to the birth story I was told almost exactly a decade later sitting in the Kyrgyz Ministry of Foreign Affairs. We were told that the SCO was “a baby that was born of a time.” It was an “illegally born child” to its parents China and Russia who could not agree on a way forward, hence they decided to form a family called the SCO. But like any family, our Kyrgyz interlocutor informed us, there were “certain frictions” usually involving money, and over time there was “psychological exhaustion by the parents.” A more cynical view that over time I discovered was more typical from the region to what I would hear in Beijing.

A year later, I had my first physical encounter with the organization. After chasing various contacts and colleagues in Shanghai, I fixed a meeting at the Organization’s headquarters in Beijing with a fellow researcher. We had aimed to meet with the Secretary General, but ended up getting passed along to some lower-level diplomats. A Kazakh and a Russian official who were posted to the Organization from their respective Ministries of Foreign Affairs. The more elderly Russian was in a playful mood and clearly enjoying what he saw as a sinecure role. 

Sat in a grand and slightly dusty meeting room which had a cabinet full of football trophies in the corner, we listened as he expounded about the organization’s processes and procedures downplaying any of the more menacing aspects. Projects were nascent and slow moving, he told us. Everything was done by consensus. Terrorism – something he described using the Chinese phrasing of the Three Evils (terrorism, separatism and religious extremism) – was a major concern. Economic aspects were still under discussion. The overriding message we got from them was nothing to see here, move along, move along.

The overriding question from all of these encounters was what really was the point and aim of this organization? Western diplomats we met in Beijing or Central Asian capitals would largely rubbish the organization as a large talking shop. Chinese officials we spoke to, however, would talk about it as a foundational element in their vision for Eurasia and the world. Westerners, they would tell us, missed the gentle consensus building that the SCO brought to the table. As a Chinese expert at one of the more influential think tanks in Beijing told me when I asked what the SCO had achieved “to not do anything is to do everything.”

The initial seed of the SCO was planted in the wake of the Cold War. As the Soviet Union fell apart, there was an imperative for China to clarify its western borders. China had shared a long, porous and remote border with the Soviet Union. Once China was suddenly confronted with three new border countries, this vagueness no longer worked. From this was born the idea of establishing a grouping to discuss de-militarization and border delineation between China and the new states of Russia, Kazakhstan, Kyrgyzstan and Tajikistan. Meeting first in Shanghai in 1996, the grouping was imaginatively called the Shanghai Five, upgraded later to the SCO when Uzbekistan joined at the glittering event in Shanghai.

China’s vision was larger, however, than just borders and security. It was about economic connectivity and prosperity across the entire region. The larger concept could be found in a visit in 1994 by then-Premier Li Peng to Central Asia, when he swept through all of the capitals except Tajikistan. China was opening itself up after the setback of the 1989 Tiananmen Square massacres and Premier Li had been at the forefront of promoting the new China, taking groups of businessmen around with him and trying to encourage western firms to come and invest. Central Asia was critical both in terms of being a border region to China, but also given the deep cross-border security concerns that existed with Beijing worried about Uyghur dissidents using the region as a base to launch attacks within China. 

This blend of security and prosperity is what has been at the heart of Chinese interests in the SCO. Focusing on terrorist threats in particular is something that all of the member states find themselves agreeing on, and economic prosperity is always appreciated. Counter-terrorism in particular developed its own home. 

The Regional Anti-Terrorism Structure (RATS), first announced in 2001, and then formally opened in Tashkent in 2004 was established as a hub for counter-terrorism and counter-extremism activity. When I visited in 2012, I found a sleepy institution in a bright pink building where the Chinese officials refused to speak Mandarin to me, while their bosses told me about the meetings and conferences their institution hosted and some of them fell asleep during our meeting. This dozy welcome, however, masked the institution’s role in creating a common roster of enemies and the growing legal harmonization in counter-terrorism and countering online extremism that RATS helped foster. 

Counter-terrorism has also provided China with a way into other forms of engagement. China pushed forwards the development of a training center in Shanghai which offered courses for Interior and Border Guard forces across the region – providing an opportunity to develop relationships at multiple levels in local security forces. Through the SCO it has hosted and partnered with numerous regional partner forces on joint military exercises. The regular large-scale military exercises provide not only an opportunity to strengthen bilateral relations, but also for Chinese forces to practice with the vastly more experienced Russian forces. It has also increasingly given China an opportunity to show-case some of their military hardware – in particular drones – to potential customers. 

But the organization has over time developed a much wider range of activities beyond this, creating an entire cultural roster of actions and events to encourage what they describe as the ‘Shanghai Spirit.’ A whole series of cultural activities bringing SCO nationals together. A marathon, a film festival, young businessmen forums, a traveling festival of culture which I once came across by chance in Tashkent which included exhibitions from key cities in each member state, a university exchange program which allows for post-graduate students to spend a year at a university in another member state university offer a sense of the SCO’s broader activities. 

Not everything Beijing wanted to achieve has succeeded. Notwithstanding putting almost one billion dollars on offer, the idea of an SCO Development Bank or Fund has never taken off. Repeated efforts to establish an SCO Free Trade Area have gone nowhere. And after having tried to get the Organization to do something specific about Afghanistan rather than just host meetings, China seemed to accept it was too complicated. In 2016, China established a new mini-lateral entity called the Quadrilateral Cooperation and Coordination Mechanism (QCCM) that brought together the Chiefs of Army Staff of Afghanistan, China, Pakistan and Tajikistan. Notwithstanding continued Chinese efforts, they realized nothing was moving forwards within the SCO on Afghanistan and so they built a parallel entity to handle their direct security concerns. This is not to say that China has not continued to push the idea of the SCO doing more in Afghanistan forwards – most recently, after meeting with his Central Asian counterparts in May 2021, Chinese Foreign Minister Wang Yi once again hammered home the point that the Organization needed to do something about Afghanistan. Everyone agreed, though it is still not clear anything will happen.

But China’s relentless persistence with the Organization has paid dividends. And the Organization has only continued to grow over time, now also encompassing Pakistan and India, with Iran a regular courter. Afghanistan, Belarus, Iran and Mongolia are official Observer states, while Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey are Dialogue Partners. The Organization is growing and at current count claims to be the largest regional organization by population and geographical coverage – representing about half of the world’s population. Whatever Jiang Zemin released in Shanghai in 2001 has proven to be attractive. 

Beijing has also shown itself to be highly dynamic through the Organization, echoing in many ways their global growth in other areas as well. When one path is blocked they seem to find another. Having been repeatedly stymied in their grand economic goals, China has now managed to start to advance them through its tech and digital giants who have started to work with the SCO to advance China’s Digital Silk Road. Chinese applications, Chinese online markets, Chinese online health and educational platforms, have all become increasingly dominant within the SCO. Central Asians working with the Organization tell me working with Chinese tech is one of their biggest tasks. The capstone of all of this activity was laid in November 2020 with the establishment of the China-SCO Development Zone in Qingdao, which was inaugurated with $8.6 billion worth of projects focusing on China’s digital and tech sector.

China’s SCO partners were not very visible during the event, however, but had supported its establishment during an earlier Summit in Qingdao in 2018. They have continued to attend, participate and host, even as other tensions have developed between them. Notwithstanding the violent border clashes and technological tensions between Delhi and Beijing last year, Prime Minister Modi attended the SCO leaders Summit and paid respect to the Organization, while his country has taken the lead in establishing a working group looking at digital commerce and start-ups ahead of this year’s twentieth anniversary. China and India may be at knifepoint at the border, but Delhi still sees great value in participating in the SCO.

And this is the ultimate goal of this now two-decade old entity. To create an Organization in China’s image that has captivated the Eurasian heartland with its non-judgmental appeal. The constant meetings, conferences and encounters have developed a web of relationships across the Eurasian heartland that are all fostered around a vision of the world articulated by China. The world may be obsessed with what China is doing in the seas, but it is through the SCO and over land that the longer-term play can be seen. It is here that the real impact and effect of China’s webs of connectivity can be found, and a vision of what China’s new world order might look like.

Raffaello Pantucci is a senior associate fellow at Britain’s Royal United Services Institute and a visiting senior fellow at the S. Rajaratnam School of International Studies in Singapore. His work focuses on terrorism, counter-terrorism and China’s Eurasian relations.

And another piece, this time for The Diplomat, linked to Xi’s visit through Central Asia, this time focusing on the Shanghai Cooperation Organization (SCO) Summit now happening in Bishkek with my friend and co-author Li Lifan. I have also been doing various media bits around this trip, including an interview with RFE/RL among others.

Shanghai Cooperation Organization: Not Quite the New Silk Road

By  Raffaello Pantucci and Li Lifan

September 12, 2013

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Presaging his stopover in Kyrgyzstan, President Xi Jinping delivered a speech in Kazakhstan in which he spoke of establishing a “Silk Road Economic Belt” that would bind China to its Eurasian neighborhood. A trip so far focused largely on Afghanistan and trade, the stopover in Bishkek for the Shanghai Cooperation Organization(SCO) summit is the capstone to what has been a successful trip, tidily wrapping the two subjects up in a bow largely of China’s making.

Of course, there are numerous other topics on the table at the summit beyond Afghanistan. Expanding membership looks like it is going to remain unresolved again – India and Pakistan continue to knock loudly on the door. Iran’s new President Hassan Rouhani has announced he will attend, possibly highlighting the new regime’s diplomatic approach (although it is unclear what the SCO means within this context), and it seems likely that further agreements about closer cooperation and discussion are likely to be held. Beijing will undoubtedly push an economic agenda – though this will find hostility from the other member states fearful of dominance. The question over the SCO development bank will remain unresolved.

Inevitably, Afghanistan will feature as a major topic of conversation. Just prior to the delegates meeting in Bishkek, units from SCO member states will have just completed a training exercise near Lake Issyk-Kul in the northeast of Kyrgyzstan. This comes after an earlier SCO flagged exercise, in which Chinese and Kyrgyz troops trained in their border areas, and a larger “Peace Mission” exercise involving Chinese and Russian formations. All of these training missions are described as being focused on countering terrorism: large-scale military activity that in fact seems more aimed at border protection and countering insurgent groups rather than urban terrorists. Useful skills if you are worried about overspill from Afghanistan.

The reality, however, is that the Russian-led Collective Security Treaty Organization (CSTO) is still largely considered the main regional security player by most Central Asians, backed as it is by Russian guarantees and equipment. The Chinese-led SCO still plays a second fiddle to the Russian endeavor, though the SCO has spoken at length about counter-narcotics, countering the “Three Evils” of “extremism, separatism and terrorism,” and now has a Chinese head of its security structure in Tashkent – the unfortunately namedRATS center (Regional Anti-Terrorism Structure).

The problem for the SCO is that it remains an organization lacking a clear sense of its role in the world. This is a problem that is fundamentally about the very divergent views among the member state capitals (all of whom have equal weighting within the institution’s decision-making processes), and in particular Beijing’s desire to create a positive umbrella under which to shelter its efforts in Central Asia, even as other members worry about Chinese dominance.

The result is a half-baked multilateral vehicle that focuses on arcane discussions about membership with no conclusion, and holds military exercises aimed at unspecified enemies. On the one hand, this helps develop relations and bonds in a region rife with internal tensions, but on the other it fails to deliver much in the way of practical progress. The real progress during Xi’s trip has already been made. The SCO summit merely provides a tidy bookend.

Raffaello Pantucci is a senior research fellow at the Royal United Services Institute and the co-editor ofChina in Central AsiaLi Lifan is secretary general of the Centre for SCO Studies at the Shanghai Academy of Social Sciences.

A new piece with Alex for The Diplomat, an excellent online magazine focused on mostly Asian affairs and strategy. This one looks particularly at Turkey’s recent public dalliance with the Shanghai Cooperation Organization (SCO) and highlights some of the problems inherent in that organization. Turkey’s role in Central Asia writ large is a fascinating one and the topic of much more research – more hopefully to come! In the meantime, I was quoted in this piece for another online magazine The International on China’s role in ‘New Iron Silk Road’ and Afghanistan. As ever, for more of mine and Alex’s work on the broader themes in these pieces, please see our co-authored blog: http://www.chinaincentralasia.com

Turkey: Abandoning the EU for the SCO?

February 15, 2013

By Raffaello Pantucci and Alexandros Petersen

Recent moves suggest Turkey could make a bid for entry into the Shanghai Cooperation Organization. It would be a mistake.

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The European Union is in a rut. Its once-vaunted economy and “ever closer” integration is facing the tough challenges of a dogged recession and anti-EU sentiment in some of its most powerful member states. It is therefore perhaps not surprising that some EU aspirants appear lukewarm about their prospects and continued desire to join the club. For Turkey, probably the most unfairly spurned EU aspirant, it makes a lot of sense to at least explore alternatives.

After all, Turkey’s economy is booming – leaping from $614.6 billion in 2009 to $775 billion in 2011 (in current U.S. dollars) according to World Bank figures. Reflecting the country’s position at the global cross-roads, Istanbul’s Ataturk Airport international traffic more than doubled between the years 2006 and 2011. Last year alone its passenger volume increased by 20%, making it Europe’s 6th busiest airport. The country’s regional and global profile has grown since it first evinced a desire to join the EU. European leaders should only be surprised that Turkey has maintained its interest in the EU for so long.

However, even as it makes sense to decision-makers in Ankara to reconsider their relationship with the EU, it is not a strategically sound choice for Turkey to consider membership of the Shanghai Cooperation Organization (SCO) as an alternative. Already a ”dialogue partner” with the SCO, late last month, Turkish Prime Minister Recep Tayyip Erdogan announced that he had made an overture to Russian President Vladimir Putin about joining the SCO, stating “If we get into the SCO, we will say good-bye to the European Union. The Shanghai Five [former name of the SCO] is better — much more powerful.” Erdogan also noted that Turkey has more “common values” with the SCO member states.

The issue, however, is that the SCO remains a nascent organization that is still in the process of defining itself. Absorbing new members, or figuring out the protocols for new members to be formally acceded, is merely one of the many problems the SCO faces. The Organization’s security structures, including the unfortunate-acronym RATS Center [Regional Anti-Terrorism Structure], have yet to fully flesh out their purpose in advancing regional security in a very militarily tense region. Meanwhile, China continues to dominate the SCO’s economic agenda, including negotiations to establish an SCO Free Trade Area (FTA), an SCO Development Bank, and Beijing offering $10 billion in loans for member states. All of this alarms Russian strategists who see China encroaching on Moscow’s Central Asian interests. Nonetheless, all of this results in a minimal concrete presence, something we found first-hand as we travelled around Central Asia over the past year, finding little tangible evidence of the Organization’s footprint on the ground.

Further complicating matters, Turkey is not the only country that has expressed an interest in becoming a full member. In fact, Pakistani and Indian officials both said their countries were interested in becoming full-fledge members at the Prime Minister’s Summit in Bishkek last December. Iran too has expressed an interest in joining the organization, although Moscow recently said this would not be possible so long as Tehran remains under UN sanctions. All three countries currently languish as “observers,“ a status that Pakistan and India have held since 2005 and one that is considered superior to the ‘dialogue partnership’ that Turkey was only accorded last June. Still, both Pakistan and India – strategically important allies for China and Russia respectively – would undoubtedly feel put out were Turkey allowed to jump the queue.

None of this is to say that Turkey does not have a key role to play in Central Asia, the SCO’s primary area of operations. Waiting for visas in Bishkek, we found ourselves jostling with Turkish truckers getting visas to Kazakhstan, whilst in the city’s downtown, eager students at the Kyrgyz-Turkish Manas University told us how exciting it would be to visit Turkey. In neighboring Uzbekistan, our driver told us how he preferred to fly Turkish airlines and how convenient the country was linguistically. This ethnic proximity is something that China in particular has sought to cultivate – in April last year, Erdogan broke protocol when he started his Chinese trip with a stopover in Urumqi, capital of historically Turkic Uighur Xinjiang.

Eager to attract outside investment to encourage prosperity as a salve for ethnic tensions between Uighur and Han Chinese and historical underdevelopment, the Urumqi government has established a Turkish-Chinese trade park outside the city, offering Turkish investors favorable rates and support to develop businesses in the province. Turkey is clearly a significant regional player and its SCO “dialogue partner” status reflects this. But full membership is a step too far and one that seems out of whack with the Organization’s current trajectory.

Far more likely, Erdogan is hinting at a shift in orientation in frustration at the West’s relationship with his country. Europe has repeatedly proven an awkward partner and the United States has demonstrated little appetite to get overly involved in the problems that sit right on Turkey’s border. Aware of his nation’s geopolitical location at a global crossroads, Erdogan is highlighting that he has options.

Still, the reality is that joining the SCO would not heighten Turkey’s global stature or teach the West a lesson. U.S. and NATO policymakers keep an eye on the SCO, but none seriously view it as a strategic counterweight. In some respects, Western strategists have been far more eager than their Chinese counterparts about the possibility of an SCO role in stabilizing Afghanistan after Western combat forces depart in 2014. In the past year, the Organization has expressed some interest in doing more in Afghanistan, but it remains light years away from replacing NATO as a security guarantor.

As an ascendant power in Eurasia, Turkey may find it useful to keep in a toe in the SCO.  However, full membership is not in the offing.  And even if it were, Turkey’s decision-makers would quickly find that China’s multilateral cover for its bilateral engagement in Central Asia is still an empty shell.

Raffaello Pantucci is a Senior Fellow at the Royal United Services Institute (RUSI).  Dr. Alexandros Petersen is the author of The World Island: Eurasian Geopolitics and the Fate of the West and an Associate Professor at the American University of Central Asia.  Their joint research is available at www.chinaincentralasia.com.

A new piece with Alex for The National Interest, again looking at the SCO and Afghanistan. I feel like a more apt title might be “What the SCO will not be doing in Afghanistan.” Hope the message sinks in in Washington. As ever for more on our work on the topic of China in Central Asia please visit our co-edited site.

Afghanistan and the Eurasian Neighborhood

The big takeaway from the Shanghai Cooperation Organization (SCO) summit held earlier this month here in Beijing is that the group is going to become more involved in Afghanistan. Western optimists seem to have concluded that this means the SCO—which includes China, Russia and all of the post-Soviet Central Asian states except for Turkmenistan—might take on the burden as the West tries to extricate itself from the war-torn country. But this expectation, while popular in Washington and Brussels, is vastly overblown.

The SCO was born out of the ashes of the Cold War and the Shanghai Five, a grouping aimed at delineating China’s border with the newly independent Central Asian states. By 2001, it had successfully resolved these questions and decided to formalize the structure into a regional organization that expanded to bring in Uzbekistan (which does not border China). Of course, that was also the year that everything changed in the world, when Osama Bin Laden finally managed to launch an attack from his Afghan base that got America’s attention. From then on, the seeming orientation of the group shifted from building greater regional coordination to a counterterrorism-oriented but still anti-Western club. When Iran tried to join in 2006–07, this narrative was somewhat confirmed in the public mind, though little attention was paid when the body rejected Iran’s application.

The SCO has potential, but its members currently treat it as an institutional tool to advance their often-competing interests. Many outsiders mistakenly conclude that it is a body capable of implementing its pronouncements.

The SCO has two centers. There is a secretariat in Beijing, while Uzbekistan’s Tashkent hosts the rather unfortunately acronymed Regional Anti-Terrorism Structure: RATS. Each of these is staffed by thirty diplomats from the member states. RATS has a database of individuals wanted in member states and is looking into coordination to shut down extremist websites. But there is no police-training component or active force ready for deployment. Even counternarcotics, an issue of great regional concern, has not been addressed in any concrete way. There is no unified military command, and unlike the Russian-led Collective Security Trade Organization (CSTO), there is little serious discussion of establishing a rapid-reaction force.

China has tried to transform the SCO into an economic body, eyeing the idea of a regional free-trade zone. This meshes with Beijing’s approach to Afghanistan: to develop the country and link its infrastructure into the broader region as a means to guarantee stability. This also concords with U.S. ambitions of a “New Silk Road.” But Afghanistan’s development, advanced through the SCO, would be stymied by the preference of the Central Asian states to work with Kabul bilaterally as well as by Russia’s very different economic imperatives in the region.

Lowering Expectations

So what exactly can we expect from the SCO summit and the previous week’s agreements with Afghanistan? The answer is best summarized by quoting an SCO official one of us spoke to on the fringes of the summit: “It is a first concrete step.” This is a political gesture of recognition that the organization should be doing more, and China’s decision to in parallel sign a “strategic agreement” with Afghanistan is reinforcement of the ambition that whatever happens with the SCO, it will make a point of being engaged in Afghanistan. This will probably mean increased training efforts by Chinese police, increased Chinese investment in natural resources and a push for regional links, such as recently announced plans for a pipeline from Turkmenistan to China through Afghanistan.

While China’s interests in developing Afghanistan to make it stable, prosperous and peaceful concord broadly with Western objectives, they do not completely align. China’s central aim in Afghanistan and broader Central Asia is to stabilize and strengthen Xinjiang, its poor and underdeveloped western province. The SCO will be helpful for Beijing as long as it contributes to this objective.

The SCO is a frequently misunderstood organization. During its decade-long history, it has been ignored, considered cause for alarm and characterized as an authoritarian club. Now, its decisions have been met with an outsized sense of optimism as the West frantically seeks an exit from Afghanistan, hoping that others might take on responsibility there. Pouring cold water on these expectations is important unless the United States and NATO want to find themselves leaving responsibility to a regional body that has none of the capacities necessary to stabilize a country as troubled as Afghanistan.

Raffaello Pantucci is a visiting scholar at the Shanghai Academy of Social Sciences and Alexandros Petersen is author of The World Island: Eurasian Geopolitics and the Fate of the West. Their joint research is available at www.chinaincentralasia.com.

A short post for China in Central Asia from a trip I am currently on, in Beijing at the time of the SCO Summit. Have lots of great pictures that will slowly be published over the next few weeks (alongside more writing on this topic). But in the meantime, here is a brief taste.

The Shanghai Spirit in Beijing

June 6, 2012

Beijing is in a Shanghai Cooperation Organization (SCO) kind of mood. All around the city there are SCO logos and nowhere more so than in Tiananmen Square and the Wangfujing area near it. Along Chang An Jie (Avenue of Peace) the big international hotels have prominent signs in front declaring in Chinese, Russian and English “Welcome to the Shanghai Cooperation Organization Summit.” Outside the Singaporean owned Raffles Hotel, alongside what I presume are their usual flags, the Afghan, Indian and Pakistani flags fly, presumably marking the delegations staying at the hotel. Outside, black Audis marked “Pak” awaited delegates, while in the lobby groups of South Asians checked in. Teams of bullet-proof wearing black clothed policemen march around guaranteeing security, multiplying the already tight security around the Square.

A large three sided SCO logo is perched in the middle of Tiananmen Square, surrounded by flowers and a pair of bored looking guards sitting on stools hiding in the shade. In front of the entrance to the Forbidden City pairs of flags are draped from lamp posts – one Chinese, and one for each of the member states and observers of the SCO. However, facing them on the other side were four other lamp posts on which only the Chinese and Russian flags were paired.  Perhaps hinting at the most significant relationship within the SCO.

The Summit’s outcomes of course are still unclear to some degree. However, discussions seem to point to Afghanistan as a major focus with the decision to let the country in as an observer seemingly a forgone conclusion. Turkey is also going to come in as a “dialogue partner”.  We will also likely see discussions about potential cooperation on counter-narcotics, as well as trade issues. But as is often the case at these summits, there will probably be more one-on-one interactions between SCO member states and China, highlighting how much members, as well as Beijing, prize bilateral relations over the SCO format.

A new post for Foreign Policy’s AfPak Channel, touching on my new growing theme of China and her Central Asian periphery. This time a focus on the Shanghai Cooperation Organization (SCO) and its inelastic nature.

The Limits of Regional Cooperation in Asia

By Raffaello Pantucci  Wednesday, November 16, 2011 – 1:59 PM   Share

VLADIMIR RODIONOV/AFP/Getty Images

Last week’s Shanghai Cooperation Organization (SCO) Summit in St. Petersburg, Russia was unsurprisingly uneventful. While not a “head of state” summit — where traditionally big announcements like the decision to allow new members in would be made — in the lead-up to the meeting there was a flurry of press about a possible enlargement of the group. But aspirant members and current observers India and Pakistan were not made into full members, and Afghanistan was once again not brought any closer into the club. Generally seen by Western observers as a less threatening entity than before, the organization’s inability to move forward on expansion highlights its immaturity and should show outsiders the likely limited role that it will be able to play in post-American Afghanistan.

Initially born as a vehicle through which to resolve long-standing border disputes in the wake of the collapse of the Soviet Union, the “Shanghai Five” as it was known (made up of China, Russia, Tajikistan, Kyrgyzstan and Kazakhstan) formally changed its name in 2001 when it opened up to Uzbekistan and turned into the SCO. Over time, it developed into a forum in which regional players could forge closer links on a variety of issues, including economics, development, infrastructure projects and most recently education.

At the core of its identity, however, remained security concerns, focused on countering what the SCO members describe — in a clear emulation of the Chinese definition of a threat — as “terrorism, separatism and extremism.” Its biannual “Peace Mission” joint counter-terrorism exercises have been the most visible expressions of this focus, offering opportunities for nations to get together and practice operations usually focused on countering an assault by a small force of well-armed terrorists. In January 2004 it established the Regional Anti-Terrorism Structure (RATS) in Tashkent, Uzbekistan, and the next year opened its doors to the leaders of India, Iran, Mongolia, and Pakistan, who all attended the annual summit as “observers.” Also present was Afghan President Hamid Karzai, and the group agreed to establish the SCO-Afghanistan contact group, “with the purpose of elaborating proposals and recommendations on realization of cooperation between the SCO and Afghanistan on issues of mutual interest.” However, since then the Contact Group has done very little, and while further countries have joined the constellation of nations interested in becoming involved in the organization (Belarus and Sri Lanka are now “Dialogue Partners” and Turkey has applied to join this club) no further tangible movement has been made.

Yet it seemed as though this might be changing. Earlier this year, the organization celebrated its ten-year anniversary, and at a high-level conference in Shanghai the question of expansion was brought up repeatedly. However, while Russian participants seemed eager for the organization to allow new members in, the Chinese side seemed hesitant, pushing to deepen the organization’s economic focus and develop its international profile through official connections with other international bodies before expanding it further. This was reflected in the public discourse ahead of the St. Petersburg Summit where Russian officials backed the Afghan bid for upgrading the nation to “observer” status and openly supported Pakistan’s bid for full-membership. Yet nothing happened, and in his official read-out to journalists on his way back from the Summit, Chinese Foreign Minister Yang Jiechi made absolutely no mention of the possibilities of expansion.

This inaction is somewhat perplexing to outside observers. The organization was fundamentally founded to clarify borders so as to counter a transnational terrorist threat that most would agree has had a regional home in Afghanistan, and yet the SCO has done surprisingly little in direct terms to help the nation. Individual members have given support and money, but the organization itself has not. The idea of membership, or at least “observer” status, would theoretically tie Afghanistan more closely to regional players and bolster the current administration in Kabul. Yet by this same token, admitting Afghanistan to the group would mean taking sides in a conflict whose outcome remains uncertain. No one yet quite understands what the American withdrawal in 2014 will actually look like, and SCO members are unsure whether they want to become too entangled in a nation that has already subdued at least one SCO member in the past (Russia). And atop all of this there is the capacity question: the SCO has no standing forces and controls few direct funds. Consequently, as a diplomat at the Secretariat in Beijing put it to me last year, “what would you have us do?”

Other potential members face different problems: unwilling to take sides, the organization would most likely have to open its doors to both India and Pakistan at the same time — something that would also have the effect of bringing into the organization all the disagreements they share. The question of upgrading Iran is one that has taken something of a back seat of late following President Mahmoud Ahmedinejad’s failed attempt to be admitted last year. The reason for this blockage seems to be a general desire amongst SCO members to not overtly antagonize the United States. Mongolia would seem to be a relatively natural member, but given the precedent that letting a nation in would set, it continues to be obliged to sit on the sidelines.

And so the question remains: Why, in the run-up to the St. Petersburg Summit, was there such a flurry of interest in possible expansion? One explanation is that Islamabad has for some time been trying to bolster its regional partnerships in an attempt to counter-balance American anger and perceived fickleness. Russia also appears to be behind a lot of talk of expansion. Concerned about the in-roads China is making in its Central Asian periphery, Moscow perhaps hopes that expanding the SCO, something seen as primarily a Chinese vehicle, might stretch it beyond its ability to function. While the SCO may not have done much yet, it has laid the foundations for a more weighty future — a long-term vision that accords with China’s approach to foreign policymaking.

Whatever the case, the end result is that another high-level SCO Summit passed with little tangible forward movement. Seemingly obvious achievements like upgrading Afghanistan or Turkey continue to be avoided, while outside China there is little evidence that the regional powers are willing to invest too much into the SCO. All of which is welcome news to those who worry about the organization becoming a “NATO of the East,” but less positive to those who hope it might be willing to take on a greater role in Afghanistan when the United States makes its move in 2014.

Raffaello Pantucci is a Visiting Scholar at the Shanghai Academy of Social Sciences and an Associate Fellow at the International Center for the Study of Radicalisation. His writing can be found at http://www.raffaellopantucci.com.

A new post for the Lowy Institute’s Interpreter blog, this time based on some conversations in Beijing about China’s role in Central Asia. As I have mentioned previously, there is going to be an increasing amount on this topic here in aid of a bigger project I am doing with Alexandros. We had also set up this parallel website specific for the project that I would encourage you to visit regularly: http://www.chinaincentralasia.com. In the meantime, a few more posts along these lines in the next few days.

China hasn’t yet grown into its role

By Raffaello Pantucci & Alexandros Petersen – 7 November 2011 9:29AM

Raffaello Pantucci is a Visiting Scholar at the Shanghai Academy of Social SciencesAlexandros Petersen was a nonresident senior fellow with the Atlantic Council’s Dinu Patriciu Eurasia Center.

It was a grim, grey Beijing morning as we fought with our taxi driver and traffic to make it to a meeting at one of China’s many official think tanks. We had set up the meeting with the intention of discussing Chinese foreign policy in her western periphery, Central Asia, but were instead asked to present on the pending Western withdrawal from Afghanistan.

Trying to shift things back in our direction, we offered a brief presentation on the view increasingly shared in Western capitals that regional powers and the Shanghai Cooperation Organization (the Chinese-instigated regional grouping encompassing nearby Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Russia) could take on a greater role in ensuring post-withdrawal Afghan stability.

In response, we were told that our perspective was exclusively Western; we needed to see things from an Asian point of view.

According to the analysts and diplomats at the table, China’s influence is based on cooperation, development and mutual interests. China’s ‘soft power’ (a term that is not popular in Beijing) is its ability to let countries develop at their own rate. When China looks to the region, it sees nations that are beset with problems, but ones that China cannot and should not address. Instead, Beijing has constructed the SCO.

The purpose of the SCO is not to supplant the EU, US or Russia, but rather to create a mechanism. We were told our tendency to view the SCO as a ‘NATO of the East’ — a view we pointedly said we did not concur with — was merely a product of a Western bias built on the assumption that some sort of China threat lurks behind every corner. The SCO is young and regionally focused. Afghanistan, they reassured us, was something the SCO had always been concerned about and would address in the future.

So far, it has done very little. In fact, at the last summit the SCO member states were unable to agree on giving Afghanistan observer status. Instead the country continues to languish on the sidelines of an organisation nominally established with a view to stabilising a region that was menaced by trouble spilling over from Afghanistan.

This paradoxical approach seemed evident in other statements we heard about Chinese influence in Central Asia.

China is interested in countering the SCO’s stated ‘three evils’ of separatism, terrorism and extremism in Central Asia, yet it is not interested in interfering in anyone’s internal affairs. The SCO is not an economic organisation, and yet we were repeatedly told that it was focused on economics and development.

The paradox was made most clearly when someone announced to us something along the lines that ‘in the past the SCO has done nothing and in the future it will do nothing as well’.

But the reality of China’s sheer size means this approach is unsustainable. China is the world’s foremost rising power and her influence will be felt wherever she pops up. As we sat down to a sumptuous meal around a large garlanded table after our discussion, our new Chinese friends gave us no sense of having really thought through the implications of what their newfound accidental influence means.

The impression was rather that China is stumbling onto power it does not want, and with which it doesn’t know what to do.

Photo by Flickr user QUOI Media.

An op-ed in the International Herald Tribune today, looking at China and Russia across Central Asia. Am currently in the middle of a fascinating trip through the region, about which more later. My co-author and I are going to be producing a lot more on this topic in the near future, so watch this space. This particular article has already generated one angry response.

October 17, 2011

BY RAFFAELLO PANTUCCI AND ALEXANDROS PETERSEN

BEIJING — Traffic around Tiananmen Square was even worse than usual last week as President Vladimir Putin rolled through town to cement the supposedly flowering Chinese-Russian relationship. A series of high-level deals were signed between Chinese and Russian state-owned enterprises and China announced a substantial infusion into the new Russian Direct Investment Fund.

While cordial, an unspoken undertone to the meetings was Russian concern about growing Chinese influence in the former Soviet Union and particularly Central Asia.

Just before his visit to Beijing, Putin had announced a desire to form a new Eurasian Union that would tie a number of former Soviet states back into the Russian orbit. Hands immediately starting wringing in Brussels. At this time of E.U. weakness, the Eurasian Union was seen to be aimed at counterbalancing Western institutions.

These concerns are largely ill-founded. While the new organization is clearly an effort by Russia to reassert authority over its old dominions, it is in fact aimed East rather than West. Russia is far more concerned by growing Chinese influence in its backyard than anything the West is throwing its way.

The core of Russia’s concerns is the slow but steady progress of the Shanghai Cooperation Organization, originally set up in the post-Cold War period to define borders between its five members — China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan ( later joined by Uzbekistan).

But in the last 10 years the S.C.O. has evolved into the most interesting, and perhaps consequential, example of Chinese diplomacy. As a Chinese scholar put it to us the other day in Beijing, the organization went from being focused on regional security to honing in on regional development — a trajectory that accords tidily both with China’s and the Central Asians’ interests.

While nominally an equal partner to all members, Russia has felt like a junior partner in the S.C.O. Once one of the two poles in the world, Russia is now considered among the ranks of new rising powers — not a bad group to be in, but clearly a step down from its previous position in global affairs.

Moscow has sought to counter this by retaining links and authority among former Soviet republics. Those in Europe have now been absorbed into the European Union, but the Eurasian states have remained within the Kremlin’s sphere of influence, bound by a latticework of organizations like the Collective Security Treaty Organization, the Commonwealth of Independent States and the Eurasian Economic Community.

The S.C.O. was initially ignored by Russia when it was set up a decade ago, but it has steadily developed into an increasingly important actor that has become a vehicle for China’s push to develop Central Asia.

China has focused on trying to turn the S.C.O. from a security-focused organization into an economic bloc, a policy predicated on the knock-on effect that a stable and prosperous Central Asia would have on China’s underdeveloped Xinjiang Province.

Using its deep pockets to pour money into the poor and isolated Central Asian states, China has secured energy contracts, worked on hydroelectric plants and helped develop infrastructure from roads to telephone systems.

But China has gone beyond hard-nosed economics, developing a holistic strategy that attempts to bring Chinese soft power to bear on the region. China has established Confucius Institutes to teach Chinese in all the Central Asian states but Turkmenistan, and has also helped develop an S.C.O. University that brings together some 50-plus universities across China and Eurasia.

As part of a push to develop the S.C.O. as a cultural entity, as well as one focused on security and economics, these are admittedly baby steps, but there is some evidence of success. Growing numbers of Central Asian students can be found at Chinese Universities and reports from Confucius Institutes in the region point to the children of affluent families trying to learn Mandarin.

This is perhaps the greatest threat to Russia’s powerful legacy in the region. Moscow has no money to spend, so it has been happy to allow China’s investment in Central Asia, as long as Russia retains cultural predominance. That is starting to slip. Putin’s efforts at a Eurasian Union thus appear to be a rearguard action to stem the tide of increasing Chinese omnipotence in Russia’s backyard.

Raffaello Pantucci is a visiting scholar at the Shanghai Academy of Social Sciences. Alexandros Petersen is an adviser at the Woodrow Wilson International Center for Scholars in Washington.