The SCO was created in 2001 out of a previous organization called the Shanghai Five (Russia, Kazakhstan, Kyrgyzstan, Tajikistan and China) in order to deal with border issues stemming from the Soviet Union's collapse. The SCO then expanded to include Uzbekistan and began focusing on multilateral security issues in the region.
The SCO has been pulled in multiple directions since its inception, due in part to the competing visions for the organization's function from its two heavyweights, Russia and China. Moscow wants the SCO to become a political and security alliance that could eventually rival NATO in terms of organization, clout and capability — or at least to appear comparable to NATO. With no desire to confront the West — particularly the United States — on security matters, China sees such a goal as dangerous.
The SCO indeed has been used for coordination on many security matters, including military exercises and joint counternarcotics and counterterrorism efforts. However, the organization will never become the grand counter-NATO alliance Russia originally envisioned. As result, Moscow has gradually turned its focus toward strengthening its other military grouping, the Collective Security Treaty Organization, which includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Despite the SCO's limited security value, Russia has stayed involved in the organization to influence China's involvement in the region.
Beijing's interest in the SCO is rooted in geography and economics. China's economic and political core runs along its coast, and more than 90 percent of its trade is maritime-based. Consequently, China wants to secure its land borders, particularly the volatile frontier between Central Asia and the Xinjiang Uighur Autonomous Region, to avoid diverting its focus from the coast.
China is interested in importing energy and raw materials from Central Asia. However, by economically tying itself to the region through investments, China is encroaching on Russia's sphere of influence. Thus, the SCO was created as a way for Moscow and Beijing to communicate and cooperate in their shared region.
Two changes that could result from the SCO summit could be crucial to the organization's future. First, the SCO is under greater pressure to allow Afghanistan to join with observer status. The SCO has four such members already (Pakistan, Mongolia, Iran and India) and most full SCO members favor this proposal. Afghanistan's neighbors are concerned about the potential for security issues to spill over into Central Asia after the United States withdraws its forces, so the countries favor active engagement with Kabul. At the summit, China will propose an action plan for SCO involvement, recognizing the benefits of regional cooperation in Afghanistan. This will attempt to further cement Afghanistan's integration into Central Asia and help keep the country stable enough to contain most security concerns. The plan could include Russian provisions of security training and equipment, as well as Chinese investment and infrastructure assistance.
The more controversial issue is an expansion of the SCO's mandate to institutionalize an economic component. Beijing has wanted to include such a component since the SCO's inception. Russia has opposed China's initiatives, however, because Moscow has no interest in allowing Beijing to strengthen its economic ties to the region.
Russia has an upper hand in security in the region due to its other military alliances and bilateral security deals, as well as the region-wide deployment of its own military. However, the Russians know that China's regional strength is economic. In 2009, after Moscow rebuffed China's proposal for an SCO economic component, Beijing struck multiple bilateral deals loaning SCO members billions of dollars under the organization's aegis. In the upcoming summit, Beijing wants to set up an inter-SCO development banking system in order to formalize loans given within the organization's framework. Since Beijing has demonstrated its willingness to make deals without Moscow's approval, Russia seems to be considering support for the plan in order to influence China's use of such money within the SCO. Beijing, meanwhile, would rather deter Russia from taking an aggressive stance against Chinese spending in Central Asia.
The underlying issues between Moscow and Beijing will remain: Both countries want to expand their regional influence but currently cannot compete with each other on the same level. Thus, they have opted to try to coordinate positions and policies via the SCO. Over the years, Beijing has conceded military dominance in the region to Moscow. Now, Russia could be considering granting the same concession to China's economic presence.
