Shanghai Cooperation Organization (SCO) in Post COVID-19


Written by

Mr. Shakeel Ahmad Ramay, MemberBoard of Experts, Center for Global & Strategic Studies (CGSS), Islamabad


Mr. Khalid TaimurAkram, Executive Director, Center for Global & Strategic Studies (CGSS), Islamabad.

World has been jolted by COVID-19 pandemic. It was un-expected and sudden. The impacts are multidimensional and multifaceted. The severity of impacts is unfolding in a timewise manner. The first victim was economy which was immediately stuck and bearing the full wrath of impacts. It is shrinking. World Bank predicted that the economy will be contracted by 5.2 percent in 2020. Foreign direct investment is exhibiting a negative trend. The United Nations Conference on Trade and Development (UNCTAD) came up with the figure of 40 percent reduction, which means the global FDI in 2020 would be less than US$ 1 trillion. It is happening after a long time, since 2005. Besides, it has been envisioned by UNCTAD that there would be further reduction of 5 to 10 percent in 2021, which is a scary prediction. Recovery in FDI is expected in 2022, which is still a long way to go.

The economic crises and drying investments are resulting in increasing extent of extreme poverty. World Bank report, Poverty and Shared Prosperity, has projected that 88 million to 115 million people will be added to extreme poverty (US$ 1.90) group. The South Asia would be major hit and bear the brunt of the poverty. It was estimated that 63 percent of these extreme poor will be from South Asia. If we change the poverty line from US$ 1.90 to US$ 3.20, the number will jump to 223 million at global level and South Asia will account for 71 percent. It is happening after 20 years that the extreme would be on rise. It is expected that it will affect the about 9.1-9.4 percent world population against the pre-Covid-19 projection of 7.9 percent.

The COVID-19 has also wedged the most celebrated achievements of humanity like mobility. The COVID-19 has compelled people to restrict their movement.In some cases, the countries had to adopt complete lockdown. World is still struggling to find a way of un-restricted movement of people. International travel and shipments have also been severely squeezed. Tourism is another major sector which is bearing the brunt of COVID-19 and restriction on mobility. It is happening against the backdrop of cherished success in means of mobility like air, train etc.

The second wave of COVID-19 is further aggravating the situation. We have witnessed many countries are going back to lockdowns. The economic activities have further started to shrink. World institutes are working to analyse the effects of second wave of COVID-19. It is expected that the impacts would be more severe in 2021, if the second wave of COVID-19 continued. It would be a scary scenario, as world is already facing huge problems due to the pandemic. The COVID-19 has introduced two specific problems, which has no precedent in history;

  1. Restriction on mobility
  2. Closure of economies

Countries and regions are offering hefty relief packages domestically and globally. However, the focus is on domestic markets and economy. For example, USA has already offered more than US$ 3 trillion. European Union has announced a package of 750 billion Euros. Unfortunately, the same commitment is not visible at global level. Owing to weak response many developing, and least developed countries are suffering the most. These countries were already facing problems due to food insecurity, energy crises, poverty etc. The global data showed that even before COVID-19 world was home to 600 million poor and 820 million people suffering from food insecurity. Further, 2 billion people were looking for safe drinking water and 1 billion were in need of electricity. 2.8 billion Peoplelacked sources of good quality cooking fuel. World was struggling to find ways to take care of 263 million out of school kids. Unfortunately, the majority of these people are resident of global south or developing world.

The worst impact of COVID-19 is that the process of unilateralism and protectionism got accelerated among the big countries. Strong countries, especially the Western, led by USA seems less interested in cooperation, rather they are focusing on domestic front.It is creating a sharper divide between poor and rich countries. Now the poor countries are struggling to find a way for recovery by building cooperation with strong economies. It has culminated into three specific problems, which are pressurizing world;

  1. Economic recession and poverty
  2. Unilateralism
  3. Protectionism

However, the analysis of past and history reveals that problems can only be solved by win-win cooperation, opening the borders and multilateralism. The situation also urges that world needs to work on multiple areas simultaneously, like economy and diplomacy. However, diplomacy would have to lead the way, as world is more fragmented at the present. In this scenario China is emerging as global player which can tackle the both dimensions of the problem. The reason of believe is sheer big size of economy, sustainability of growth even during COVID and partnership building style of diplomacy.

China has already showed the commitment and skills of partnership-based diplomacy through Shanghai Cooperation Organization (SCO). The SCO is one of the unique initiatives in many ways. The organization is home to 45 percent population and 25.88 percent land mass of world. Its contribution in economic sphere is also huge and constitute 21 percent of global GDP. It is only organization which have four nuclear armed states e.g. China, Russia, Pakistan and India. Its contribution in global trade is 21 percent (US$ 7.1 trillion). The sheer size of organization makes it a very relevant and principal player at the global stage.

Although the organization was created to settle the border issues among the member countries but in recent times it has phenomenally in all aspects. Now it is hosting 8 members, 4 observer states and 6 dialogue partners. Globally it is considered as one of the major diplomatic forums. In recent times China has also started the process of economic engagement and enhanced economic connectivity through the SCO. Hence, it is necessary to analyze the role of SCO in contemporary world and look how SCO can enhance role in role.

SCO and Economic Cooperation

The pre-COVID-19 efforts to enhance economic cooperation were focused on the traditional economic fields. China proposed a Free Trade Agreement many years back, to enhance the economic and trade linkages among the SCO members. It was suggested by keeping in mind the sheer market size of the SCO. On bilateral level China is already deeply connected with all countries e.g. China’s trade with SCO countries is US$ 337 billion. Russia (US$ 106.65 billion) and India (US$ 95.87 billion) were major trading partners in 2018.

President Xi Jinping recently has launched two specific initiatives. First, he established a dedicated economic zone with the name of “China-SCO Local Economic and Trade Cooperation Demonstration Zone”. It has been envisioned that through the zone China will enhance relationship in the fields of trade, investments, technology, tourism etc. It is an excellent opportunity for SCO countries to benefit from it, especially in the context of COVID-19. As, we know COVID-19 has impacted the whole world and the economic opportunities are scarce. It will also pave the way for future free trade agreement among SCO members.

In the post COVID-19 era, President Xi has proposed that the cooperation in the digital economy. He urged it should be enhance among the SCO members under the guidelines of UN. He emphasized that the COVID-19 reiterates the importance of digital economy, technology and cooperation. He advocated that with win-win cooperation we can reach at destiny of shared prosperity. China will be organizing a meeting of SCO members with name of “China-Shanghai Cooperation Organization on Digital Economy” next year. The announcement of forum shows that China is serious in building cooperation and ready to take practical steps.

The initiative is need of the time, as COVID-19 multiple the importance of digitalization and role of technology in economy. As we know COVID-19 has restricted the mobility and human interaction. The technology helped to minimize the impact, as it helped to keep the supply chains functional. There is no second opinion that the China was on forefront to use the technology and demonstrate the successful deployment of technology. In this context the initiative by China to enhance the cooperation in digitalization economy will help the member countries. The biggest catch would be technology sharing by China. The successful implementation will encourage other countries to join hands with SCO and expand the cooperation at wider scale. The best part of initiative is that SCO will be host of the initiative, which will enhance the importance of SCO in coming years.

SCO and Diplomacy

SCO was created as a diplomatic forum to settle the most urgent issues of borders and border management among the members states. The successful implementation led to expand the scope of work. The expansion process is still going on. However, the core values of SCO are intact which emphasize on the need of “partnership building” not “alliances”. The alliance building is favorite tool of global order at present. We can find number of organizations which have built on the concept of alliance. The prominent example is North-Atlantic Treaty Organization (NATO) including other. The basic flaw of alliance building approach is “alliance needs an opponent if not enemy”.

The world is facing the outcome of “alliances” approach. Today we are living in fragmented world and fractured global order. The Western countries are trying to oppose the rise of any other country and applying all types of instruments to hinder the rise of any other great power. It has led to fragmentation, unilateralism and protectionism. The forces of globalization are on backfoot. The pioneers and once proponents of globalization are backing out. They are trying to introduce ways, which can hinder the process of globalization rather reverse the process of globalization. The most famous slogan of present days is “country first” which is entirely in opposite direction to globalization.

It is unfortunate reality that the big powers are not understanding the impact of COVID-19 and importance of cooperation.The COVID-19 has urged the world leaders to cooperate, as cooperation is only way out to find ways to combat the impact of COVID-19. The situation also highlights that alliance building strategy will not serve the purpose. It can help few countries, but world will be losing.

In this context the approach of SCO, the “partnership” building can help world. The approach can pave the way for win-win cooperation under the auspices of UN. Although, the leading members China and Russia are already working to achieve the objectives of win-win cooperation but there is need to move fast. China will be hosting major event China-SCO Digital Economy Forum, under the auspices of SCO next year. The event can be used to lay the foundation to expand the cooperation at wider level. China and SCO can also look to enhance the participation and invite non-member countries to join the forum.

SCO can also launch a series of events and meetings to engage with non-member states and extend hand of the cooperation. As we discussed above SCO is home to 45 percent of world population, it can also serve as hope of world economic recovery due to its market size. China is already working to further open up but through the SCO, as an organization and platform, world can benefit in better way.

SCO can also introduce new form of engagement which would be based on thepartnershipand principles of equality. The equality among nations is a desired commodity and small countries are specifically looking for it. They are tired of the hegemonic or dominant behavior of big countries.

Future Role of SCO

In the light of discussion above, we have come up with following suggestions;

  1. SCO should immediately launch a dialogue process with other leading forums of world like European Union
  2. SCO should, on urgent basis, start to engage developing and least developed countries to give them hope of equality and cooperative world
  3. Economic opportunities should be increased at SCO platform, especially in the aftermath of COVID-19 and its impact on global economy
  4. To enhance economic opportunities, SCO should look ways to create formal linkages with Belt and Road Initiative (BRI) and China International Import Expo (CIIE) and Eurasia initiative of Russia among others
  5. To spread message of SCO, the organization should create a dedicated window for engagement of civil society at larger scale