India, China must segregate bilateralism from a pan-SCO discourse

By Faisal Ahmed

Qingdao is all set for the Shanghai Cooperation Organisation (SCO) summit in early June. This could be a defining moment for India as it prepares to attend its first meeting as a full member. However, this congregation has its own strategic relevance and geo-economic connotations for India. The recent informal summit between Prime Minister Narendra Modi and President Xi Jinping in Wuhan can give enough cues for the future of Sino-India engagements. Interestingly, the SCO is a Eurasian regional grouping and its impact on Sino-India bilateral ties and the expectations thereof may not be deep-rooted. In fact, the SCO platform cannot be used to prevent border skirmishes, but it may provide substantial advantage in rationalizing bilateral trade. By engaging through this platform, both India and China can leverage geo-economic and strategic benefits accruing from larger issues of common interests, which may however not necessarily be bilateral in nature! Therefore, both India and China need to explore joint possibilities with a caution, by clearly distinguishing the bilateral from the congregational.

Chinese President Xi Jinping (3rd L, front) and other leaders and representatives of international and regional organizations pose for a group photo before a large-range meeting of the 17th meeting of Council of Heads of State of the Shanghai Cooperation Organization (SCO) in Astana, Kazakhstan, June 9, 2017.[Photo: Xinhua]

Primarily, the issue of regional connectivity is a key geopolitical concern, which in its present configuration narrows down to the Belt and Road Initiative (BRI). Last month, the SCO meetings of the defense and foreign ministers were held in China and attended by India as well. A key concern for India was that the foreign ministers of the other member countries including Russia, Pakistan, Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan affirmed their support for China's ambitious project – the BRI. Primarily, India's concern lies in a key tributary of this project called the China-Pakistan Economic Corridor (CPEC), which India's sees as a threat to its sovereignty. This corridor includes multiple projects focused on rudimentary and ancillary infrastructural development at Pakistan's Gwadar port, and provides geo-economic opportunities for Russia as well as Central Asian countries. Some of the key initiatives under this project include development of infrastructure related to special economic zones, international airports, and liquefied natural gas (LNG) facilities in a segment of the Iran-Pakistan pipeline – a part of the stalled Iran-Pakistan-India (IPI) gas pipeline.

Also, the Quadrilateral Traffic in Transit Agreement (QTTA) which was initiated in the mid-1990s and now being considered a part of the CPEC is both an opportunity as well a concern for India. Whereas, it envisages an opportunity to connect to Central Asia, for India it poses the same sovereignty question associated with the CPEC. QTTA, in fact, is a transit trade deal between China, Pakistan, Kyrgyzstan and Kazakhstan. This road is geopolitically significant for Pakistan as well which sees it as an alternative to the Afghanistan-Pakistan Transit Trade Agreement for gaining access to Central Asia. Now with countries like Tajikistan too expressing their desire to be a participant in this agreement, its scope and geopolitical significance is gradually widening.

Thus, considering the CPEC and QTTA and India's reservations thereto, a geopolitically correct and a conducive connectivity mechanism for India has to be developed through the Chabahar port only, which is a joint initiative by Iran, India and Afghanistan, without Pakistan. However, after the first phase of inauguration of the Chabahar port, Iran invited both China and Pakistan to participate in the port development. Though India termed it as Iran's prerogative, Chabahar now too is indirectly under the ambit of the SCO. Therefore, India and China need a bilateral discussion on this issue in the forthcoming SCO summit.

Another key concern is the nature and extent of military cooperation. The recently concluded 15th SCO Defense Ministers meeting in Beijing saw participation by both India and Pakistan as full members. On the sidelines, each member country held bilateral defense discussions with the other with an exception of an India-Pakistan bilateral meeting. They will however be participating in the Peace Mission counter-terrorism joint exercise to be organized in the Ural Mountains in Russia later this year. Both countries have indicated that they will keep bilateral defense issues apart and will cooperate within the joint SCO framework. Arguably, even under the purview of the Regional Anti-Terrorist Structure (RATS), terrorism and intelligence sharing are two critical issues that may not produce enough pragmatic outcomes in the SCO - at least to the satisfaction of India. Also, military cooperation and the much-desired strategic communications between India and China to avoid any Doklam-like border skirmish also solicits a bilateral context, and would be too subjective to be handled by the SCO.

On a different note, there are talks that countries like Nepal, Pakistan and Maldives seem to have an inclination for inclusion of China in the South Asian Association for Regional Cooperation (SAARC), a rather geo-economically subdued group. However, China's inclusion is likely to change the geopolitical equation in a way that China could be rebalancing SAARC and the SCO with the possible epicentre in Pakistan. The SAARC-SCO conundrum, if at all it happens, may involve the inter-play of India, Pakistan and China as well. This would rather create a geopolitically volatile situation.

Further, energy security remains a concern for both India and China owing to their huge hydrocarbon-dependence. Geographically located around the Caspian Sea, the Central Asian republics are energy and resource-rich countries. In fact, Kazakhstan, Turkmenistan and Uzbekistan are rich in natural resources including hydrocarbon and minerals, and would be favourable for India and China. However, India faces the critical issue of gas pipelines whose negotiating stances have to be followed closely. For instance, there is good news for a Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline whose negotiations has again been reinstated recently and the pipeline is expected to start distribution from the Galkynysh gas field in Turkmenistan up to Fazilka in India by early 2020. But, despite being a Central Asian country, Turkmenistan is not a member of the SCO, and so, the TAPI pipeline is not under the purview of this congregation. Another gas pipeline i.e. the IPI pipeline is marred by a stalled negotiation. China is working on the Iran-Pakistan segment, but whether and when the Pakistan-India segment would become functional is unforeseeable. Moreover, since Iran is not a SCO member, there is no possibility of this negotiation to be subsumed under the SCO framework.

One agenda in which the SCO can contribute significantly is the development of global value chains (GVCs). There is a huge possibility of development of GVCs across the SCO in sectors such as petro-chemicals, metallurgy, LNG, aviation, automotive components, pharmaceuticals, and defense manufacturing, among others. Also, there is huge possibility of joint investment by the member countries in sectors such as agriculture, port infrastructure, construction, power, and development of small and medium enterprises (SMEs). Such initiatives will reduce the supply-side constraints and therefore the trade costs within the SCO. This will also help increase export competitiveness of the countries, reduce their trade deficits (e.g. in the case of India and China), and help leverage the roles of SMEs in contributing to the combined SCO outputs.

Moreover, the SCO needs to pay utmost importance to enhancing cultural and humanitarian cooperation, which is one of its key mandates. It needs to give due impetus to developing people-to-people contact among the countries. The Mode-4 and academic exchange mechanisms need to be made more robust to induce an enhanced social connect, which can bring unprecedented benefits for the people across the SCO.

Therefore, the narrative of India, China and other member countries should drift from their respective bilateralism to a congregational level. Pragmatic discourse on geo-economic interests on a pan-SCO level will be instrumental in maintaining the legitimacy and mandate of the SCO in the fast-evolving regional geopolitical architecture.

(Faisal Ahmed is a geopolitical expert and an associate professor of international business at FORE School of Management, New Delhi, India.)