The Qingdao quest and the 2018 SCO summit

By Digby Wren

On June 9 and 10 the annual Shanghai Cooperation Organization (SCO) summit will be held in Qingdao. The goal of the summit is to increase consensus between China and its neighbors, and to boost regional cooperation. The selection of the historic city of Qingdao - located in China's eastern province of Shandong and one of the world's most modern and efficient shipping ports - indicates the important role the Belt and Road Initiative and the 21st Century Maritime Silk Road will play at this year's summit. However, the steady progress in building trade mechanisms and taking comprehensive action against the "Three Evils" of terrorism, separatism, and extremism could be overshadowed by a raft of serious regional issues.

Photo taken on May 3, 2018 shows the old town of Qingdao, east China's Shandong Province. The 18th Shanghai Cooperation Organization (SCO) Summit is scheduled for June 9 to 10 in Qingdao, a coastal city in east China's Shandong Province. [Photo: Xinhua]

First among these are the serious ructions caused by the actions of the Trump administration, which include its withdrawal from the Iranian nuclear deal; an on again-off again North Korea summit; and continuing sanctions that impact Russia's economic security. India, too, still has major issues of concern, including territorial disputes with neighbors.

For the first time, both India and Pakistan will be attending as full members of the SCO. And Iran, perennially keen to become a member, will attend in its current status of observer. It is noteworthy that the organization includes all six nations bordering Afghanistan, where an emerging power vacuum could soon threaten Indian power and security and the space from the Mediterranean to the Arabian Sea that is bordered by Iran. Taking in the larger geo-strategic view, the United States will not be pleased with greater support being offered to Iran. However, the United States ought not to be reticent about the responsibility for their Afghan quagmire passing to the SCO that, unlike NATO, is not a military alliance but a forum for disputes, security issues, and other interstate bilateral and multilateral cross border issues.

The SCO members states include two United Nations Security Council members (China and Russia), and half of the world's nuclear powers now that India and Pakistan are full members. The current turmoil surrounding President Trump's decision to withdraw from the Iran nuclear deal, a deal long supported by China and the Europeans, means the visit to the SCO summit by Iran's President Rouhani will be closely monitored for signs of a possible breakthrough. Russia's previous position – that with American and European sanctions against Tehran lifted, that country could finally become a member – might also bear fruit.

Despite these issues, China sees the enhancement of the role of the SCO as a priority, and President Xi Jinping has expended considerable political and diplomatic capital over the past year to ensure the success of the 2018 Qingdao summit. Following the 2017 standoff in Doklam, India moved steadily closer to the United States, Japan, and Australia. And India refused to attend the 2017 Belt and Road Initiative Forum in Beijing because of sovereignty concerns after China-Pakistan Economic Corridor projects traversed the contested Kashmir territory.

India's concerns about its northern frontiers and the strategic role of the Belt and Road Initiative were key targets of China’s diplomatic efforts. Last year, President Xi met Prime Minister Modi on the sidelines of the Annual BRICS summit in Xiamen and moved towards ending the 73-day standoff in Doklam. Finally, the two leaders met earlier this year at a highly publicized meeting in Wuhan and made considerable headway towards greater coordination and cooperation that helped set the stage for this year's SCO summit in Qingdao.

Trade is perhaps the most important of all issues, as it is intimately linked with the Belt and Road Initiative and is seen by China and others as the key to long-term security. It is expected that President Xi will propose a SCO-FTA, a proposal that Russia's Prime Minister Dimitri Medvedev said last year would be viewed positively by Russia. The proposal would represent significant progress in implementing the Shanghai Spirit that was defined by the foreign ministers of the SCO member states earlier this year in Beijing. The Shanghai Spirit is the term adopted to encapsulate the key SCO principles of mutual trust, mutual benefit, equality, consultation, respect for cultural diversity, and the pursuit of common development.

Since its inception in 2001, the SCO has become a comprehensive regional organization that plays a constructive role in regional and international issues and regional security and stability. It enhances cooperation on the Belt and Road Initiative, builds institutional arrangements for regional economic cooperation, and expands people-to-people exchanges and cultural cooperation. That being said, other issues that will be high on the agenda are the status of Afghanistan, a possible breakthrough on the Korean peninsula and its economic development, the development of trade with Iran, linkages with Indian transport infrastructure, and a Renminbi-dominated payment mechanism that could accelerate moves toward a free trade agreement.

For countries like Kazakhstan, the SCO provides a forum to promote its transition into a major crossroads and transit hub for all west-east and north-south trade within the SCO and the Belt and Road Initiative. Having recovered from the oil price fall a few years ago, Kazakhstan can now envisage a future when its own vast mineral, energy, and agricultural resources, and an expanding industrial processing value chain, can benefit from distribution along Belt and Road infrastructure and within an SCO-FTA arrangement.

For Kyrgyzstan, Tajikistan, Uzbekistan, Pakistan, and Afghanistan (an observer), energy and mineral exports, foreign investment, and infrastructure enhancement to fuel growth across Eurasia are key issues.

And terrorist, separatist, and extremist issues that continue to be a constant irritant complicate larger integration and trade initiatives. Concerns about transnational terror, particularly over Islamist fighters returning from Syria into SCO states, are of specific concern for Russia, and will require closer coordination in intelligence collection and sharing, and passport and border checks.

Ultimately, the entire Eurasian landmass from Vienna to Vladivostok, Moscow to Mumbai, and Shanghai to Singapore requires high-level multilateral coordination to coordinate, negotiate, and deliberate on the vast new trading networks currently under construction. While both the SCO and Belt and Road Initiative are horizontally networked, the SCO is positioned above the Belt and Road Initiative to oversee and underpin the security and transnational trade linkages that are up for discussion at Qingdao. Together they form the critical multilateral architecture required to secure the transfer of the axis of global wealth and power to Eurasia in the first half of the 21st century.

(Digby Wren is an Australian scholar from Deakin University. He now serves as a visiting scholar at Sichuan Normal University)