SCO Summit: What It Means For India-China Diplomatic Ties Post Ladakh Pullback?

Amid Russia-Ukraine crisis, India and China can together get SCO moving into actual engagement for other nations.

6 min read
Hindi Female

As Delhi and Beijing decided on a surprise disengagement at Hot Springs in Eastern Ladakh, media across the board were linking it to the upcoming summit of the Shanghai Cooperation Agreement to be held on 15-16 September which President Xi Jinping is expected to attend.

The summit is to be held at Samarkand, a name that evokes all the romance of a time when it was once, the crucible of world cultures in a history going back two millenia. The Uzbek town, still has a priceless heritage from the past, including the ancient city of Afrosiab, destroyed by a rampaging Genghis Khan in 1220.

That’s one lesson. Riches bring trouble with it. The oasis town, though it rose again, receded into obscurity as sea farers brought the caravans to an end , leading directly to the dominance of Europe and later the US.

This week’s summit conference of the Shanghai Cooperation Organisation ( SCO) is aimed at again shifting it back again to the East. No easy task. Especially when one gets behind the gloss. And why PM Modi is travelling there at all?

All You Need To Know About SCO

The SCO was formed in June 2001 by Russia, China, Kyrgyzstan, Kazakhstan and Tajikistan, as a follow up to an earlier agreement on “Deepening Military Trust in the Border Regions." At the time, China chose to settle its borders with neighbours at a time when it needed their cooperation to stem violent upsurges in its only-Muslim region of Xinjiang.

As the Chinese economy surged, there came the Belt and Road Initiative( BRI) as a way to monetize its industrial excess capacities. With time, the SCO expanded to include Uzbekistan, and then India and Pakistan, with Afghanistan, Belarus, Iran and Mongolia as observers, and six others — Azerbaijan, Armenia, Cambodia, Nepal, Turkey and Sri Lanka as dialogue partner status .

SCO Member Nations Echo Anti-Us Sentiments

It went onto get an observer status at the United Nations, and associations with other regional bodies, all of which was very impressive. Now it appears that Iran and Belarus will also join as full members. Both are staunchly anti-American as it gets.

Another point. While the organisation doddered about for a while, it’s activities – particularly, military ones gathered pace as the US arrived in Afghanistan with its troops and its aircraft.

Later, SCO summits condemned US Missile defence and its backing off from Arms control pacts. As Ukraine gathers pace, a certain anti-Americanism, earlier only latent, is only likely to sharpen.


Why Should SCO Matter to India?

The bare figures are impressive. After all as the group’s website notes that members’ collective economic potential (not GDP) nearly equals the total U.S. GDP Central Asia harbours more than forty-five percent of the world’s untapped oil and natural gas reserves, and the entire territory after Belarus is included, will encompass 12 time zones and 30 million 189 thousand square miles of territory of its members states, that encompassed a quarter of the total population of the world.

It also harbours four nuclear weapon states that between them hold 6928 warheads. Compared to that, the only other like organization – the North Atlantic Treaty Organisation (NATO) is a biggish dot on the map. But territory and population is not everything. For instance, NATO’s nuclear warheads are about the same at 6065 but that is a cohesive military organization.

No one in their right minds would ever think that of the SCOs whose members are at loggerheads with each other. That’s not just Indo-Pak tensions, or the China- India fracas but central Asian states are also at odds with one another. Again, NATO’s collective GDP is more than twice of that of SCO’s original members.

Uzbekistan has a per capital income of about $2000 while Albania, arguably the least wealthy in NATO, is placed at $6536. No comparison, but here’s a catch.

Within this grouping, India’s $3 trillion economy counts for something. Especially as Delhi is courting the Central Asians for trade and political support. As Iran joins, Chahbahar could get an uptick, and with it India’s International North South Trade Corridor, and trade corridors to Central Asia. That would be no bad thing, particularly for Central Asians themselves who are beginning to feel rather hedged about by its massive neighbour.

Selective Rail Connectivity Plagues Several Countries

That brings one to the connectivity question. China has begun to run trains to Europe with major routes via Russia, while the other by passes both Russia and much of SCO barring Kazakhstan, to reach Europe.

The border town of Xi'an in Western China, for instance, has 16 main freight train routes to Europe, passing through 45 countries and regions. But the war in Ukraine has stalled the massive 3680 freight trains that ran this year, due to sanctions against Russia.

The alternatives are meagre. China’s promised rail route to Kyrgyzstan has been on for 20 years, and nothing much has happened with ‘iron brother’ Pakistan either in terms of an ‘SCO space’ , though Gwadar Deep Sea port is being sold by both as a natural exit for Central Asian trade. Turkey’s rail systems lack the capacity and upgrading Central Asia’s rail network is not just a problem of different gauges, but also electrification differences, customs difficulties and a system that has run down. But there is clearly a push on to diversify.

Kyrgyzstan has recently opened a Trade house in Islamabad for facilitating transit trade through Pakistan, while Uzbekistan is looking even further for a Free Trade Agreement and a railway line. All that depends on the stability of Afghanistan and its own border areas. Not really encouraging. But then India’s own connectivity with the region suffers from the same limitations. No winners here.


Central Asia Reeling Under Trade Debts

China has already established a network of trade agreements, to create conditions for economic union, a prospect that is being resisted for fear of an even bigger Chinese embrace. China is already the largest trading partner – particularly in buying up energy - and also the largest source of investment.

The result is predictable. Three Central Asian countries are among the top 50 most indebted recipients of Chinese direct loans – Kyrgyzstan indebted upto 30.5% of GDP, Tajikistan at 16.1%, and Uzbekistan at 7.5% of GDP.

There are instances where Tajikistan, once an ardent supporter of the BRI, has had to cede mining rights and land to China due to its inability to pay off debts. China naturally calls all this ‘mutually beneficial’ and most recently, Chinese sources were reporting that outbound direct investment from China was at $14 billion, and that combined trade with all five surged by 25 percent year-on-year to $44.6 billion during the first 11 months of 2021.

However, even as Chinese Majors press to get into the region, Beijing is learning, helped along by its own resource crunch. Research shows that it is localising labour and adapting to meet local needs. That there is local resentment however is indicated by other studies as well particularly in Kazakhstan over Beijing’s treatment of its Uighurs.

Despite its massive presence, its no cake walk. China not only needs SCO hydrocarbons, it also needs its goodwill, especially as the US ramps up the pressure

How Can India Collaborate With China To Steer SCO Ahead?

In a nutshell, Prime Minister Modi is likely to find his counterpart a little less upbeat, and a little more conciliating as China’s economy slides, and Xi awaits the pivotal Congress of the Communist party in October. None of this means that China ‘gave’ anything away in disengagement nor is it likely to give an inch its projects in Pakistan Occupied Kashmir(PoK) – our position on ‘respect for sovereignty and territorial integrity” in connectivity notwithstanding.

But the truth is that as of now, with Russia bleeding from the Ukraine crisis, it is China and India who can together get SCO moving into something approaching actual engagement rather than a Chinese colonization project.

To get there, India has to weigh in, not just with offers of digital connectivity, technology parks and alternative medicine but also as a strong trading partner with a vibrant connection through Iran.

The problem is to get all this done without Washington breathing heavily down our backs. But hope flows. As China takes a pause in its rise, it may well be that Samarkand will live again as a upscaled caravan route to the world – not just Beijing. That’s good for everyone, including America.

(Dr Tara Kartha is a Distinguished Fellow at the Institute of Peace and Conflict Studies (IPCS). She tweets @kartha_tara. This is an opinion article and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)

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