SCO backs China’s Belt & Road Initiative

Islamabad: Leaders of the Shanghai Cooperation Organisa­tion (SCO) on Wednesday reaffirmed their strong support for China’s Belt and Road Initiative (BRI), despite India blocking a consensus on the sweeping infrastructure project.

However, all member states unified in the criticism of Western unilateral sanctions and protectionist trade practices.

A joint communique issued at the end of the 23rd Council of Heads of Government meeting of SCO member states said that Belarus, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Russia, Tajikistan and Uzbekistan “while reaffirming support for the People’s Republic of China’s One Belt, One Road (OBOR) initiative noted ongoing work on joint implementation of the project, including efforts to bridge the Eurasian Economic Union and OBOR”.

The meeting was held to discuss and agree on strategies for enhancing regional cooperation and promoting connectivity and economic growth.

The summit was attended by Russian Prime Minister Mikhail Mishustin, Chinese Premier Li Qiang, Belarusian PM Roman Golovchenko, Tajik PM Qohir Rasulzoda, Kazakh PM Olzhas Bektenov, Kyrgyz PM Akylbek Japarov, Uzbek PM Abdulla Aripov, and India’s External Affairs Minister Subrahmanyam Jaishankar.

Iran was represented by Minister for Trade and Industry Seyyed Muhammad Atabak, after First Vice President Aref Reza withdrew due to escalating tensions with Israel.

The leaders placed strong emphasis on enhancing connectivity and improving transport links as crucial drivers of regional cooperation and economic growth. Development of railway systems, multimodal transportation, port and logistics infrastructure, and the digital transformation of the transport sector were highlighted as key priorities.

By renewing support for BRI, the SCO member states acknowledged the Chinese initiative’s potential to transform the economic landscape by building transport networks, energy infrastructure, and trade corridors.

Prime Minister Shehbaz Sharif, who presided over the meeting, in his opening remarks called for expansion of BRI.

“Investment in regional infrastructure projects, such as transport and energy corridors, is crucial for economic integration. To this end, projects such as the Belt and Road Initiative (BRI), China-Pakistan Economic Corridor (CPEC) and International North-South Corridor (INSC) can be expanded to improve connectivity, focusing on roads, railways, and digital infrastructure,” he said while cautioning against viewing such projects through the narrow political prism.

“Let us work together for a well-integrated and prosperous region that benefits all member-states,” said PM Shehbaz, whose country plays a crucial role in the BRI through the CPEC.

Prime Minister Mishustin, according to TASS, emphasised that improving transport connectivity among SCO countries and developing reliable logistics routes is a top priority.

“By maximising the transit potential in both East-West and North-South directions, we can boost cargo flows and make travel more convenient for citizens,” he said, while speaking about Russia’s efforts to build the North-South International Transport Corridor in collaboration with Iran and other Commonwealth of Independent States (CIS) countries.

Premier Li, meanwhile, called for improved “regional trade and investment facilitation and connectivity” and maintaining “the stability and smoothness of the industrial chain and supply chain”.

Iranian Minister Atabak stressed “strengthening (of) transit corridors and communication lines” for expansion of regional cooperation.

Sanctions, protectionism
The participating leaders, according to the joint communique, took a unified stance against unilateral sanctions and protectionist trade practices, which were seen as barriers to open trade and economic collaboration.

They argued that sanctions not only undermine the sovereignty of countries, but also disrupt global economic relations. They advocated for multilateral cooperation under which countries openly trade and respect for international law takes precedence over unilateral actions.

“The heads of delegations emphasised that the unilateral application of sanctions is incompatible with the principles of international law and has a negative impact on third countries and international economic relations,” according to the communique.

They also opposed protectionist actions and trade restrictions that undermine the multilateral trading system and impede global sustainable development.

Two of the SCO members, Russia and Iran, have been the major victims of the Western sanctions that have significantly affected their economies, restricted access to international markets and stifled growth.

“Russia is under increasing pressure, but the authors of the sanctions will not achieve their goals. We are focused on unlocking our internal potential, supporting key areas of the national economy and enterprises,” PM Mishustin said.

Iran’s Atabek likened the sanctions on his country as “economic terrorism” and hoped that SCO will “stand with one voice against the unilateralism and economic terrorism of the United States against the people of developing countries, including Iran, and its member countries that are affected by these illegal actions.”

Development bank, funds

SCO leaders decided to expedite consultations on the establishment of financial institutions for boosting economic cooperation among member states.

“Pursuant to the SCO CHS Decision of 4 July 2024 on the mechanisms of financial support for project activities of the Shanghai Cooperation Organi­sation, the heads of delegations instructed the authorised Ministries and Departments of the Member States to intensify consultations on the establishment of the SCO Development Bank, the SCO Development Fund (Special Account) and, in the format of the interested parties, the SCO Investment Fund,” the communique read.

These institutions are expected to contribute to economic integration, trade facilitation, and regional connectivity. The proposed SCO Development Bank is planned to provide financing for infrastructure projects, while the SCO Development Fund is intended to support economic development initiatives. The SCO Investment Fund, after materialising, will likely focus on investments in key sectors, such as energy, transportation, and telecommunications.

By providing alternative financing options, the SCO aims to reduce dependence on external financial institutions and promote economic growth among its member states.

In a move aimed at reducing reliance on the US dollar and other foreign currencies, the SCO also called for prioritising the use of national currencies in mutual settlements.

These decisions are seen as a strategic effort to reduce the dominance of Western currencies in global trade, positioning member states to have more control over their economic interactions and financial policies.

“Pakistan also supports the proposal to create an SCO alternative development funding mechanism, to give the needed impetus to various stalled development initiatives. We also welcome the timely decision of the SCO Council of Heads of State on the mechanisms of financial support to project activities of SCO,” Prime Minister Shehbaz said and noted that there was “a clear understanding among all SCO member-states about the need for settlement in mutually acceptable currencies.”

Premier Li asked member-states to “actively prepare for the establishment of the SCO Development Bank”.

Security
Regional security and stability were key priorities throughout the meeting, with member-states addressing shared challenges such as terrorism, extremism, and organised crime.

The communique pointed to the desire for developing cooperation in the spheres of politics and security.

One of the four suggestions put forward by China’s Li for strengthening cooperation among the member states was to “strengthen joint actions to combat the three forces — separatism, terrorism, and extremism — and speed up the construction of a comprehensive centre for responding to security threats and challenges, a drug control centre, etc.”

PM Shehbaz also made a reference to the cross-border terrorism it was facing from Afghanistan as he called on the member states to press the Taliban administration to prevent its territory from being used by various entities for terrorism against its neighbours.

Interestingly, Prime Minister Shehbaz also urged the SCO members to press the Taliban to ensure political inclusivity in their governance.

Despite the SCO’s prohibition on discussing bilateral issues, Mr Jaishankar subtly criticised Pakistan, making veiled references that were seemingly directed at the host country.

“If activities across borders are characterised by terrorism, extremism and separatism, they are hardly likely to encourage trade, energy flows, connectivity and people-to-people exchanges in parallel,” he said.

“If trust is lacking or cooperation inadequate, if friendship has fallen short and good neighbourliness is missing somewhere, there are surely reasons to introspect and causes to address,” he further said.

Leaders also acknowledged the need for joint action on climate change and called for stronger cooperation on environmental protection and efforts to build climate resilience.

Cultural diversity and people-to-people diplomacy were recognised as essential components of the SCO’s mission. The summit concluded with the signing of eight important documents, addressing the organisation’s budget, the functioning of the SCO secretariat, and regional counterterrorism initiatives.