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Russia: Shanghai Group Aims To Increase Economic Cooperation

By Antoine Blua/Bruce Pannier

A declaration adopted by the presidents of the six countries belonging to the Shanghai Cooperation Organization calls the development of economic partnerships one of the priorities of the organization. The declaration outlines the organization's intention to step up negotiations over creating favorable conditions for trade and investments and developing a long-term program of multilateral economic cooperation.

Prague, 12 June 2002 (RFE/RL) -- The presidents of the six countries belonging to the Shanghai Cooperation Organization (SCO) met Friday in St. Petersburg and signed a charter and a political declaration making their security grouping a formal international organization with longer-term goals.

In addition to fighting terrorism, preventing regional conflicts, and ensuring security in Central Asia, the declaration also outlines the development of economic partnerships, which it calls "an especially important task."

The SCO was established in Shanghai in 1996 to help defuse tensions along China's border with the former Soviet Central Asian states. The organization -- originally called the Shanghai Five -- includes Russia, China, Kazakhstan, Kyrgyzstan, and Tajikistan. Uzbekistan joined last year after the group changed its name to the Shanghai Cooperation Organization to reflect its expanded focus on fighting extremism, terrorism, and separatism.

The political declaration adopted in St. Petersburg states the SCO's intention to step up negotiations for creating favorable conditions for trade and investment and to develop a long-term program for multilateral economic cooperation.

According to the document, top priority will be given to projects such as the construction of transportation networks and power-generation facilities, water usage, and the production and export of hydrocarbon fuels.

Participants at the summit, including Kazakh President Nursultan Nazarbaev, expressed optimism that the SCO will become an important element for ensuring economic prosperity in the region. Nazarbaev also moved to hold consultations on a common tariff policy.

Sergei Blagov is a Moscow-based specialist in the political affairs of the Commonwealth of Independent States who is skeptical of the pledges made in St. Petersburg. He told RFE/RL that past experience indicates that pledges by Central Asian countries to develop economic cooperation often are ignored when national economic interests become involved. "For instance, say, three years ago, Kazakhstan imposed punitive -- around 200 percent -- tariffs against foodstuff imports from other Central Asian states, including members of this customs union [the Eurasian Economic Community], one of the groupings within the CIS," Blagov said.

Blagov conceded, however, that there are positive signs this time around. Russian President Vladimir Putin and Kazakh President Nazarbaev signed an important deal in St. Petersburg on the transit of up to 20 million tons of Kazakh crude oil a year through a Russian pipeline system. "It's really important in terms of competition between pipeline systems, notably the Kazakhstan-Novorossiisk Russian pipeline and the Baku-Ceyhan southern pipeline. So, at least one important economic deal was signed on the fringes of the SCO summit. So, it is not impossible that the SCO could mean some difference in terms of actual economic cooperation," Blagov said.

Blagov stressed that the main difference between the SCO and other organizations grouping former Soviet republics is the presence of China, whose involvement in the Shanghai group can, indeed, boost multilateral economic cooperation.

Considering that Russian officials have been pushing for pipeline projects to export Siberia's energy resources to China since the mid-1990s, Blagov said, there is great potential for cooperation among SCO member states. China and Kazakhstan have also signed an agreement to build a pipeline for exporting Kazakh oil to China.

In addition, Russian Foreign Ministry spokesman Aleksandr Yakovenko described China's recent admission into the World Trade Organization and Russia's preparations also to join the WTO as encouraging factors for wider bilateral relations.

Blagov noted, however, that current trade among SCO members remains negligible. "Trade between Russia and China last year was about $10 billion, compared to Russia's overall trade turnover of about $150 billion a year. And trade with other SCO partners is even smaller. For instance, trade between Russia and Kazakhstan is expected to reach just $5 billion this year, and with Uzbekistan only $1 billion," Blagov said.

At the same time, Beijing appears increasingly sidelined as Moscow forges closer ties with Washington, especially in the wake of the terrorist attacks of 11 September. Previous to Putin's shift toward the West, Russia and China had forged what they had described as a "strategic partnership," intended to offset alleged U.S. global domination.

Putin sought to reassure China about increasing U.S.-Russian cooperation at a meeting with Chinese President Jiang Zemin on the eve of the SCO summit. Putin pledged that Beijing will remain Moscow's top strategic partner and promised to increase Russia's weapons exports to China.

However, Alex Vatanka, editor of the "Russia-CIS Security Assessment Binder," part of the Jane's Sentinel group, stressed that the two states, separately, continue to view better relations with the U.S. as their top foreign-policy objectives. "The fact that [the U.S.] was so quick in stationing troops in Central Asia and the rest of it really must have somehow put a bit of fear in the Chinese and the Russians. But now things have cooled down slightly, and again if you look at the foreign-policy objectives separately, it is not a Chinese-Russian alliance or better relations they're really interested in. It is better relations with the U.S," Vatanka said.

Oksana Antonenko is a senior fellow at the London-based International Institute of Strategic Studies. She told RFE/RL that the SCO is currently undergoing an "identity crisis" because the group failed to respond adequately to the terrorist threat from Afghanistan. The organization's role of addressing regional security issues, she added, is being re-evaluated.

But Antonenko stressed that the SCO can be "very effective" if it builds on the interests of regional states. "Over the long run and as the U.S. interest in the region declines -- and I think it will be inevitable -- I think this is where the Shanghai Cooperation Organization can again assume a more prominent role. And I think following that, I would imagine that some countries in the region might be more and more interested to cooperate and participate in the activities of the Shanghai Cooperation Organization," Antonenko said.

Antonenko says the SCO can become "very valuable" if its members -- notably China and Russia -- start investing resources to develop both a counterterrorism capability and a "joint economic program" that can help alleviate poverty and solve such sensitive regional issues as border delineation and water resources in a cooperative manner.