SCO and EEU: the difficulties of pairing

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SCO and EEU: the difficulties of pairing 01.11.2017 12:44

 

In the countries that make up the space of the Shanghai Cooperation Organization and the Eurasian Economic Union (EEA), 40% of the world's population lives. The two alliances have every opportunity to create a new platform for economic cooperation. The conjugation of the EEU and the SCO is beneficial, first of all, to the countries of Central Asia. This will help in developing the economy and raising the level of security. It's no secret: stability is the basis for successful economic cooperation. These two organizations, despite a number of contradictions, can successfully complement each other. Cooperation in the framework of the EEU is focused, first of all, on issues of economic interaction. As for the SCO, declaring its fundamental commandment - "strengthening security in the region, promoting the opening of the potential for good-neighborliness, unity and cooperation between states and their peoples", also declares the creation of mechanisms for economic cooperation.

To assess the possibility of pairing the two organizations, it is necessary to recall the goals and objectives of each of them. Participants in the first summit, which in 1996 created the Shanghai Five (Russia, China, Kazakhstan, Kyrgyzstan and Tajikistan), signed an agreement on strengthening confidence in the military sphere in the field of border protection. A year later, Uzbekistan joined the SCO, the format of the organization turned into a "six". Russia and the young sovereigns of Central Asia no longer represented a military threat to China. All the Soviet military garrisons were withdrawn from the Central Asian region.

But at the same time, the economic balance was violated, including the factor of de-industrialization, since many enterprises were "grounded" in servicing the Soviet military system. Having accomplished the task - ensuring stability along the perimeter of the borders of the former Soviet republics and China, the organization turned to the economic component. There were contradictions: Beijing insisted on the establishment of the Development Bank of the Shanghai Cooperation Organization, Moscow offered to stop at the SCO Development Fund with a view to providing financial support for joint projects within the organization. The conflict consisted in the fact that China has a large amount of cash, and the Bank of the SCO would automatically become a Chinese tool. Russia insisted on maintaining a balance within the SCO. Today, the SCO has entered a new phase of its institutional development already as the "Shanghai Eight" - in the summer of this year. India and Pakistan became full members of the Organization.

Speaking about the EEU, it is a project in which, at the level of all official documents, exclusively economic integration is laid. Presidents of Russia, Kazakhstan and Belarus in May 2014 signed the agreement of the EEU on the basis of the Customs Union. Later Armenia and Kyrgyzstan joined the integration association. Next is Tajikistan. The EEU was conceived as a confederation of sovereign states with a single political, economic, military and customs space.

Of course, this is not a question of influencing the political sovereignty of the member countries of the organization, their currency and taxation regime. The EAEC has clearly defined the development path as a subject of international law - the Free Trade Zone (FTA). The direction is quite effective and efficient. The EEU concludes an agreement on the FTA with specific countries. Recently, the main parameters of the FTA have been coordinated with China. Indian delegations have repeatedly participated in the meeting of the EEU. Interest in the FTA is shown in about 50 countries around the world. In fact, for cooperation within the framework of the EEU - FTA, it is sufficient to have bilateral relations: the EEU - China, the EEU- India, etc. This is the best option because all participants have different economies, different structure of export-import trade relations. But, the FTA agreement within the framework of the organizations of the EEU-SCO is difficult to imagine, as the interests of the countries belonging to these organizations are different. And most importantly, the SCO does not have legal personality in the framework of international law, i.e. on behalf of the SCO no one can sign agreements, while such a right is with the EEU. However, China offered to establish a regional FTA on the SCO site. To fully implement its plans, Beijing proposed the concept of One Belt One Way as part of its strategy The Economic Belt of the Silk Road.

In May 2017, the presentation of this project took place in Beijing, where questions were discussed on allocating investments for the construction of industrial enterprises in the oil and gas and transport infrastructure, which will connect the PRC with the countries of the Central Asian region, the European Union and Africa. China in an effort to demonstrate the seriousness of its obligations guaranteed the allocation of $124 billion in investments Kyrgyzstan has secured the consent of China to build a railroad that will connect the railway systems of the two countries with access to Uzbekistan. The latter concluded agreements with China for $23 billion. Within the framework of the program, Tajikistan plans to increase the trade turnover with China up to $3 billion by 2020. Experts believe that by interacting with Central Asia through ESP and SCO, China builds long-term partnership relations with each country in the region separately due to unresolved intra-regional problems.

Accounting for such peculiarities in Beijing is valued in the region and suits the parties. It is also expected to intensify the search for specific mechanisms for linking the initiative Economic belt of the Silk Road and the EEU. According to the head of the economic theory of the IMEMO E.M. Primakov of the Russian Academy of Sciences Sergei Afontsev, several factors impede the development of a full-fledged interface between the Chinese initiative and the EAEC. The first is the interpretation of the draft OPOP as predominantly infrastructural. Secondly, large projects involving state-owned companies at the level of interstate discussions are always at the forefront. These are projects that require billions of investments and decisions at the level of the political leadership of countries.

According to Afontsev, business circles are able to identify the possible points of conjugation no less effectively. The potential for cooperation in the high-tech sphere remains unclaimed for the time being. "This is a real opportunity for the Russian side to ensure the solution of the priority task of increasing the share of non-primary products in exports, for the Chinese side - to further expand its export potential through the production of fundamentally new products customized for specific markets of the EEU and the partner countries of the EEU. According to the economist, this direction is especially promising in light of the opportunities that are currently being opened due to the fact that the EEU is preparing a number of agreements on the FTA with third countries. Potential win, according to expert Kubat Rakhimov, may be in building equal relations on the platform of the SCO Bank or the SCO Foundation. "The SCO Bank should be a multilateral investor. It would be interesting. Alignment of the balance of geopolitical interests within the SCO at the expense of the emergence of India and Pakistan is observed, "Rakhimov said. In his opinion, the SCO is acquiring a new interface with the economic project of the EEU".

 

Victoria Panfilova

 

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