EurasiaNet Eurasia Insight - Energy Cooperation and the Shanghai Cooperation Organization: Much Ado About Nothing?

EURASIA INSIGHT

ENERGY COOPERATION AND THE SHANGHAI COOPERATION ORGANIZATION: MUCH ADO ABOUT NOTHING?
Michael Raith and Patrick Weldon 4/25/08
A EurasiaNet Commentary

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The Shanghai Cooperation Organization, originally envisioned as a regional security provider in Central Asia, is striving to branch out into the energy sphere. The United States and European Union, two energy rivals in the regions, profess not to be concerned � yet.

The SCO started to delve into the energy sphere in 2004, when members adopted an action plan that established a basis for cooperation between the organization’s three energy-producing states (Russia, Kazakhstan and Uzbekistan) and the three consumer countries (China, Tajikistan and Kyrgyzstan). During the Moscow Summit in October 2005, members expressed an intention to promote joint energy projects. Then, in November 2006, Russian officials floated the idea of creating an "Energy Club." Energy security also topped the agenda of the summit meeting in Kyrgyzstan in August 2007, when SCO members agreed to establish a unified energy market.

Given the high price of fuel in recent years, international observers have started to wonder whether the SCO’s energy-cooperation initiatives actually pose a challenge to Western economic interests. Taking into consideration that SCO members do in fact control about 23 percent of the world’s oil and 55 percent of natural gas reserves, with Russia accounting for the single largest gas reserves on the globe, the ability of SCO-coordinated activities to move markets would seem considerable.

Growing energy security cooperation within the SCO is motivated, first of all, by producer countries’ interest in securing supply routes and export markets, and the consumers’ interest in safeguarding access to energy resources. [For background see the Eurasia Insight archive].

It was specifically Moscow’s proposal to create an Energy Club that caught the attention of Western policymakers. Some saw the announcement as an attempt by the SCO to move from merely coordinating its participants’ national energy policies to actually setting up some kind of energy cartel. However, a closer look at the actual state of the SCO’s cooperation mechanisms suggests that the group currently lacks the ability to forge an energy or natural gas cartel. Admittedly, SCO members agreed in late 2007 to follow through with Russia’s proposal. Nevertheless, the Energy Club to be set up in 2008 will be little more than a consultative body to discuss already existing cooperation.

Russia will continue to use the SCO in order to retain its control over energy supply routes. But the group has to tread carefully in energy affairs. Any attempt by energy-producing members to use the SCO to foster a Central Asian "Organisation of Gas Exporting Countries" could force consumer members to speed up the diversification of supply routes and energy sources. Such a move could thus be counter-productive to the SCO’s overall cohesion.

Cooperation in the field of energy production and security will increase within the SCO so long as it meets the political and economic interests of its member states. In this regard, the SCO’s international posture will continue to be promoted by Russia and China, as it suits their common interest in building a multi-polar international system. At the same time, both states use the organization to balance each other’s political and economic weight in the region. Finally, the organization will continue to offer a useful multilateral framework to Central Asian governments, enabling them to deepen economic ties with China, while simultaneously dealing with internal security threats related to the fight against terrorism and separatism.

SCO members should be expected to follow their respective strategic interests, whether inside or outside the organization’s framework. While this refers in particular to internal stability in the case of the smaller members, Russia and China will stay focused on gaining political and economic strength in order to improve their position on the global level. However, since the six SCO members do not share a common ideology directly aimed against the West, there is no reason to be overly concerned about the organization, which is clearly not a mutated version of the Warsaw Pact. Especially in terms of energy security, practical cooperation within the SCO has to be distinguished from the organization’s political posture and the rhetoric of its major players.

Keeping this in mind, Western policymakers should stay engaged with the SCO on the political, as well as the economic level. However, constructive engagement is not something the United States is currently interested in.

At a wide-ranging State Department briefing April 23, Richard Boucher, US assistant secretary of state for South and Central Asian affairs, did not appear overly concerned about the SCO’s ability to interfere with the US energy agenda in the region. "We do think it [the SCO] has had a very useful role in some of the economic issues, the border issues, the transit issues and things like that. We’ve criticized it when they went wandering into political areas. We’ve criticized it when they started making pronouncements about other countries, like us," Boucher said. "We’re not looking for any formal association with this organization."

Editor�s Note: Michael Raith is a political scientist specializing in International Relations. Patrick Weldon is a legal expert. Both are currently working as consultants in Brussels.

The Central Eurasia Project aims, through its website, meetings, papers, and grants, to foster a more informed debate about the social, political and economic developments of the Caucasus and Central Asia. It is a program of the Open Society Institute-New York. The Open Society Institute-New York is a private operating and grantmaking foundation that promotes the development of open societies around the world by supporting educational, social, and legal reform, and by encouraging alternative approaches to complex and controversial issues.

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