SCO (Shanghai Cooperation Organization) – Significance & Challenges – Explained Pointwise

The 25th SCO Summit is being held from August 31 to September 1, 2025, in Tianjin, China. It marks the fifth time China hosts the summit and is expected to be the largest gathering in SCO history. Leaders from over 20 countries, plus heads of about 10 international organizations, will be present. PM Narendra Modi is also attending the summit – marks his first visit to China since 2019.
In this regard, let us understand the significance & challenges of the Shanghai Cooperation Organization (SCO).

What is SCO?

• Shanghai Cooperation Organization (SCO) is a Eurasian political, economic, international security, and defense organization. It was established on June 15, 2001, in Shanghai, China.
• SCO’s roots lie in the “Shanghai Five” formed in 1996, consisting of China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan. This group was initially created to address security concerns and manage border issues after the dissolution of the Soviet Union. With the admission of Uzbekistan in 2001, the “Shanghai Five” was officially transformed into the SCO.
• At present, SCO comprise of 10 members: People’s Republic of China, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan, Uzbekistan, India and Pakistan (both joined in 2017), Iran (joined the in 2023), and Belarus (joined in 2024).

What is the SIGNIFICANCE of SCO?

1. Geopolitical and Strategic Influence: 

• The SCO is the world’s largest regional organization in terms of geographic scope and population. It covers approximately 80% of the Eurasian landmass and about 40% of the world’s population.
• Its members range from nuclear powers (Russia, China, India, Pakistan, and now Iran) to resource-rich Central Asian states. This diversity of political systems, economies, and cultures makes it a unique platform for dialogue.

2. Economic and Connectivity Potential:

• SCO member states collectively account for about 30% of global GDP. The inclusion of major economies like India and resource-rich nations like Iran further enhances its economic weight.
• With the inclusion of Iran, the SCO members control a significant percentage of the world’s oil (20%) and natural gas (44%) reserves. The SCO Energy Club promotes cooperation between major energy producers and consumers within the bloc.
• SCO emphasizes promoting connectivity and infrastructure development across Eurasia. It aligns significantly with China’s Belt and Road Initiative (BRI) (though India has concerns about BRI), promoting projects that enhance trade networks and transportation routes, such as the Central Asia–China Gas Pipeline.

3. Counter-Terrorism and Security: A primary and highly successful initiative of the SCO is its focus on combating terrorism, separatism, and extremism. The Regional Anti-Terrorist Structure (RATS) based in Tashkent facilitates intelligence sharing and coordinated efforts against these threats, making it the primary security organization in Central Asia. 

4. Regional Stability in Eurasia: The SCO plays a crucial role in maintaining peace, security, and stability across the vast Eurasian region, particularly in Central Asia, which is strategically vital. While not always directly intervening, the SCO provides a platform for its members to discuss and coordinate approaches to regional issues, including the instability in Afghanistan.

5. Platform for Dialogue: The SCO provides a crucial platform for high-level political and security dialogue among its diverse members, including those with bilateral tensions (e.g., India-China, India-Pakistan). This can help in de-escalating tensions and fostering understanding.

6. Consensus-Based Decision Making: While dominated by China and Russia, the SCO’s consensus-based decision-making process means that all members (including India) have a voice, even if it sometimes leads to slower action.

7. Quad vs. SCO: India’s membership in the Quadrilateral Security Dialogue (Quad) with the US, Japan, and Australia, which is often seen as a grouping to counter China’s influence, creates a delicate balancing act. Thus, India maintains its strategic autonomy by being part of both “pro-Western” and “non-Western” blocs.

What are the LIMITATIONS/CHALLENGES of SCO?

1. Internal Conflicts and Bilateral Tensions:

• India-China Border Disputes: Ongoing border disputes and geopolitical tensions between India and China (e.g., the Ladakh standoff) frequently spill over into SCO discussions, making it difficult for the two major powers to fully cooperate on broader issues.
• India-Pakistan Animosity: The historical animosity and persistent issues between India and Pakistan create a challenging environment for consensus-building. India often expresses concerns about cross-border terrorism emanating from Pakistan, which Pakistan may try to deflect or downplay within the SCO forum.
• Central Asian Border Disputes: Conflicts and border disputes between Central Asian member states (e.g., Kyrgyzstan-Tajikistan) can also affect regional stability and divert the SCO’s focus.
• Lack of Conflict Resolution Mechanism: The SCO lacks a formal and effective mechanism for resolving disputes between its member states, which means bilateral tensions often fester and can impede collective action.

2. Dominance of China and Russia: There is an inherent power imbalance within the organization, with China and Russia being the dominant players. This can lead to concerns among other members about disproportionate influence and decision-making, particularly from China due to its growing economic might e.g. The official languages of SCO are Russian & Chinese.

3. Lack of a Free Trade Area: Despite discussions, the SCO does not have a comprehensive free trade agreement among its members. This limits its potential for deep economic integration compared to other blocs like ASEAN or the EU.

4. “Anti-Western” Perception: Despite its claims of being an open and non-aligned organization, the SCO is often perceived by Western countries as a grouping aimed at challenging the US-led global order and a potential counter to NATO. This perception can limit its ability to engage with Western partners on global issues.

5. BRI Concerns: China’s Belt and Road Initiative (BRI), particularly the China-Pakistan Economic Corridor (CPEC) which passes through Pakistan-Occupied Kashmir (PoK), remains a major sovereignty concern for India. While all other SCO members endorse BRI, India remains isolated in its opposition, which limits its participation in some economic connectivity initiatives within the SCO framework.

6. Limited Mandate: While expanding, the SCO’s primary focus remains on security (the “three evils” of terrorism, separatism, extremism). This strong emphasis sometimes overshadows other crucial areas like economic and cultural cooperation, which could offer broader benefits.

What can be the WAY FORWARD?

1. Strengthening Trust and Dialogue: While the SCO is a multilateral forum, its most immediate utility for managing internal tensions often lies in providing opportunities for high-level bilateral meetings on its sidelines (e.g., India-China, India-Pakistan). These informal channels can be crucial for de-escalation and addressing specific grievances.

2. Unified Stance on Terrorism: 

• Zero Tolerance, No Double Standards: The SCO must unequivocally condemn terrorism in all its forms and manifestations, without any justifications or differentiation between “good” and “bad” terrorists.
• Actionable intelligence sharing: SCO needs to actively utilize the Regional Anti-Terrorist Structure (RATS) for intelligence sharing, capacity building, and joint exercises & also push for RATS to be more effective and less susceptible to political maneuvering by individual members.

3. Deepening Economic and Connectivity Initiatives:

• Identify specific sectors for enhanced cooperation, such as energy (including renewables), agriculture (food security), pharmaceuticals, and digital technology, where members have complementary strengths.
• Leverage Existing Corridors: Fully utilize and expand existing and nascent corridors like INSTC, promoting their integration with regional transport networks.
• Digital Connectivity: Emphasize digital infrastructure development, cross-border e-commerce, and digital payment systems to foster seamless economic interaction e.g., sharing India’s UPI success, digital public infrastructure models.

4. Non-Traditional Security Threats:

• Counter-Narcotics: Enhance cooperation through RATS to combat illicit drug trafficking, which often funds terrorism and organized crime in the region.
• Cyber Security: Push for joint initiatives and capacity building in cybersecurity, a growing threat to all member states.
• Disaster Management: Promote cooperation in disaster response and humanitarian assistance, drawing on India’s expertise and resources.
• Climate Change: Advocate for greater cooperation on climate change mitigation and adaptation strategies, particularly given the shared environmental challenges like water scarcity and desertification in the region.

Conclusion:
For India, the SCO remains a platform of both opportunities and constraints. Thus, India needs to devise a strategy that is assertive on core national interests (like terrorism and sovereignty), pragmatic in economic engagement, and diplomatically nimble in balancing competing geopolitical currents.