At the upcoming Shanghai Cooperation Organization (SCO) Heads of State Summit in Samarkand, Uzbekistan on September 15-16, 2022, Saudi Arabia, Qatar and Egypt are expected to join in as dialogue partners. Bahrain will initiate this process. The United Arab Emirates, Syria and Iraq also aspire to partner with the SCO. Why has the SCO become so important to the Arab world, and why now?
Established in 2001 as a successor to the Shanghai Five, the SCO is the largest regional grouping in Eurasia, covering around 40% of the world’s population and 30% of the world’s economic output. It currently comprises eight member states – China, India, Kazakhstan, Kyrgyzstan, Pakistan, Russia, Tajikistan and Uzbekistan), four observer states – Afghanistan, Belarus, Iran and Mongolia, and six dialogue partners – Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey.
Due to its impressive record in security and economic cooperation, the SCO has expanded its regional profile in a relatively short period of time. India and Pakistan became full members in 2017. Iran will gain membership status at the Samarkand summit. A memorandum of understanding between the SCO Secretariat and the General Secretariat of the League of Arab States was also reached at last year’s SCO summit in Dushanbe, Tajikistan.
The value of the SCO for the Arab world derives from the fact that it is led by China, the world economic power, and includes Russia and India as major international players, as well as Asian states. Central and Caucasus, which have largely untapped resources. of petroleum and natural gas. Although the SCO has not yet established a free trade area, it has made significant gains in expanding intraregional trade and investment.
China is the main mind behind the SCO and therefore holds the largest share of the organization’s trade and investment portfolio. Its trade with other SCO member states is said to have increased 20 times since 2001, reaching $245 billion in 2020, compared to $12 billion in 2001. During this period, China also invested $85 billion and contracted additional development projects worth $280 billion in other Member States. .
Due to its impressive record in security and economic cooperation, the SCO has expanded its regional profile in a relatively short period of time. India and Pakistan became full members in 2017. Iran will gain membership status at the Samarkand summit.
The SCO’s current traction in the Arab world owes much to China’s growing economic footprint in the region. China is not only its largest trading partner, but also a top investor, thanks to the Belt and Road Initiative.
Over the past decade, President Xi Jinping and Foreign Minister Wang Yi have visited the region and entered into “comprehensive strategic partnerships” with Saudi Arabia, the United Arab Emirates, Egypt and the Morocco. China has also hosted prominent leaders and officials from the Gulf region, including Saudi King Salman bin Abdul Aziz and Crown Prince Mohammed bin Salman, as well as Sheikh Mohammed bin Zayed, President of the United Arab Emirates. In January, the foreign ministers of Saudi Arabia, Kuwait, Oman and Bahrain visited Beijing to speed up the process of a free trade agreement between China and the Gulf Cooperation Council.
Last year, China’s two-way trade with Arab states amounted to $330 billion (an annual increase of nearly 37 percent). A third of China’s energy imports come from GCC countries, most of it from Saudi Arabia. China’s bilateral trade volume with the Kingdom stood at $87.31 billion at the end of 2021, a nearly 209-fold increase from $418 million when diplomatic ties were established in 1990. A key driver of China’s interest in the Gulf region is securing access to its critical energy resources and maritime trade routes, as well as seaports like Dubai, through which 60% pass. of its trade to Europe and East Africa.
The BRI has enabled China to increase its investment portfolio in the Arab world, which currently stands at $140 billion in the GCC countries alone. These investments are operational in various fields such as the development of port and transport facilities, industrial complexes, 5G networks, artificial intelligence, emerging technologies and renewable energies.
As Gulf countries transform their economies away from oil, they are looking to China to develop critical infrastructure. Saudi Arabia is the largest recipient of Chinese investments worth $43.5 billion between 2005 and 2021. In turn, Saudi Arabia has invested or plans to invest around $35 billion in projects based in China. These investments reflect the growing synergy between the Chinese BRI and Saudi Vision 2030.
The similarities between the GCC and the SCO are also conducive to cross-regional connectivity. Security and economic integration were the founding objectives of both organizations. They are intergovernmental organizations, with similar structures. The GCC is the most successful regional body in the Arab world, with a customs union and a common market.
China has been able to develop strong relations with Saudi Arabia and Iran, despite their continued hostility. It will therefore continue to play a moderating role, with the Gulf countries gradually entering the SCO.
Other reasons also explain the current willingness of GCC countries to join the SCO. While looking to Asia, they have sought bilateral free trade agreements with China, India and Pakistan, but with limited success. Their relations with the states of Central Asia and the Caucasus, despite the community of hydrocarbon wealth, are still minimal.
That Saudi Arabia and Qatar are about to become dialogue partners of the SCO is therefore an encouraging development. They are the world’s largest suppliers of oil and natural gas, respectively. Bahrain will join the club in over a year. It would be great if the United Arab Emirates, another oil-rich country, also joined the membership process. Along with Egypt, Turkey and other Middle Eastern aspirants to the SCO partnership, the oil-rich Gulf countries have the means to act as a catalyst for Eurasian regionalism, alongside China, Russia and resourceful members from Central Asia and the Caucasus.
As China’s largest trading and investment partner, Saudi Arabia will be crucial to SCO’s economic prowess. As part of Vision 2030, the Kingdom has developed a viable narrative on the global transition to renewable energy, the use of carbon capture technology and hydrogen as an alternative energy source, among others. Climate change has also become a key priority for the SCO.
Finally, Saudi Arabia and other GCC countries need not worry about Iran, which is preparing to join the SCO as a member. After all, the joining of great rivals India and Pakistan has not caused any problem in its institutional effectiveness over the past five years. China has been able to develop strong relations with Saudi Arabia and Iran, despite their continued hostility. It will therefore continue to play a moderating role, with the Gulf countries gradually entering the SCO.