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Read the interview on the U.S.-China Perception Monitor’s website

Nationalism is defined as “a sense of national consciousness exalting one nation above all others and placing primary emphasis on promoting its culture and interests as opposed to those of other nations or supranational groups.”[1] This raises critical concerns regarding its implications. The primary issue with nationalism lies in its inherent assumption that individuals within a nation are intrinsically tied to that state. This perspective effectively reduces individuals to mere components within a larger national entity, often overshadowing their identities as autonomous human beings striving for self-determination. Furthermore, ethnicity is often used as a tool to reinforce notions of national identity, fostering an ideology that posits members of a particular group as homogeneous and sharing “pure blood.” Such a conception can lead to profound societal divisions and fragmentation.

This commentary seeks to elucidate the dangers associated with the rise of nationalism by illustrating its connections to racial discrimination. Additionally, it proposes ways to promote social integration by fostering transnationalism in South Korean society, advocating for a more inclusive approach that transcends narrow nationalistic boundaries.

2. Nazism: The Limitations of Nationalism

During World War II, the Nazi regime, officially known as National Socialism and led by Adolf Hitler, supported eugenics and pseudo-scientific theories that promoted a racial hierarchy, asserting a belief in genetic supremacy. The Nazis gained support from the German population, largely due to the aftermath of Germany's defeat in World War I, compounded by punitive conditions of the Treaty of Versailles and economic turmoil. This context weakened Germany’s national power compared to other great powers such as Britain, China, Japan, France, and the USA. Consequently, Hitler’s rise was perceived as a messianic emergence, advocating for the unity of the Germanic peoples and claiming the superiority of "Aryan blood." Many Germans identifying as "pure-blooded," aligned themselves with his totalitarian ideology, which systematically excluded other ethnic groups within Germany.

In Mein Kampf, Hitler articulated the concept of Lebensraum (living space), positing that the German people needed additional space for their growth. To achieve this, he argued that so-called inferior peoples, including Poles, Russians, and other Slavic groups, needed to be exterminated, expelled, or enslaved to facilitate German resettlement in these regions (as cited in Park, H.K., 2008). This territorial ambition underpinned the Nazi regime's policies of ethnic cleansing, which culminated in the Holocaust, the systematic extermination of Jews, Slavs, and other groups deemed inferior. The Nazis’ campaign to preserve "pure Aryan blood" led to widespread persecution and mass murder. The Holocaust resulted in the deaths of approximately 17 million individuals between 1941 and 1945, including around 6 million Jews (United States Holocaust Memorial Museum, accessed September 5, 2024), 4.5 million Soviet civilians (Niewyk, 2000), and 3.3 million Soviet prisoners of war (Barenbaum, 2005), and 1.8 million Polish people, among others. Nazism, a form of totalitarian nationalism, highlights inherent dangers associated with nationalism driven by self-centered orchestration of government and people. The public's engagement with Nazism can be analyzed through the lens of the “politics of enthusiasm", a phenomenon where masses yearning for strong charismatic leadership amid political, economic, and social turmoil are incited by charismatic leaders who manipulate nationalistic sentiments. This manipulation often leads to extreme societal choices (Park, H.K.). Citizens anticipate a messianic dictatorship that promises improvements in living conditions and social fulfillment, while tacitly supporting oppressive nationalist governance. In this environment, social agitation often results in the oppression of the minorities as the public seeks to enhance their relative social status, while reinforcing notions of racial purity.

Even segments of the German working class – expected to resist Nazism – demonstrated varying degrees of support for Hitler’s regime. (Ludtke, 2002, as cited in Park, H.K.). Their backing was significantly influenced by Nazi initiatives aimed at reducing unemployment through national projects such as highway construction and military expansion. These national projects and the policy of full employment through military expansion diminished workers’ motivations to pursue their individual and economic interests (Kim, Seung-Ryul, 2004, as cite in Park H.K., 2008).

Additionally, the political sacralization of Nazism portrayed Germans as protagonists engaged in a sacred struggle against perceived threats from Jews. This ideological framework effectively captivated public sentiment (Na, Inho, 2004). Through propaganda and strict control over information dissemination, the Nazi regime effectively manipulated the masses, turning them into unwitting participants in its totalitarian agenda. George Orwell’s concept of “Big Brother” in “1984” resonates here; people became cogs in a national machinery without awareness of their roles as victims manipulated by those in power.

Nationalism can be likened to a mirage within totalitarianism – instilling a false sense of allegiance to an abstract entity, while promoting the illusion that shared ethnicity constitutes a tangible reality. The tragic lessons from Nazism reveal that extreme nationalism can obstruct societal integration and dehumanize individuals based on perceived racial superiority. Such exclusionary ideologies undermine human solidarity and foster division within society.

4. Racial Discrimination in South Korea

Over the past 50 years, South Korean society has developed a form of cultural exclusivity characterized by heightened nationalism, which has manifested as both patriotism and racial discrimination. This exclusivity has particularly fostered hostility toward foreigners, especially those from Southeast Asia and Muslims, while Western nations receive more hospitable treatment.

A notable example of this cultural exclusivity occurred in Daehyeon-dong, Daegu City, where Muslim students sought to build a mosque to accommodate the growing Muslim population. In response, around 40 residents organized a barbecue party, cooking pork dishes directly in front of the proposed mosque as part of an anti-Muslim demonstration. One resident articulated their stance by stating “Because those Muslims claim freedom of religion, we have the freedom to hold a pork barbecue party” (The Hankook Ilbo, 2022). Online reactions to this incident included a surge of comments directed at Muslim foreigners in Korea, with statements such as “This absolutely must not be allowed. We support the residents,” “It’s heartwarming news,” and “Everyone! We need to expel Muslims” (SBS News, 2022). Such remarks reflect an exclusive animosity toward Muslims, viewing them as “complete strangers” rather than “members of the local community,” neglecting the values of religious and social integration.

Additionally, societal perceptions regarding multicultural families contribute to discrimination. A parent named Jang, a 42-year-old living in Gwanak-gu, Seoul, remarked, "There seems to be a stereotype that immigrant parents have different emotions, which could lead to different views on their children's education. Additionally, there is a perception that some multicultural students face language barriers or are neglected by their parents, making it difficult for them to communicate. As a result, there is a tendency among some parents to prevent their children from associating with multicultural students" (The Seoul Economic Daily, 2023). According to the Ministry of Gender Equality and Family of South Korea (2021), the enrollment rate of multicultural students in higher education institutions stood at 40.5%, which is significantly lower than the national enrollment rate of 71.5%.

A survey conducted among 1,000 South Korean citizens regarding "socio-cultural expectations and concerns" related to the increase in foreign immigrants revealed that 63% of respondents believed that "an increase in foreign immigrants will lead to an increase in social ‘greater respondents (46%) "believed that 'an increase in foreign immigrants will harm their unique culture and intensify conflicts due to differences in socio-cultural values' compared to those who thought that 'an increase in foreign immigrants will enrich culture through the expansion of races and religions' (31%)" (Hankook Research, 2024). Another study indicates that foreigners from developing countries experienced more discrimination than those from developed countries (Jeong & Park, 2017). This suggests that Korean society exhibits nationalistic discrimination, particularly against individuals from lower-income nations. Two primary factors contribute to this phenomenon: external and internal influences.

Externally, South Korea has developed an economic-based nationalism that fosters societal pressures leading to the exclusion of foreigners from developing countries. This exclusion is rooted in perceptions that create barriers for outsiders seeking integration. During South Korea’s rapid economic development phase, emphasis was placed on growth and increasing incomes while viewing advanced nations as desirable models for emulation. Consequently, public attitudes toward accepting foreigners are often linked to anticipated social benefits and a sense of national pride—factors closely associated with admiration for Western countries.

Internally, Korean nationalism is deeply ingrained within the educational system and societal consciousness from an early age. The elementary school curriculum emphasizes political history through figures who established or defended the nation, while portraying Korean culture as inherently superior. For example, narratives surrounding the invasions during the Goryeo period (10th–14th centuries) and responses during the Joseon period (14th–19th centuries) highlight national resilience against foreign threats while glorifying cultural achievements such as celadon pottery and the Tripitaka Koreana (Kim Minsu, 2021). The language used in the textbooks often promotes cultural nationalism through phrases like "the oldest […]," "the most outstanding […]," and "registered as a UNESCO World Cultural Heritage site […]," which can reinforce cultural nationalism (Kim Minsu).

This early exposure to nationalistic rhetoric fosters a mindset among young Koreans that prioritizes in-group superiority while marginalizing out-groups. This creates barriers among different groups and hinders progress toward a multicultural society. By emphasizing Korean cultural superiority and focusing solely on "preservation" and "purity" rather than on understanding or accepting other cultures, there is a risk of reinforcing attitudes that reject diversity.

5. Conclusion: Escaping the Nationalistic Shell

The discussion highlights that the origins and deepening of nationalism in both Korea and Nazi Germany arise from a complex interplay between the people and the government. Both contexts have "sacralized" ethnicity and nationality, creating a distinction between the sacred and the profane (Eliade, 1957). According to Eliade, humans distinguish between religious space and secular space, leading to the "manifestation of the sacred," which imbues certain spaces with specific symbolic significance. When individuals transition from secular to sacred spaces, they interact with the sacred unconsciously, approaching the essence of an absolute being. Within this framework, nationalism operates as a quasi-religious phenomenon. Consequently, through the religion of nationalism, people come to worship the state and become its survivalist slaves. This functions as an irrational caste system between the state's power holders and its people. Nazism during World War II and contemporary Korean nationalism share similarities: both involve "the initial introduction by the government," "religious worship by the people," and “exclusivity based on bloodline.” During World War II, in the midst of the national crisis caused by the Treaty of Versailles, the distorted messianic ideology of Nazism rallied the people as an "imagined community" (Anderson, 1983), uniting them under the notion of the "pure Aryan bloodline." Similarly, after the devastation of liberation and war, modern Korean nationalism proceeded in a direction that promoted national heroes and fostered national pride through economic development. On the other hand, the German people sacralized Nazism as a nationalist ideology, reconstituting themselves racially as a "community of blood," while portraying themselves as the "forces of light" and "God's chosen people" (Na, I., 2004).

Furthermore, according to Kang Jung-in (2016), the Korean people, in their efforts to promote development or fight for democratization, justified their positions by embracing nationalism, and this resulted in the further sacralization of nationalism. This was reinforced by beliefs in the 5,000-year history of the Korean bloodline and an infallible national spirit. The prevailing cultural climate in Korea emphasizes ethnic homogeneity and purity of bloodline, which fosters an exclusive sense of superiority and a mentality of being a chosen people toward other ethnicities. This exclusivity manifests in social favoritism toward certain groups, especially Westerners, while discriminating against people from developing countries.

To transcend this nationalistic shell, it is imperative to recognize that nationalism often sacrifices individuals for the sake of maintaining the abstract notion of nationhood. Such a consciousness fosters an environment where others are rendered entirely “other,” enforcing self-centered exclusivity. It embodies a neo-caste system that delineates superiority and inferiority among ethnicities and nations rather than acknowledging shared human existence. Nationalism can thus be viewed as a contemporary iteration of outmoded feudalism. Its hierarchical divisions perpetuate distinctions akin to those between nobles and commoners in historical contexts.

To counteract these divisive tendencies, it is essential to embrace transnationalism—acknowledging that every individual’s traits and ontological visions (i.e., their existential perspectives) are shaped by societal factors rather than predetermined by notions of purity at birth. A regional approach (Jinwoo Choi & Young Chul Cho, 2016) should be adopted instead of adhering to nationalism’s invisible ideologies resembling idol worship. While members of the same group inevitably share aspects of universal identity, culture, and lifestyle, nationalism often engenders exclusivity against others. Therefore, it is crucial to foster a cooperative regional framework that mitigates nationalism’s exclusivity in multicultural societies and enhances greater collaboration among diverse groups. Once the illusion of nationalism is broken, South Korea can navigate the multicultural landscape of the 21st century more effectively by moving beyond discrimination and conflict toward genuine progress.

References

1. Anderson, B. (2016). Imagined communities. Verso Books.
2. Berenbaum, M. (2005). The world must know: The history of the Holocaust as told in the United States Holocaust Memorial Museum. United States Holocaust Memorial Museum & Johns Hopkins University Press.
3. Eliade, M. (1957). The sacred and the profane: The nature of religion (W. R. Trask, Trans.). Harvest, Brace & World.
4. Ha, S. (2005, August). The politics of Korea’s democratization and the ideology of nationalism (1945–1987). Sogang University, Institute for East Asian Studies, 193-230.
5. Hankook Research Co., Ltd. (2024, July 9). Korean people’s perception about receiving foreign immigrants. Hankook Research Opinion Poll. https://hrcopinion.co.kr/archives/30333
6. Hankook Ilbo. (2022, December 15). Residents hold 50kg whole pig barbecue party in front of Daegu mosque. Hankook Ilbo. https://www.hankookilbo.com/News/Read/A2022121514250001760
7. Jeon, J. H. (1998, July 4). The use of nationalism and history: Traditional cultural policies of the Park Chung Hee regime. Journal of Social Science Research, 7, 83-106.
8. Jeong, H., Park, S.-Y., & Jun, H.-J. (2017). The determinants of migrants’ experience of discrimination: Considering structural, cultural, and environmental perspectives. Korean Journal of Public Administration, 55(4), 307-336.
9. Choi, J., & Cho, Y. C. (2016). Nationalism and regionalism: Underdevelopment of regional integration in Northeast Asia. Journal of Future Politics, 6(2), 89-112.
10. Kang, J. (2016). August 15 and Korean society: The sanctification of nationalism and its subsequent decline. The New Asia, 23(3), 134-160.
11. Kim, M. (2021). An analysis on elementary school social studies textbook of the 2015 revised curriculum: Focused on the perspective of historical education for democratic citizenship. Research in Social Studies Education, 28(2), 61-74.
12. Ministry of Gender Equality and Family of the Republic of Korea. (2022, June 28). 2021 national survey on multicultural families in Korea.
13. Na, I. (2004). Nazism as political religion: Its results and limits. Journal of History and Culture, 20, 379-412.
14. Niewyk, D. L. (2000). The Columbia guide to the Holocaust. Columbia University Press.
15. Oh, M. (1998). Cultural policies and national cultural discourse in the 1960s and 1970s. Comparative Cultural Studies, 14, 121-149. Seoul National University, Institute for Comparative Cultural Studies.
16. Oh, S. M. (2020, December 22). Soldiers killed during the Gwangju uprising recognized as dead on duty, not war dead. Yonhap News Agency. https://en.yna.co.kr/view/AEN20201222005500325
17. Orwell, G. (2021). Nineteen eighty-four. Penguin Classics. (Original work published 1949)
18. Park, H. K. (2008). Politics of "Fanaticism": Japan’s imperial fascism and German Nazism in the 20th century. Korean Journal of Political Science, 15(3), 121-143.
19. Plunk, D. M. (1985, September 16). South Korea's Kwangju Incident revisited. Asian Studies Backgrounder, 35, 5.
20. SBS News. (2022, December 16). Residents opposing the mosque construction in Daegu hold a ‘barbecue party’ in front of the mosque construction site (Subtitled News). SBS News. https://www.youtube.com/watch?v=7dZh9Ti5gZU
21. Shin, & Lee. (2023, September 11). With 200,000 multicultural students... "Not allowed in the same school," discrimination persists. Seoul Economic Daily. https://www.sedaily.com/NewsView/29UN5EEYHS
22. United States Holocaust Memorial Museum. (n.d.). Documenting numbers of victims of the Holocaust and Nazi persecution. United States Holocaust Memorial Museum. https://encyclopedia.ushmm.org/content/en/article/documenting-numbers-of-victims-of-the-holocaust-and-nazi-persecution

[1] Merriam-Webster. (n.d.). Freedom. In Merriam-Webster.com dictionary. https://www.merriam-webster.com/dictionary/nationalism

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The Liberal Democratic Party (LDP) put forward 9 candidates for the party leadership position. On Friday, September 27, 2024, Shigeru Ishiba was declared the winner, which traditionally signified the assumption of the office of Prime Minister of Japan. Parliament will vote on his confirmation as Prime Minister in a special session on October 1, with a public statement expected to follow.[1]

As none of the nine candidates managed to secure a majority of votes, the election proceeded in two rounds. In the first round, Ishiba received 154 votes and advanced to the second round alongside Sanae Takaichi. In the second round, the politician emerged victorious, garnering 215 votes.[2]

Former Defense Minister Ishiba unsuccessfully participated in elections five times in 2008, 2012, 2018, and 2020. During the preparation for the current elections, he stated that this would be his final attempt. Ishiba remarked that a scandal prompting the party to dissolve influential factions traditionally responsible for appointing LDP leaders facilitated a more transparent voting process, enabling him to win his "final battle."[3]

On Tuesday, Ishiba announced that he would form a new government once a special session of parliament officially appointed him to the position.

According to NHK, Ishiba, expected to be formally appointed as Prime Minister next week, intends to retain certain former government officials in their positions. Specifically, he has decided to keep Yoshimasa Hayashi as Chief Cabinet Secretary (Foreign Minister from 2021-2023) while appointing former Minister of Agriculture Hiroshi Moriyama as LDP Secretary-General.[4]

Upon assuming office this week, Shigeru Ishiba, the new leader of Japan, plans to commence work on policies aimed at alleviating regional tensions.

What challenges lie ahead for the incoming prime minister?

From the very first day, Ishiba has been confronted with significant political challenges in the country’s foreign policy, including growing concerns regarding North Korea’s missile launches and incursions into Russian airspace, as well as China’s threat to Taiwan.[5]

Known for his expertise in defense matters, Ishiba has stated that he will continue the foreign policy of his predecessor, Prime Minister Fumio Kishida. He also aims to enhance Japan’s independence and seek ways to have Japan’s worth recognized in alliance with the United States, which includes revisiting the Status of Forces Agreement with the United States and developing agreements on collective security with strategic partner countries in Asia.

The Liberal Democratic Party (LDP) has been governing the country for 30 years. It is noteworthy that Ishiba’s administration is entering a highly complex political and economic period. According to experts, the LDP currently faces one of the most challenging tasks in the party’s history - the task of restoring the trust of the Japanese people. Economic stagnation, a weak yen, and the sharpest rise in food prices in the past half-century are increasing society’s trust in the ruling party.

According to the Organization for Economic Co-operation and Development (OECD), wages in Japan have remained unchanged for 30 years.[6] The need to stimulate economic growth, combat economic stagnation, strengthen the Japanese currency, and curb rising food prices requires the attention and actions of the new government.

Another significant issue on Japan’s domestic agenda is the aging and shrinking population. This puts pressure on social and medical services and threatens the country with a labor shortage in the medium to long term. This, in turn, necessitates the development of strategies that ensure sustainable socio-economic development in light of population aging and decline. It is essential to review immigration policies to offset demographic decline and bolster the economy by attracting foreign experts. In his new role as the head of government, Ishiba will have to reassess Japan’s labor market management policies and amend his stance on immigration.

What is known about Shigeru Ishiba?

Shigeru Ishiba is one of the most experienced politicians in the Liberal Democratic Party (LDP), having held several state positions: Minister of Defense (2007-2008), Minister of Agriculture (2008-2009), and Minister of Depopulation and Regional Revitalization (2014-2016). He is renowned for his expertise in defense matters, agricultural policies, and strategies for regional development. While serving in these ministerial roles, Ishiba played a role in shaping Japan’s national security policy, agricultural policies, and rural revitalization strategies.

In 1979, Shigeru Ishiba graduated from the prestigious Keio University in Tokyo and started working at Mitsui Bank. However, four years later, he joined one of the LDP factions as a secretary. From the 1990s, the politician actively engaged in defense matters, earning him the nickname "gunji otaku," which translates to "obsessed with military affairs."

He first joined Koizumi’s cabinet in 2002 as the Director-General of the Ministry of Defense, later holding positions as Minister of Defense and Minister of Agriculture, Forestry, and Fisheries. During the 2012 presidential elections, when he was part of the opposition Liberal Democratic Party, he garnered the majority of votes among party members but lost in the second round to former Prime Minister Abe.

From 2002 to 2004, he headed the Ministry of Defense. Researcher Adam Liff notes that in this role, Ishiba played a pivotal role in restructuring Japan’s Self-Defense Forces. He oversaw the successful launch of Japan’s first reconnaissance satellite and the joint development with the United States of the ballistic missile SM-3 Block IIA. Additionally, as the Director-General of the Ministry of Defense, he worked on enacting emergency legislation in response to the September 11 terrorist attacks in the United States and deploying Self-Defense Forces troops to Iraq for humanitarian and reconstruction aid in the relatively stable camp of Samawa, with forces withdrawn in July 2006.

[1] The Japan times. Eric Johnston and Kanako Takahara. 27.07.2024.

URL: https://www.japantimes.co.jp/news/2024/09/27/japan/politics/ldp-election-winner/

[2] 日本海テレビニュース。自民党総裁選　石破氏と高市氏による決選投票へ（Liberal Democratic Party Presidential Election: Runoff between Ishiba and Takaichi）

URL:　 https://news.ntv.co.jp/category/politics/nkf71e91598878471390630d5a5558a95e　

[3] 日本海テレビ。石破茂 氏 自民党の新総裁に選出　鳥取県出身で初の総理大臣誕生へ (Shigeru Ishiba was elected as the new president of the Liberal Democratic Party)

URL: https://news.ntv.co.jp/n/nkt/category/politics/nkb51a3060c1d1400c880bcdb30c955d10　

[4] NHK.　自民 石破新総裁 党幹事長に森山氏 官房長官に林氏 意向固める。(New LDP president Ishiba strengthens ties with Moriyama as party secretary-general and Hayashi as chief cabinet secretary.)

URL:　 https://www3.nhk.or.jp/news/html/20240928/k10014594491000.html

[5] The Japan Times. 29.09.2024. Kathleen Benoza and Jesse Johnson

URL:　https://www.japantimes.co.jp/news/2024/09/29/japan/politics/ishiba-japan-foreign-policy/

[6] Nikkey Asia. YOHEI MATSUO. 16.10.2021.

 URL: https://asia.nikkei.com/Politics/Japan-election/Japan-s-30-year-wage-slump-hangs-over-distribution-debate

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On July 4, 2024, at the Astana summit, the Shanghai Cooperation Organization (SCO) officially admitted Belarus as a member state, expanding its membership to ten countries[1]. Initially established as the “Shanghai Five,” a small coalition of five states to solve border delineating issues, the SCO has since evolved into one of the largest trans-regional organizations. Today the member states of the organization span over 35 million square kilometers and encompass a population of more than 3.5 billion, with the extended “SCO Family” including 26 states engaged at various interaction levels[2].

The organization’s Charter outlines the SCO’s primary objectives, which include maintaining and enhancing regional peace, security, and stability, collaboratively combating terrorism, separatism, and extremism, promoting economic growth, trade, and humanitarian efforts.[3] Since its foundation, and for most of its existence, the SCO has primarily promoted security and economic development initiatives. This has led some researchers to dub the SCO a military bloc (the “NATO of the East”)[4] or a platform for a new multipolar world order.[5]

However, after the organization’s first expansion in 2017, the declarations and joint documents of the SCO have increasingly focused on cultural-humanitarian, logistical, and ecologic topics, surpassing the emphasis previously placed on security, political, and economic issues. Each year, more agreements are reached on initiatives related to people-to-people friendship, international road transport, and traditional medicine, rather than on security and economics concerns. The decision-making process in the SCO is based on consensus. Thus, such a shift in priorities likely reflects internal disagreements and contradictions within the organization regarding new security and economic cooperation initiatives, as the consensus process struggles to accommodate the diverse and sometimes conflicting interests of its expanded membership.

One plausible explanation for this tendency is that the organization’s current structure is incompatible with the expanded composition of the SCO. Initially designed for a six-country format, these institutions did not anticipate the subsequent changes. While the leaders of SCO member states portray the organization’s expansion as a significant milestone in its “new development trajectory”[6], one of the potential growth directions is financial cooperation and economic development projects. However, as Uzbek President Shavkat Mirziyoyev highlighted in his address at the Astana Summit, trade and economic collaboration within the SCO region remains fragmented[7].  The proposed transformation would require new structures to breathe new life into it, specifically, new financial institutions. This brings back the proposal of a long-forgotten SCO Development Bank.

The Limit Is Reached  

Historically, the SCO has particularly focused on addressing security issues. In this regard, the organization has made notable progress in the security and military cooperation fields. For instance, the member states established the Regional Anti-Terrorist Structure (RATS) to combat the so-called “three evils” (terrorism, extremism, and separatism)^[8], intelligence sharing, and coordinate the activities of law enforcements in the region. Furthermore, member states launched series of military exercises, such as the “Peace Mission” among defense ministries[9], and joint “Counter-Terrorism” drills among the intelligence services and law enforcement agencies of SCO member states[10].

However, after the inclusion of India and Pakistan (which have tense relations in the security field), the member states started exploring alternative security engagement options in the region through other international organizations and bilateral relations. For example, China, which previously cooperated with the Central Asian region in the military domain exclusively through the mechanisms of the SCO[11], shifted to bilateral military engagements. Notably, starting in 2019, Beijing initiated a series of counter-terrorism drills with Central Asian countries outside the SCO framework^[12]. From a technical standpoint, all these bilateral military engagements align with the existing activities of the SCO and could have been implemented using its mechanisms. However, this would require navigating the consensus mechanism.  

Furthermore, in 2013 on the basis of RATS member states launched a mechanism for collaboration among the border services of its member states. From 2013 to 2021, the SCO conducted at least eight joint border operations along both the external and internal borders of its member states.[13] Since 2019, the member states have also conducted the annual “Solidarity” joint border operations.[14]

Despite these efforts, border tensions among member states persisted. In 2020, a clash between Indian and Chinese soldiers at the Sino-Indian border resulted in numerous casualties on both sides.[15]Additionally, in September 2022, the conflict between Kyrgyzstan and Tajikistan along their disputed border escalated sharply, leading to violent clashes characterized by heavy shelling and military equipment use, numerous casualties and significant civilian displacement.[16] However, the SCO remained largely inactive.[17] Experts argue that SCO mechanisms are not designed to address such conflicts, which should be resolved through bilateral agreements.[18]

Additionally, the SCO did not play a direct role in the crisis during the unrest in Kazakhstan in January 2022, with the situation being primarily addressed by the Collective Security Treaty Organization (CSTO). Experts speculate that the organization’s structure and decision-making processes likely contributed to its inaction[19].

These cases may suggest that the consensus-based decision-making process is too slow to respond to emerging threats timely. Alternatively, it may indicate that the SCO mechanisms have reached their limits in the field of security cooperation. Thus, based on the established situation, the SCO now has to focus on the specific security threats that will satisfy all sides’ interests. For example, during the 2024 Astana Summit, the member states decided to create an Anti-Drug Center in Dushanbe[20]. Consequently, the current level of interaction may remain static, and new security mechanisms, such as Iran’s proposal to establish the SCO Police[21], may not achieve the intended outcomes.

Unfulfilled Ambitions

Documents adopted in the early years of the SCO indicate that trade, economic development, and integration were key focuses of the organization. China was a primary driver of these initiatives, aiming to increase investment in the region and potentially create a free trade area. In 2003, member states adopted the “Program of Multilateral Trade and Economic Cooperation,” which aimed to enhance the investment climate and create favorable conditions for trade among member states.^[22] To facilitate these efforts, China proposed the establishment of the “SCO Development Fund” in 2004.^[23]

However, it is conceivable that other member states were not eager to establish a free trade area with China immediately. Experts contend that Beijing’s promotion of Chinese trade interests in the SCO was viewed by others as “too aggressive and selfish.”[24] Therefore, the consensus was reached on founding less integrated types of economic cooperation frameworks. For instance, in 2005, to “implement joint large-scale investment projects in Central Asia region”^[25], member states approved the foundation of the SCO Interbank Consortium (IBC). The Agreement on the IBC was concluded between the 6 big banks of member states^[26] to develop the infrastructure development projects, attract syndicated loans, stimulate trade and regional economy^[27].

In addition to the IBC, in 2006 the consensus mechanism approved the foundation of the SCO Business Council. This non-governmental entity comprises commercial organizations from all SCO member states, representing both public and private sectors. The Business Council was meant to assist member state governments in enhancing regional economic cooperation and bettering contacts “between the business and financial circles of the SCO countries”^[28], and to attract them to regional projects outlined in the Program of Multilateral Trade and Economic Cooperation.

Furthermore, in 2007, these two institutes signed an agreement to execute the decisions of the SCO in facilitating economic development in the region. Under the agreement, the Business Council would present prospective projects to the IBC, which could then offer recommendations and assistance in securing financial resources, or directly fund the projects if they met the IBC’s criteria^[29].  

However, except for a few accomplished projects, these two institutes did not achieve their set goals and results in boosting regional trade and funding large-scale development infrastructure projects. One of the possible explanations for their failure is that their model mimicked the approach of Asia-Pacific Economic Cooperation (APEC) agencies, which is mostly based on financing projects via private funds. Since the region lacked robust commercial entities and developed economies, APEC’s strategies were ineffective when applied to the SCO. Private entities lacked either the capacity or the interest to fully fund the proposed projects.[30]

Additionally, the system was neither obliged to fund the economic and development projects proposed by the SCO^[31] nor did it possess its own financial resources. Consequently, even if specific projects were selected, there was no requirement for the parties to finance them. Moreover, both institutes lacked decision-making authority, which adversely affected problem-solving and implementation processes. This led to many proposed initiatives at SCO summits and meetings being postponed or neglected. For instance, the “SCO Youth Card” initiative, which aimed to create numerous opportunities for young entrepreneurs interested in establishing a “common business space”^[32] within the SCO region, received significant attention from political leaders during the summits and meetings. However, it was ultimately not funded and was abandoned.

As the result, as noted by the Uzbek leader, the SCO failed “to create a solid foundation for multilateral trade and inter-sectoral partnership”.[33] It is arguable that the Chinese perspective attributed the failure of the existing economic structures of the SCO to the fact that these institutions were not real economic and financial tools. Thus, they came up with the idea of the bank.  

Banking Dilemma

During the 2010 SCO Summit in Dushanbe, Chinese Premier Wen Jiabao called sides “for deepening financial and monetary cooperation” and proposed the foundation of “SCO Development Bank”^[34], which could issue loans with low-interest rates to long-financed infrastructure projects in the region. Under the bank, it was planned to establish the “SCO Development Fund (Special Account)”, which could also issue loans in case if member states experience a balance of payments or a budget deficit.  

The crux of the issue lay in the existence of two competing concepts for creating the SCO Development Bank: one proposed by China and the other by Russia^[35]. Beijing’s proposal included establishing a new financial institute, requiring member countries to contribute to the bank’s authorized capital in proportion to their economic size, measured by GDP or PPP. This proportional contribution would mean that China would receive the biggest share of voting power on the bank’s board.[36] However, experts assert that Russia was concerned about the swift economic and financial influence of China in Central Asia, a region the Kremlin regards as within its sphere of interests.[37]Therefore, Russia proposed to establish the SCO’s bank on the base of the existing structure.[38] In Russia’s eyes, the Eurasian Development Bank (EDB), which was founded by Russia and Kazakhstan in 2006 and had Tajikistan and Kyrgyzstan among its members, was the best candidate for that role. China was offered to join the EDB, with keeping Russian and Kazakh dominance in it.[39]  

Apparently, the differences in approaches to the bank ownership led the initiative to stagnate. Although the SCO official documents continue to highlight the necessity for consultations on establishing both the bank and the fund, there has been no advancement on this matter.

It is arguable that, upon realizing the SCO mechanisms would not allow China to fulfill its economic ambitions, China redirected its efforts into establishing the Asian Infrastructure Investment Bank (AIIB) and the BRICS New Development Bank (NDB). Interestingly, despite Russia’s initial fears regarding China’s economic dominance in the SCO Development Bank project, it ultimately emerged as one of the largest shareholders in these new financial institutions.

Simultaneously, Chinese leader Xi Jinping proposed the Silk Road Economic Belt at Nazarbayev University in Kazakhstan, which later evolved into the Belt and Road Initiative (BRI). Since then, Chinese economic initiatives have gradually started shifting from the SCO meetings to a bilateral format, which did not require approval of consensus mechanism. China’s disappointment with the SCO has likely played a role in accepting new members, contributing to its current transformation. Eventually, the Chinese side abandoned the bank proposal, leading to the 2021 SCO Dushanbe Declaration, which articulated the member states’ decision against forming a “military-political union or economic integration association with supranational governance institutions”[40] within the SCO.  

New Perspectives

At the current stage, the SCO has significantly moved from the initial compact size group of states operating strictly on consensus basis, and has become the platform, where particular member states pursue their specific interests. Annual SCO declarations, adopted in the last two years, apply the phrase “interested member states” when it comes to economic initiatives like the SCO Economic Development Strategy, transport corridors, and other programs.

In its expanded format, the SCO now prioritizes regional connectivity, poverty alleviation, climate change mitigation, environmental protection, the digital economy, e-commerce, startups, and innovations. However, these development projects require funding sources which the SCO does not have. For growth, the organization must establish effective financial mechanisms. An independent development bank could vitalize these initiatives. However, creating such an investment tool would require a novel conceptual framework, distinct from previous SCO models.

This new concept of the bank should be based not only on the international (e.g. World Bank, ADB) but also on the regional (AIIB, NDB, CDB) experience of development banking.  Three factors will play essential roles in the success of the future development bank: governance, operational structure, and capital strategy.   

The main reason for the SCO’s bank failure was its governance principle. Experts argue that other member states were unprepared and apprehensive about potential economic dominance by China’s robust economy.[41] From this perspective, instead of applying China’s GDP or PPP size or Russia’s EDB formats, the shareholding proportion of the bank should be based on principles similar to those applied in AIIB and NDB to ensure balanced and effective governance. One approach is to distribute equal voting rights for founding members (the NDB model), which could ensure balanced decision-making. Another one is the shareholding based on financial contributions of member states (the AIIB model), with major contributors like China, India, and Russia holding significant shares. However, to maintain inclusivity and broad membership, smaller member states should also be given meaningful participation. Importantly, membership in the bank can be open to countries outside of the SCO region, with shareholding adjustments to support the bank’s adaptability and long-term sustainability. This approach aligns with the SCO’s strategic objectives of regional connectivity and economic development.

A crucial component is the operational structure. To ensure that the bank achieves its intended impact on the region and meets its goals, it is essential to grant the SCO bank sufficient operational flexibility. The bank should adopt a market-oriented framework with established international banking standards. Therefore, the bank’s autonomy is vital for its success. It must prevent government interference in project recommendations to avoid power corruption. Project selection should be conducted by an independent collective review, with the bank president holding only veto power, not the authority to designate projects. This model of independent operation, successfully implemented by the China Development Bank (CDB), enabled the CDB to evolve from a standard policy bank handling government-assigned projects to one of the world’s largest development banks, with over $2.3 trillion in total assets^[42].

The third key element is capital strategy. While the SCO Development Bank will fund projects at very low interest rates, the source of the capital is crucial. The CDB’s experience reveals that most of the bank’s income comes from local bond market operations. The future SCO bank could adopt a similar strategy of issuing bonds, for example, in a basket of national currencies, and raise funding domestically. The Chinese interbank bond market, along with the Russian and Indian bond markets, are viable options. CDB’s role in poverty alleviation was indispensable and demonstrated that development banks should be an essential part of anti-poverty strategies in developing economies with underdeveloped market institutions and capital markets^[43]. Therefore, along with adhering to international standards of development banking, regional experience should also be considered in the concept of the future bank.

In the pre-COVID-19 world, critics of the proposed SCO Development Bank contended that the region already had an adequate number of development institutions[44]. Experts specifically noted that the AIIB and the NDB had substantially addressed the development funding gap, diminishing the need for a new SCO-specific bank. Nonetheless, the ADB’s 2023 report highlights a pressing demand: from 2023 to 2030, developing Asia requires $13.8 trillion in infrastructure investments (or $1.7 trillion annually) to maintain its current growth rate^[45]. Presently, regional investments amount to only $662 billion annually, with existing multilateral development banks contributing a mere 2.5% of this total[46]. Clearly, there is significant potential for additional development financial institutions in Asia.

Conclusion  

The Shanghai Cooperation Organization has evolved significantly since its inception, expanding its membership and scope. Initially focused on security, the organization has diversified its agenda to include cultural, humanitarian, and economic initiatives. Despite its growth, internal disagreements and structural challenges have hindered progress in security and economic cooperation. The SCO’s current structure, designed for a smaller group, struggles to accommodate its expanded membership and ambitions. To sustain its growth trajectory and regional influence, the SCO must consider innovative financial mechanisms, such as the proposed SCO Development Bank. This bank would require a novel governance and operational framework to succeed, drawing from both international and regional banking experiences.

Today member states recognize the necessity of financial support for project activities to fully realize the organization’s investment potential. For example, leaders from Kyrgyzstan[47] and Iran[48] have advocated for the establishment of a bank. Nevertheless, despite the recurrent emphasis on the need for consultations in each annual SCO summit declaration, no significant progress has been made to date. 

The foundation of the bank will be a significant move in the SCO’s further transformation. By learning from both international and regional banking models, and ensuring balanced governance, operational flexibility, and a robust capital strategy, the SCO can effectively address its members’ development needs and fulfill its broader ambitions. Otherwise, the organization would maintain the platform at a level suitable solely for hosting exhibitions such as “Eight Wonders of the SCO” and the “SCO Tourism Forum”.

[1] Astana Times, "SCO Welcomes Belarus as Its 10th Member State”, July 2024, https://astanatimes.com/2024/07/sco-welcomes-belarus-as-its-10th-member-state/.

[2] Shanghai Cooperation Organization, “О Шанхайской организации сотрудничества,” [“About the Shanghai Cooperation Organization”], December 15, 2015, https://rus.sectsco.org/20151208/16789.html.

[3] Shanghai Cooperation Organization, “Charter of the Shanghai Cooperation Organization,” June 7, 2002, https://eng.sectsco.org/files/203013/203013.

[4] Ariel Cohen, “The Dragon Looks West: China and the Shanghai Cooperation Organization,” The Heritage Foundation, September 7, 2006, https://www.heritage.org/asia/report/the-dragon-looks-west-china-and-the-shanghai-cooperation-organization.  

[5] Gisela Grieger, “China's Leading Role in the Shanghai Cooperation Organisation,” European Parliamentary Research Service Briefing, June 2015, 1-10, https://www.europarl.europa.eu/RegData/etudes/BRIE/2015/564367/EPRS_BRI(2015)564367_EN.pdf

[6] Administration of the President of Russia, “Астанинская декларация Совета глав государств – членов Шанхайской организации сотрудничества,” [“Astana Declaration of the Council of Heads of State of the Shanghai Cooperation Organization,”], July 4, 2024, http://www.kremlin.ru/supplement/6163.

[7] Official web-site of the President of Uzbekistan, “President of the Republic of Uzbekistan Takes Part in the Meeting of the Council of Heads of State of the Shanghai Cooperation Organization”, July 4, 2024, https://president.uz/en/lists/view/7374.

[8] Shanghai Cooperation Organization, “The Delhi Declaration of the Council of Heads of State of the Shanghai Cooperation Organization”, July 4, 2023, https://eng.sectsco.org/files/207250/207250.

[9] State Council Information Office of China, “A quick guide to SCO and its military cooperation”, June 5, 2018, http://english.scio.gov.cn/infographics/2018-06/05/content_51673238.htm.  

[10] Shanghai Cooperation Organization, “В Китае состоялись антитеррористические учения Тянь-Шань-2 – 2011” ["China held anti-terrorist exercises "Tianshan-2 - 2011”], May 8, 2011, https://rus.sectsco.org/20110508/58703.html.  

[11] Kenneth Allen, Phillip C. Saunders, and John Chen, “Chinese Military Diplomacy, 2003–2016: Trends and Implications”, China Strategic Perspectives 11, Institute for National Strategic Studies, National Defense University, July 17, 2017, https://inss.ndu.edu/Portals/68/Documents/stratperspective/china/PLA-diplomacy-database.xlsx?ver=2017-07-18-133407-147  

[12]Xinhua, “Xi Calls for Carrying Forward the Shanghai Spirit to Enhance Solidarity and Cooperation,” August 19, 2021, http://www.xinhuanet.com/english/2021-08/19/c_1310137264.htm.   

[13] Shanghai Cooperation Organization, “Сводный доклад '20 лет Шанхайской организации сотрудничества,” [“Summary Report '20 Years of the Shanghai Cooperation Organization”], November 30, 2021, https://rus.sectsco.org/20211130/810791.html.  

[14] Regional Anti-Terrorist Structure of the Shanghai Cooperation Organization, “О восьмом заседании руководителей пограничных служб компетентных органов государств-членов Шанхайской организации сотрудничества” [“On the eighth meeting of the heads of border services of the competent authorities of the member states of the Shanghai Cooperation Organization”], June 21, 2022, https://ecrats.org/ru/press/news/150/.

[15] Reuters, “China Reveals Four Soldiers Killed in June 2020 Border Clash with India,” February 19, 2021, https://www.reuters.com/article/world/china-reveals-four-soldiers-killed-in-june-2020-border-clash-with-india-idUSKBN2AJ05A/.

[16] Kommersant, “Союзники по ШОС открыли залповый огонь,” [“SCO allies open salvo fire”], September 16, 2022, https://www.kommersant.ru/doc/5569171.

[17] Aijan Sharshenova, “More than a ‘Border Skirmish’ Between Kyrgyzstan and Tajikistan,” The Diplomat, September 19, 2022, https://thediplomat.com/2022/09/more-than-a-border-skirmish-between-kyrgyzstan-and-tajikistan/.

[18] Abdullo Rahnamo, “Таджикско-Кыргызские Пограничные Конфликты. Кто на Самом Деле Агрессор?” [“Tajik-Kyrgyz Border Conflicts. Who is the Real Aggressor?”], The Branch of Moscow State University named after M.V. Lomonosov in Dushanbe, November 30, 2022, https://msu.tj/ru/news?id=390.

[19] Vali Kaleji, “Why the Shanghai Cooperation Organization Was Absent in Kazakhstan,” The National Interest, February 1, 2022, https://nationalinterest.org/blog/buzz/why-shanghai-cooperation-organization-was-absent-kazakhstan-200199.

[20] TASS, “ШОС создаст Антинаркотический центр в Душанбе,” [“The SCO will create an Anti-Drug Center in Dushanbe”], July 4, 2023, https://tass.ru/obschestvo/21271779.

[21] Administration of the President of Russia, “Astana Declaration of the Council of Heads of State of the Shanghai Cooperation Organization”.

[22] Shanghai Cooperation Organization, “Joint Communiqué, Meeting of the Council of Heads of Government (Prime Ministers) of the Shanghai Cooperation Organization,” September 23, 2003, Beijing, https://eng.sectsco.org/files/197455/197455

[23] Shanghai Cooperation Organization, “Joint communiqué Meeting of the Council of Heads of Government of the SCO”, September 23, 2004, https://eng.sectsco.org/files/197415/197415

[24] Alexander Lukin, “Шанхайская организация сотрудничества: что дальше?” [“The Shanghai Cooperation Organization: What's Next?”]  Russia in Global Affairs, No. 3 (May/June 2007), https://globalaffairs.ru/articles/shankhajskaya-organizatsiya-sotrudnichestva-chto-dalshe/.

[25] Shanghai Cooperation Organization, “Joint Communiqué Meeting of the Council of Heads of Government (Prime Ministers) of the SCO Member States”, October 26, 2005, https://eng.sectsco.org/files/197588/197588

[26] Shanghai Cooperation Organization, “Межбанковское объединение ШОС” [“The SCO Interbank Consortium”], July 16, 2019, https://rus.sectsco.org/20190716/565256.html

[27] Lex.uz, “Соглашение Шанхайской организации сотрудничества о межбанковском сотрудничестве (объединении) в рамках Шанхайской организации сотрудничества” [“The Agreement on Interbank Cooperation (Association) within the framework of the SCO”], October 26, 2005, https://lex.uz/ru/docs/2069028

[28] SCO Business Council, “Положение о Деловом совете государств-членов Шанхайской организации сотрудничества” [“Regulations on the Business Council of the Member States of the Shanghai Cooperation Organization”], June 14, 2006, https://bcsco.ru/files/docs/polozhenie_ds_shos.pdf

[29] Techexpert, “Соглашение о сотрудничестве между Межбанковским объединением ШОС и Деловым советом Шанхайской организации сотрудничества” [“Cooperation Agreement between the SCO Interbank Consortium and the Shanghai Cooperation Organization Business Council”], August 16, 2007, https://docs.cntd.ru/document/902383843

[30] Alexander Lukin, “The Shanghai Cooperation Organization: What's Next?”

[31] Techexpert, “Cooperation Agreement between the SCO Interbank Consortium and the Shanghai Cooperation Organization Business Council”, 2007

[32] Official website of Russia’s Presidency in the Shanghai Cooperation Organization 2014-2015, “SCO Youth Card to increase contact between SCO member states”, March 23, 2015, http://en.sco-russia.ru/commentaries/20150323/1013315858.html

[33] Official web-site of the President of Uzbekistan, “President of the Republic of Uzbekistan Takes Part in the Meeting of the Council of Heads of State of the Shanghai Cooperation Organization”.

[34] Ministry of Foreign Affairs of the People’s Republic of China, “Wen Jiabao Attends and Addresses the Ninth SCO Prime Ministers' Meeting”, November 26, 2010, https://www.mfa.gov.cn/eng/wjb_663304/zzjg_663340/dozys_664276/roi/201011/t20101129_555226.html

[35] Alexander Gabuev, “Китай открыл счета в свою пользу,” [“China has opened accounts in its favor”], Kommersant, June 16, 2011, https://www.kommersant.ru/doc/1667463.

[36] Alexey Mikhailov and Elizaveta Knyazeva, “Банк развития в структуре Шанхайской организации сотрудничества,” [“Development Bank in the Structure of the Shanghai Cooperation Organization”], National Interests: Priorities and Security, no. 39 (324) (2015), https://cyberleninka.ru/article/n/bank-razvitiya-v-strukture-shanhayskoy-organizatsii-sotrudnichestva  

[37] Alexander Gabuev, “Bigger, Not Better: Russia Makes the SCO a Useless Club,” Carnegie Endowment for International Peace, June 2017, https://carnegieendowment.org/posts/2017/06/bigger-not-better-russia-makes-the-sco-a-useless-club?lang=en&center=russia-eurasia.  

[38] Alexander Gabuev, “China has opened accounts in its favor”.

[39] Victor Sanjinez, Han Huang, and Andrew London, “China and Russia: A Friendship with ‘No Limits’,” South China Morning Post, March 28, 2023, https://multimedia.scmp.com/infographics/news/china/article/3214426/china-russia/index.html.

[40] Shanghai Cooperation Organization, “Душанбинская декларация двадцатилетия ШОС” [“Dushanbe Declaration of the 20th Anniversary of the SCO”], June 14, 2021, https://rus.sectsco.org/files/779610/779610.

[41] Zhao Huasheng, “Modern Approaches of China to the Shanghai Cooperation Organization”, Valdai Discussion Club, April 12, 2022, https://valdaiclub.com/a/highlights/modern-approaches-of-china-to-the-sco/.

[42] Jiajun Xu, “Market Maker: The Role of China Development Bank in Incubating Market,” Man and the Economy 4, no. 2 (2017): 20170007, https://doi.org/10.1515/me-2017-0007.

[43] Ibid.

[44] Bas Hooijmaaijers, “Understanding Success and Failure in Establishing New Multilateral Development Banks: The SCO Development Bank, the NDB, and the AIIB.” Asian Perspective 45, no. 2 (2021): 445-467, https://doi.org/10.1353/apr.2021.0008.

[45] Asian Development Bank, “Reinvigorating Financing Approaches for Sustainable and Resilient Infrastructure in ASEAN+3”, May 2023, https://www.adb.org/sites/default/files/publication/879411/financing-sustainable-resilient-infrastructure-asean3.pdf.   

[46] ASEAN, “A Special ASEAN Investment Report 2023: International Investment Trends: Key Issues and Policy Options,” December 2023, https://asean.org/wp-content/uploads/2023/12/AIR-Special-2023.pdf.  

[47] Shanghai Cooperation Organization, “Выступление Президента Кыргызской Республики Садыра Жапарова на заседании Совета глав государств-членов ШОС” [“Speech by the President of the Kyrgyz Republic Sadyr Japarov at the meeting of the Council of Heads of State of the SCO Member States], July 5, 2024, https://rus.sectsco.org/20240705/1428035.html.

[48] TASS, “Иран поддержал идею создания Банка развития ШОС,” [“Iran supported the idea of ​​creating the SCO Development Bank,”], July 4, 2024, https://tass.ru/ekonomika/21272331.

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