Policy Briefs

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Policy Briefs

31 October, 2024

How Did Taliban’s Surge Affect India’s Afghanistan Policy?

Introduction   Despite the dramatic political challenges and shifts India’s commitment to maintain relations with Afghanistan remains unchanged. What does make this South Asian giant to keep engaged in its tumultuous neighbour’s affairs?   This paper argues that while India’s core strategic interests in Afghanistan have not changed, the approach has evolved from proactive state-building to cautious engagement when the Taliban came to power in 2021. India’s continuing engagement in Afghanistan, regardless who is in power, might be explained via the following several reasons;    Firstly, India has vital interests in Afghanistan including security, economic as well as political. India is concerned about emerging different terrorist groups in its neighbourhood which could destabilise the region and potentially impact India. Secondly, India wants to counter balance Pakistan’s influence in the region through economic initiatives. For example, for India Afghanistan may serve as a gateway to Central Asia which is rich in natural resources and has huge trade potential. Taliban’s return to power, however, presented new challenges to India’s Afghanistan policy, forcing a recalibration of its approach while maintaining its core objectives. India’s long-term interests have significantly influenced its engagement with Afghanistan over many years. This influence is apparent in India’s responses both during and following the U.S. invasion in 2001.   India provided Coalition forces with vital intelligence during the 2001 US invasion of Afghanistan, helping them to topple the Taliban government. When the new government was formed, India promptly established diplomatic relations with it and actively participated in government formation endeavours in Afghanistan. Since then, India has been the biggest donor to Afghanistan in the region and fifth largest in the world.[1]   India-Afghanistan relations: Historical overview (2001-2021)   India’s engagement with Afghanistan from 2001 to 2021 was calculated and multi-dimensional with security relations being paramount. One of the key pillars of India’s Afghanistan policy was developed around the idea of Afghanistan never being used against India’s interest by terrorist groups along with containing Pakistan’s influence in the region. After the fall of the Taliban in 2001, India emerged as one of the important partners in the reconstruction and stabilisation of Afghanistan. From intelligence to military support to the US-led coalition forces could be examples of building up security apparatus in Afghanistan.   Over the years, India has trained over 4000 Afghan National Army officers and soldiers,[2] besides, provided military equipment like Mi-25 attack helicopters and counterterrorism training to Afghan security personnel.[3] This extensive security engagement by India marked a commitment to long-term stability in Afghanistan avoiding direct military intervention. Capacity building through such initiatives by India tends to establish substantial internal security in Afghanistan without engaging in any form of confrontation with regional powers like Pakistan.   However, this cooperation faced significant challenges. The bombing of India’s embassy in Kabul in 2008 which killed 58 people highlighted the existential threat to India’s interests as well as unstable security environment in Afghanistan.[4]   Economically, the strategic motivation for India was guided by interest in the improvement of regional connectivity, reducing Afghanistan's dependence on Pakistan. India invested around $3 billion in diverse projects and is one of the largest donors in the region.[5] Since the inception of the Zaranj-Delaram highway in 2009, which was constructed over 218 km, Afghanistan has become within its reach to access Iranian ports without having to rely on Pakistan for trade in a large way.[6] This project, together with India’s support for the development of the Chabahar Port in Iran, underlined India’s more extensive ambitions in regional connectivity, especially in Central Asia.   India’s economic approach was not limited to infrastructure development alone. Setting up an air freight corridor in 2017 increased bilateral trade to over $1.5 billion annually by 2019-2020.[7] Furthermore, facilitating Afghanistan’s accession to the South Asian Free Trade Area (SAFTA) in 2011 was an unequivocal signal of India’s intention to establish long-term economic connections and deepen regional economic cooperation. All this strengthened India’s position as a potential economic partner of Afghanistan and at the same time served its strategic interests in the region.   From a development perspective, India emerged as a vital partner for Afghanistan in its process of rebuilding and stabilization. Almost 500 projects were implemented by India in the priority areas of power, water supply, road connectivity, healthcare, education, agriculture, and capacity building. The landmark projects include the Afghan Parliament building, inaugurated in 2015, which symbolized the commitment of India towards Afghan democracy.[8]   The Salma Dam, earlier referred to as the India-Afghanistan Friendship Dam, built in Herat Province and completed in 2016, served 75,000 hectares of land and produced 42 MW of power, thereby significantly contributing to the infrastructure and needs of Afghanistan.[9]   India’s development involvement was indeed comprehensive, reaching to the grassroots levels through the Small Development Projects scheme, covering all 34 provinces of Afghanistan. The annual disbursement of 1,000 scholarships for Afghan students for higher education in India, as also the Self-Employed Women’s Association program, in which over 3,000 Afghan women were trained, underlined the commitment to human resource development and social progress in Afghanistan.[10] This approach helped India to gain goodwill among the Afghan people and presented itself as a responsible partner in nation-building. Its attention to high-visibility projects and other public development initiatives has helped to differentiate the country from other international actors in Afghanistan.   With this sustained and all-encompassing effort, India had undoubtedly earned its place as a factor in Afghanistan’s destiny. While this furthered Indian interests in the field of strategy, at the same time, it contributed much value to the nation-building endeavours that went on in Afghanistan after the fall of the Taliban in 2001. But, sudden political changes in 2021, brought fresh challenges to India.   India-Taliban contemporary relationships (2021–present)   Sudden developments of events in Afghanistan in 2021 created numerous challenges for India. This, in turn, necessitated the insertion of some readjustments for India in its decades-long involvement in the war-torn nation. The fall of the Republic, which New Delhi sponsored for more than two decades, had revealed a more vital need for reassessment of the approach.   Initially, India in a slightly cautious way responded to the resurgence of Taliban. Aware of the new ground realities, India was looking to retain a diplomatic presence in Kabul despite evacuating its personnel in the immediate aftermath of the takeover by Taliban.[11] It was instinctively driven by pragmatic recognition that despite the fast-changing political dynamics, keeping open channels of communication and at least a modest influence in Afghanistan remained vital for India.   Economically, India shifted its focus to address the worsening humanitarian situation in Afghanistan. With the Taliban led government failing to secure continuous international aid and recognition, India turned into an important provider of humanitarian aid through wheat, COVID-19 vaccines, and emergency relief supplies.[12] This humanitarian diplomacy has offered New Delhi a way to engage in constructive way with the new Afghan authorities while asserting its commitment to the welfare of Afghans.   India’s approach involves balancing the decision to withhold formal recognition of the Taliban government while keeping open the channels of communication. New Delhi signalled that a genuinely inclusive and representative government should be in Kabul – one that accepts all Afghans’ rights, including those of the minorities and women. This principled attitude was a part of the Indian way of acquiring credentials to establish itself as a responsible regional power working for peace and stability in Afghanistan.   The various aspects of the Taliban coming to power have opened up a set of new challenges for India in the realm of security. A revived transnational terrorist group and the spillover effects on India’s security landscape created concerns and required careful recalibration of India’s counter-terrorism cooperation with Afghanistan.   The new phase of India’s Afghanistan policy has been gradual inching away from overt state-building and democracy promotion to more cautious and selective engagement, in which New Delhi seeks to protect core interests while being responsive to the changing realities on the ground. The resurgence of the Taliban presented a challenge for India that needs careful diplomatic, economic, and security-oriented calibration in engagement with Afghanistan.   India’s Afghanistan policy pre- and post-Taliban resurgence   A comparison of Indian foreign policy towards Afghanistan, before and after the arrival of the Taliban, demonstrates major changes in tactics with maintaining the permanence of strategic goals. Between 2001 and 2021, India relied on close cooperation with the official Afghan authorities, using “soft power” to strengthen its position. This multifaceted strategy included economic, developmental, cultural, and educational initiatives, as previously stated. The return of the Taliban to power in Afghanistan in 2021 has required India to strategically reorient its regional approach. While maintaining its long-term strategic objectives, India has opted to engage indirectly with Afghanistan. Therefore, India has stepped up its engagement in international platforms such as the UN Security Council, BRICS, and the Shanghai Cooperation Organisation.   At the same time, New Delhi continues to offer humanitarian support through platforms like the UN, by providing essential food, medicine, and vaccines. Moreover, continuing scholarship programs for Afghan students in Indian educational institutions helps to maintain people-to-people ties.   India uses its economic influence in Central and South Asia as a means of indirectly influencing events in Afghanistan. In an effort to maintain economic relevance in the region, India has been strengthening trade ties with its neighbours.   Despite the political changes, India continues to promote culture through media and educational programs. In this way, India maintains its soft power and keeps the channels of communication open for possible future engagement. These indirect methods thus help India protect its interests and maintain its influence in Afghanistan without engaging directly with the Taliban government. This well-thought-out strategy thus allows India to adapt to the new political reality while pursuing its long-term regional goals.   India’s contemporary foreign policy approach towards Afghanistan strikes a fine balance between cautious engagement and strategic necessity. The world, including India, did not officially recognize the Taliban government unless they established an inclusive government that protects women’s and minority rights. But India’s interests in Afghanistan require a certain degree of involvement, which cannot wait forever for political issues to be resolved - as they say, until the dust settles. This creates a very complex political dilemma for India. On the one hand, commitment to an international consensus of non-recognition promotes the principles of democracy and human rights. On the other hand, security considerations, economic goals and regional plans dictate some pragmatic interaction with the current rulers of Afghanistan. India has therefore pursued a cautious policy of open informal contacts and offers humanitarian assistance, continuing to insist that the Afghan government be more representative and inclusive.   This plan helps India to protect its long-term interests in Afghanistan while preserving its own beliefs about responsible governance and human rights. As events unfold, India’s policy is likely to continue to adjust, balancing between moral values and political realities in this volatile region.   Conclusion   India’s foreign policy towards Afghanistan strived for continuity and adaptability in the face of dramatic political changes. From 2001 to 2021 India used a multifaceted approach of economic cooperation, development assistance and soft power projection to strengthen its position in Afghanistan and in the region. All of these were aimed at achieving the following objectives: stability in Afghanistan, counter-terrorism, balancing against Pakistan’s influence, and strengthening India’s economic ties with Central Asia. The Taliban’s return in 2021 has required readjustment of its approach, rather than a change in India’s core strategic interests. India has shifted from direct nation building efforts to a more thoughtful involvement strategy. This shows India’s pragmatic recognition of new political realities in Afghanistan and its enduring commitment to the Afghan people and regional stability.   Looking ahead, India’s Afghanistan policy is likely to remain volatile, adapting to the realities on the ground. The challenge for Indian policymakers will likely be maintaining delicate balance between moral imperatives and strategic necessities. The further engagement with Afghanistan appears to be underscoring India’s increasing potential seeking to play a constructive role in promoting stability in South Asia. How successful will this new approach be might depend on the India’s ability to work with diverse international partners and its response to the dynamic environment in and around Afghanistan.     [1] Brookings Institution. India, Afghanistan, and connectivity in South Asia: Address by H.E. Shaida Abdali, Ambassador of Afghanistan to India. https://www.brookings.edu/events/india-afghanistan-and-connectivity-in-south-asia-address-by-h-e-shaida-abdali-ambassador-of-afghanistan-to-india/ [2] The Kabul Times. Female Afghan soldiers train at Indian academy. https://thekabultimes.com/female-afghan-soldiers-train-at-indian-academy/#:~:text=India%20has%20so%20far%20trained,of%20security%20forces%20in%20Afghanistan [3] Gady, F.-S. (2016, December 1). India delivers 4th combat helicopter to Afghanistan. The Diplomat. https://thediplomat.com/2016/12/india-delivers-4th-combat-helicopter-to-afghanistan/#:~:text=India%20has%20finally%20delivered%20the,according%20to%20local%20media%20reports. [4] France 24. (2009, October 8). Taliban claims responsibility for attack outside Indian embassy. https://www.france24.com/en/20091008-taliban-claims-responsibility-attack-outside-indian-embassy- [5] Brookings Institution. (2017, April 25). India, Afghanistan, and connectivity in South Asia: Address by H.E. Shaida Abdali, Ambassador of Afghanistan to India. https://www.brookings.edu/events/india-afghanistan-and-connectivity-in-south-asia-address-by-h-e-shaida-abdali-ambassador-of-afghanistan-to-india/ [6] International Monetary Fund. (2005). Reconstructing Afghanistan. International Monetary Fund. https://books.google.co.uz/books?id=Lg8xc42UAwcC&pg=PA18&source=gbs_toc_r&cad=2#v=onepage&q&f=false [7] Embassy of India. Bilateral trade between India and Afghanistan. https://eoi.gov.in/eoisearch/MyPrint.php?11360?000/0001#:~:text=Bilateral%20trade%20between%20India%20and,Afghanistan%20around%20US%24530%20million. [8] Hindustan Times. (2015, December 25). Modi in Kabul: PM meets Ghani, to inaugurate Afghan’s parl building. Hindustan Times. https://www.hindustantimes.com/india/modi-in-kabul-pm-meets-ghani-to-inaugurate-afghan-s-parl-building/story-wua2CtN8gj4IQsRnmNknHM.html [9] Press Information Bureau. (2016, June 4). Prime Minister’s visit to Afghanistan. https://pib.gov.in/newsite/printrelease.aspx?relid=145967 [10] Brookings Institution. (2017, April 25). India, Afghanistan, and connectivity in South Asia: Address by H.E. Shaida Abdali, Ambassador of Afghanistan to India. https://www.brookings.edu/events/india-afghanistan-and-connectivity-in-south-asia-address-by-h-e-shaida-abdali-ambassador-of-afghanistan-to-india/ [11] Economic Times. (2021, August 24). MEA calls India’s evacuation mission from Afghanistan named ‘Operation Devi Shakti’. The Economic Times. https://economictimes.indiatimes.com/news/india/mea-calls-indias-evacuation-mission-from-afghanistan-named-operation-devi-shakti/articleshow/85589396.cms?from=mdr [12] Laskar, R. H. (2022, January 1). India donates 500,000 COVID vaccine doses to Afghanistan. Hindustan Times. https://www.hindustantimes.com/india-news/india-donates-500-000-covid-vaccine-doses-to-afghanistan-101641060000708.html   Download the policy brief here   * The Institute for Advanced International Studies (IAIS) does not take institutional positions on any issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of the IAIS.

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Policy Briefs

18 October, 2024

How Tajikistan and Uzbekistan Are Resolving Transport Connectivity Issues

Nargiza Umarova’s new publication addresses the ongoing efforts to improve transport connectivity between Uzbekistan and Tajikistan. The author argues that cooperation in transport and transit is crucial for intensifying regional interaction in Central Asia, aligning with national strategies for expanding transit potential. Since 2018, various initiatives have been implemented, such as the restoration of railway and road links, the mutual abolition of transit permits, and the creation of international transport corridors.   The expert discusses how increased transport connectivity has boosted trade, with a significant rise in trade volume and bilateral cargo transportation. The paper also highlights the challenges, such as infrastructure modernization and investment deficits, proposing that integrating into international transport corridors could help overcome these limitations and strengthen economic ties.   Moreover, the paper explores potential routes and projects that could position both countries as key transit hubs, including the China-Tajikistan-Uzbekistan-Turkmenistan-Iran-Turkey corridor, while addressing competition from alternative routes like the Tajikistan-Afghanistan-Turkmenistan railway, emphasizing the need for Uzbekistan and Tajikistan to cooperate in harmonizing transport strategies and improving logistics performance to maximize mutual benefits despite occasional conflicting interests.   Read the Policy brief on The Diplomat’s website

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Policy Briefs

01 October, 2024

The ruling Liberal Democratic Party (LDP) in Japan has elected a new leader

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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Policy Briefs

11 August, 2024

Reimagining The Shanghai Cooperation Organization: A Critical Look and New Horizons

New Transformation 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.   Download the Policy brief below