Shanghai Cooperation Organisation (SCO) is an evolving framework for multilateral regional cooperation. In the short history of its existence, performance of the Shanghai Cooperation Organisation is reflective of the fact that the Organisation has the potential of becoming a dynamic, vibrant and forward-looking framework for regional cooperation. SCO has been able to successfully institute mechanisms for multi-dimensional cooperation, which would serve as basis for coordinated cooperation at multiple-levels amongst its member states and also enabling its engagement with other states and international institutions. SCO is increasingly becoming instrumental in laying the foundation for promoting region-wide security and stability, while offering a framework for cooperation in economic and other areas of mutual interest in an all-encompassing manner. The importance, effectiveness and
usefulness of SCO had been duly recognized when it was accorded the Observer status in the UNGA in December 2004. It has also signed the MoUs for institutional cooperation with ASEAN and CIS, and is opening up to expand its sphere of interaction with other states, international institutions and sub-regional groupings. In 2005, SCO expanded its geographic scope by incorporating Pakistan, Iran and India as Observer members. Mongolia had already secured SCO membership in 2004. It is hoped that once the Observer states and the permanent members of SCO are ready, the Observers would be accorded full membership status also. Although, the primary focus of SCO has been on issues pertaining to security and politicalstability, it is seen gradually making a transition towards focusing more on economic and energy related cooperation within the SCO framework, while at the same time consolidating security relationships. Interestingly, in the initial phase of its creation, the perceptions of the outsiders about SCO were that it was a narrowly focused security forum established to deal with the issues of extremism, terrorism and separatism confronted by its member states. The other images reflecting upon it were that of a framework to channel unfolding strategic competition between China and Russia in the context of Central Asia and also to keep a check on the expanding US influence in the resource rich region. With the passage of time most of these perceptions were proven partly misplaced and underwent a change with the evolution of the SCO's organisational framework. With the inclusion of Pakistan, Iran and India asObserver members, the apprehensions that SCO would remain Sino-Russia centric and dominate the smaller Central Asian states are fading away. It is true that in every multilateral organisation there are always one or two lead countries, which serve as the mainstay of that organisation. In the case of SCO, China and Russia happened to be the core countries. It is also true that the success or failure of SCO would largely depend on the strategic cooperation or strategic competition between these two major players. It will not be out of place to suggest that SCO is a bipolar organisation and would need a fine balance between the two key players to be effective and to achieve its objectives. Presently, SCO is gradually evolving as a comprehensive framework for the development of the entire region, which includes possibilities of cooperation amongst its members in the areas such as politics, trade and investment, defence, law enforcement, environmental protection, culture, science and technology, education, energy, transportation, credit and finance and other areas of mutual benefit. In the meeting of the SCO Heads of States in September 2003, the ‘programme of multilateral trade and economic cooperation of SCO member states' was approved. The programme precisely determines basic goals and objectives of economic cooperation within the SCO framework; prioritise direction and spells out concrete practical steps for cooperation with special emphasis on long-term planning. In view of the existing ground realities, SCO has envisioned to expand economic cooperation in the next 20 years, and reaching a stage enabling its members for free flow of goods, finances and services - ultimately leading to regional integration. At the time of its creation, some Western analysts were of the view that "if the SCO expands and encompasses not just only security issues, but also addresses economic and social concerns, then it will be a powerful regional player indeed". As time passed by, SCO has not only expanded into an economic sphere, but also the leadership of member states have expressed determination and set economic cooperation as a priority goal to be achieved in due course. It is expected, as the current trends show, that in the coming years, cooperation in sectors such as communication, infrastructure and energy will expand and pave the way for expansion in trade, investment and other economic activities. The SCO leadership has planned to create a SCO Development Fund, SCO Business Council, Banking Union and a SCO Forum. These organisational setups, once fully functional, would greatly facilitate a coordinated approach towards economic cooperation. However, the pace of development in strategic cooperation among the major players of the SCO would set the speed of overall progress of the Organisation. SCO includes a very diverse region (including Observers) in terms of size, population, culture, political systems and the level of economic development of its member states. If one has to categorize the Member and Observer states, these can be broadly divided into three sets. In the first set, it has member countries like China, Russia and India having a GDP (at official exchange rate) of US$ 2 trillion, 740 billion and 735 billion, respectively. Their GDP real growth rate is at 9.2, 6 and 7 percent, respectively. In the second set, countries like, Iran, Pakistan and Kazakhstan can be included which have a GDP of US$ 128 billion, 92 billion and 43 billion, respectively. The GDP real growth rate of these countries is at 4.8, 8.4 and 9 percent, respectively. The rest of the member states Uzbekistan, Kyrgyzstan, Tajikistan and Mongolia have a GDP of US$ 10 billion, 2.1 billion, 1.9 billion and 1.4 billion with a GDP real growth rate of 5.4, 2, 8 and 5 percent, respectively. All the countries have different levels of development different economic bases, and different approaches and orientation to achieve their national development. In such a case, to forge comprehensive cooperation at political and economic level would require a strong political will, commitment and vision on the part of the leadership of the member states to realize the objective of regional cooperation. There has to be short and long-term policies for incremental cooperation keeping in view the comfort level of less developed members. Given the diversity in the SCO region, two types of problems impacting economic cooperation can be identified. The first category is essentially of political nature and related to the issues of political stability, political will of the state to cooperate, level of trust etc. The second category is primarily based on the disparity in economic structures, available resources, adequacy of infrastructures, and lack of other such factors, which could contribute to economic growth and facilitate economic cooperation. Instead of highlighting the problems of economic cooperation, I would like to address this issue by making suggestions on how to enhance economic cooperation. Following are a few measures, which can be considered for enhancing economic cooperation among the member states within the framework of SCO. The problems of cooperation vary from state to state, therefore all of the given measures may not be applicable across the board to all member states, but would help in cases where these are applicable.
1. Enhancing security and political stability of the member states. Domestic political stability creates an enabling environment for economic growth and progress. In turn, economic development helps to achieve greater security and political stability, when poverty and unemployment is reduced and the living conditions of people across the board improve. Economic stability denies space to some of the factors of instability. At present times, to deal with the trans-national nature of non-traditional security threats, it is imperative for states to engage and cooperate in multilateral frameworks.
2. Achieving higher degree of trust in interstate relations. Inter-state relations among the member countries should be based on the principles of mutual trust, equality and non-interference into each other's affairs. Expanding economic cooperation is essentially a political decision. And such decisions cannot be implemented in an environment of mistrust and lack of confidence. Without a higher level of trust economic cooperation cannot be realised, although there can be some exceptional cases in a bilateral context. Strong regional cooperation will never be effective unless both people and their leaders can comprehend the mutual benefits of coming together. Unless the comparative advantage of inter-regional economic relations are realised by the trade and economic leaders, and until the cost of non-cooperation is calculated by the decision makers, substantive initiatives related to economic cooperation cannot be undertaken. Therefore, the level of trust among member states would determine the level of economic cooperation.
3. Political will to cooperate needs to be further strengthened. The political will of the states to come together despite differences in size, level of development and differing perceptions has to be further enhanced. It would be an invaluable asset for regional economic cooperation. In this case the examples of EU and ASEAN can be cited, where despite differences on many counts, the political will to cooperate prevailed and resulted in experiencing successful regional cooperative frameworks. In the cases of SAARC and ECO, where the political will remained weak, regional cooperation could not take place at a desired level. Geo-strategic competition should not be allowed to undermine geoeconomic cooperation.
4. Expand the role of private sector. The private sector usually is more proactive and in novative in terms of promotion of business than the public sector enterprises. Enabling environment has to be created to facilitate private sector engagement within the SCO territories. Structural economic reforms are needed in some of the member countries to enlarge the base of private sector. The market forces have their own dynamics to engage in mutually beneficial ventures. The chamber of commerce and industries of the respective states can play a vital role in enhancing economic cooperation.
5. Informed decision making on economic cooperation. There is a need to carryout indepth research and analysis of the potential areas for cooperation within the framework of SCO. Identification of areas of cooperation where complementarities exist would generate interest in the potential partners. It would also reduce the factors of uncertainty and give confidence to the prospective business concerns.
6. Efficient and effective use of information technology. To enhance economic cooperation, information sharing has enormous potential for creating conducive environment for economic cooperation. Creation of web-based commercial links would facilitate the flow of commercialinformation and help establishing relevant connections. Information networks play a crucial role in accessing information and establishing contacts in the private commercial sector.
7. Standardisation of procedures. Reliable legal framework for foreign investment protection, especially in the non-oil projects or development projects is a prerequisite for enhancing economic cooperation. Standardising financial/legal procedures greatly facilitate inter-operability in multilateral frameworks and enhance mutual confidence.
8. Economic policy coordination for sustainable economic cooperation. Economic competition has to be channelled to create a win-win situation for all member states. Accommodation of small and weak economies in the SCO framework would ensure long-term common prosperity of the entire region. A coordinated region-based growth strategy will enable the member countries to deal effectively with future challenges, especially in view of economic globalization. There is a need to synthesize the divergent interests and create omplementarities. A coordinated economic-policy-approach is important for long-term regional integration.
9. Do the doable. SCO members plus Observers constitute a very large and diverse group of states. Therefore, while following the SCO framework guidelines, bilateral, trilateral and quadrilateral cooperation based on each state's capacity for handling certain projects should be undertaken for successful implementation of projects One should learn from the ASEAN's successful experience of creating ‘growth triangles'. In this regard, the SCO approach to focus on energy and infrastructure related projects is a good beginning. Energy security is a big challenge and has immense stakes for rapidly developing economies of states like China, India and Pakistan in the twenty first century. Apart from the Middle East; Russia, Central Asia and Iran combined are the largest producers of oil and gas; all are either members or observers of the SCO. Therefore, SCO framework provides an opportunity to have greater cooperation in the energy sector. However, the present energy competition has to be regulated in a rational manner taking a long-term view of the regional development issues.
10. Expanding communication infrastructure. The other emerging area of cooperation is the infrastructure development projects. An extensive communication infrastructure linking all member states is a prerequisite for trade, tourism and cultural exchange. In this regard all the SCO member states are in agreement to develop a multilateral agreement on facilitating international road transport. United Nations Economic and Social commission for Asia and Pacific (UNESCAP) and the Asian Development Bank are cooperating for realisation of this objective. However, the development of domestic communicationinfrastructure is equally important and due attention should be paid to this issue, especially in the countries where it is inadequate.
11. Coordination with other regional frameworks, such as ECO, SAARC, CIS, EEC, CAREC etc. is important in order to create Standard practices for multilateral interactions. Most of the member states of SCO are also members of one or more of these organizations as well. It would be useful and beneficial if mechanisms for cooperation are compatible within these sub-regional structures and overlapping does not impact efficacy of the SCO. In conclusion, I would like to emphasise on the fact that there is enormous potential for multilateral economic cooperation in the SCO framework. However, benefits of this potential can only be realised by effective and timely implementation of the decisions taken by the member states. And the principle of mutual benefit and common growth should be the guiding spirit and no small or lessdeveloped state should feel marginalized in the process.

*Director of the Institute of China, Pakistan Strategical Research Center.