A Sober Assessment of the Stirring SCO Summit
True cooperation depends on mutual interest, not rhetorical solidarity.
By: Antonia Colibasanu
This week, China held the 25th Shanghai Cooperation Organization heads of state summit, a meeting that stood out not just for its record attendance but also for the political momentum it generated as Russia, India and China came together to project a rare display of diplomatic alignment on a remarkably ambitious agenda.
One item concerned the SCO Development Strategy to 2035, which leaders were quick to endorse.
Key priorities include infrastructure development, trade facilitation and supply chain integration – a clear prioritization of unifying Eurasian transportation networks.
The strategy also elevates the importance of technology and innovation, and commitments to digital economy cooperation, green industry and artificial intelligence.
But the big news was announced by Chinese President Xi Jinping, who used the summit to unveil a series of far-reaching initiatives that will broaden the SCO’s purview.
The most important (and surprising) of them was a proposal to accelerate the creation of an SCO development bank.
To underscore Beijing’s seriousness, Xi pledged an additional 2 billion yuan (approximately $280 million) in aid to seed the institution’s capital base.
This kind of financial commitment is rarely associated with the SCO.
The proposal is striking because the SCO was never meant to be an economic bloc.
Established in 2001 – and having evolved from the Shanghai Five, a grouping formed in 1996 comprising China, Russia, Kazakhstan, Kyrgyzstan and Tajikistan – the organization’s original mission was focused on regional security, aimed squarely at addressing terrorism, separatism and extremism in Central Asia.
Over time, its aim expanded to encompass regional defense coordination and joint exercises and thus reinforced the SCO’s reputation as a non-Western counterweight to NATO-like frameworks.
In this respect, the SCO’s comparative advantage was to provide a forum for Eurasian powers to coordinate on threats to stability and to signal resistance to Western-dominated security architectures.
This stands in stark contrast to the BRICS, which originally included Brazil, Russia, India, China and South Africa but later expanded to other middle powers.
From the jump, the BRICS was seen as an economic coalition of emerging markets that could be used to amplify the voices of non-Western countries.
Its creation of the New Development Bank in 2014 reflected this economic orientation: a tangible, capitalized institution with an international governance structure and a mandate to provide alternatives to the International Monetary Fund and the World Bank.
In the informal division of labor among these new multilateral institutions, the BRICS oversaw economic matters while the SCO oversaw security.
The SCO’s foray into banking, then, blurs these boundaries.
The proposal suggests that the SCO is transforming into a hybrid organization capable of coordinating counterterrorism and regional stability efforts as easily as supplying the financial instruments that will bind its members more tightly together.
And it brings home the notion that in a world without an anchor, security and economics are inseparable: financing infrastructure, trade and technology cooperation is as essential to stability as military coordination.
For heavyweights like China and Russia, an SCO development bank could expand financial sovereignty, reduce exposure to Western sanctions and institutionalize alternatives to dollar-dominated institutions.
Whether the bank proposal succeeds will depend on several factors.
The first test is whether member states can agree on a treaty and charter that define the bank’s mandate, governance and voting rights.
Similar multilateral institutions like the Asian Infrastructure Investment Bank and the New Development Bank required lengthy and politically sensitive formal ratification by member parliaments.
As a traditionally security-focused organization, the SCO has never attempted this level of institutionalization.
Indeed, SCO members continue to show signs of distrust despite their public declarations of unity.
Most notably, the clashes that took place recently between India and Pakistan raised questions over how the organization can credibly ensure security if ardent geopolitical rivals are among its members.
(SCO advocates argued that the organization effectively prevented the clashes from spiraling out of control.)
As for military cooperation, joint activities among SCO members are narrow in scope, confined largely to special forces drills and counterterrorism scenarios rather than serious war games that would test the interoperability of conventional forces.
Put simply, member states are reluctant to expose their militaries to one another.
So it’s unclear whether something like the development bank – which requires binding commitments on capital contributions, governance and shared financial risk – will advance at all, let alone whether it will advance quickly.
Another factor is what exactly the bank intends to do.
Will it, for example, resemble the Asian Infrastructure Investment Bank, an institution conceived by Beijing as a complement and a partial counterweight to the World Bank and the Asian Development Bank, aimed at financing infrastructure across Asia?
The Chinese government was the driving force of its formation, and it provided the largest share of subscribed capital, thereby establishing its headquarters in Beijing and giving it enough control to effectively veto major decisions.
Will it follow the model of the New Development Bank, in which founding members share equal stakes?
For smaller SCO states such as Pakistan, Belarus and the Central Asian members, the question of representation will be critical.
Xi’s pledge of 2 billion yuan is symbolically important but far lower than the tens of billions usually needed for a bank to issue loans at scale.
Tracking who contributes, and in what amounts, will reveal whether the project has broad buy-in or is essentially China-driven.
But even if the bank has a charter and capital, it would still need to demonstrate functional capacity: a headquarters, professional staff, clear lending criteria and risk management systems.
More important, to operate at scale, the bank would need to issue bonds.
This raises a sticky structural issue: Western ratings agencies such as Moody’s and Fitch are the gatekeepers of credibility.
If geopolitical tensions block SCO institutions from accessing dollar markets, the bank may have to rely on the yuan, the ruble or local currency bonds.
(Neither the yuan nor the ruble is freely convertible.)
This would limit the bank’s reach, even as it aligns with the bloc’s push for financial sovereignty.
Meanwhile, settlement mechanisms will be crucial.
With Russia, Iran and Belarus under Western sanctions, the bank cannot depend on the SWIFT payment system on which much of the world operates.
Instead, it would likely have to use the Cross-Border Interbank Payment System (CIPS) – Beijing’s yuan-based alternative – and possibly link with Russia’s System for Transfer of Financial Messages.
CIPS is functional and expanding, but with only 1,600 participants in just 100 countries, it has nowhere near the users SWIFT has (11,000 participants in 200 countries).
Its growth – and members’ willingness to adopt it – will be decisive.
This is where SCO members’ penchants for distrust come back into play.
India is already wary of China’s dominance within multilateral institutions.
In the BRICS' New Development Bank, New Delhi accepted equal voting rights, but it has been reluctant to endorse any structure that appears overly tilted toward China.
An SCO bank run heavily through CIPS could therefore be perceived as little more than a Chinese financial arm, making Indian participation tepid at best.
Beyond governance, the risk of redundancy looms large: infrastructure, connectivity and green projects are already well served by the AIIB, the NDB and various Belt and Road Initiative financing vehicles.
Unless the SCO bank carves out a niche – financing sanctioned economies like Russia and Iran that lack access to Western capital, for example – it could spread resources too thinly among “non-Western” financial institutions, weakening rather than bolstering their solidarity.
Crucially, the decisions of the SCO summit were not made in a vacuum.
They were a deliberate response to shifting geopolitical pressures.
With the U.S. escalating tariffs on India, sustaining its trade war with China and adopting a harder line on Russia as the Ukraine conflict drags on, the SCO’s leading members had strong incentives to demonstrate unity.
President Donald Trump’s increasingly aggressive rhetoric on social media only reinforces concerns that Western engagement favors confrontation over compromise.
In this context, the SCO could not afford to host a low-profile meeting.
The pageantry of China, India and Russia banding together, coupled with Xi’s sweeping financial pledges and the adoption of new institutional frameworks, projected an image of momentum and solidarity.
Extraordinary statements were thus diplomatically strategic: They signaled that in the face of mounting Western pressure, the SCO intends to position itself as both a security and economic pole, an alternative arena where major Eurasian powers can articulate shared interests and reinforce their autonomy.
Although no formal trilateral session was on the agenda, an informal huddle on the sidelines drew considerable attention.
Indian Prime Minister Narendra Modi clasped Russian President Vladimir Putin’s hand as they walked together toward Xi, with all three smiling and engaging in light conversation, a scene carefully captured on camera to project unity.
The symbolism was reinforced in their summit speeches, where each criticized unilateral sanctions and stressed the need for multipolar cooperation.
Putin even said the SCO could become the vanguard of a “more just and equal system of global governance.”
Moreover, each of the trio held bilateral talks with the others.
Xi and Modi’s meeting yielded a notable shift in their usual iciness as both leaders said China and India are “development partners, not rivals” and agreed that their long-running border dispute should not define their broader relationship.
Putin and Xi, meanwhile, used the summit (and a subsequent meeting in Beijing) to reinforce their personal rapport, with Xi calling Putin an “old friend” and Putin thanking Xi for an exceptionally warm welcome.
The exchange between Putin and Modi was equally warm; Putin addressed the prime minister as a “dear friend,” and Modi noted that India and Russia have “always stood shoulder to shoulder, even in the most difficult situations.”
Diplomatic gestures like these often carry symbolic weight, but governments are ultimately constrained by the hard realities of national priorities and strategic interests.
So no matter how ambitious or polished the declarations at the SCO may be, the actual agenda is set by the divergent priorities of its leading members.
This is why the most important question raised at the summit was not the bank itself but whether China, India and Russia genuinely share national interests.
Beyond their mutual criticism of U.S. policy and a willingness to issue broad statements about multipolarity, it remains unclear whether these three powers are willing or able to align in ways that can transform the SCO into a true alliance system instead of an outlet for rhetorical solidarity.
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