The SCO, digital transactions, and the Changing World Order

The recent SCO meeting stands testament to the fact that with transforming trends and priorities; conventional ambitions of multilateral forums and organisations also change.

The SCO, digital transactions, and the Changing World Order

By Dr Pooja Bhatt and Dr Aparaajita Pandey

The world today stands witness to momentous geopolitical changes being put into motion. While the dynamics of how the global politics and economics functions is constantly challenged by the transformations in technology, bilateral and multilateral relations as well as events of global significance, the Russia – Ukraine conflict can definitely be identified as the immediate cause of upheaval in established standard procedures of operations. There are also the underlying gradual changes that have been decades in the making. The burgeoning economies of the global South, the rise and expansion of the Chinese economic and consequent political influence, and unprecedented advancement in technology.

The recent SCO meeting stands testament to the fact that with transforming trends and priorities; conventional ambitions of multilateral forums and organisations also change. The Russia – Ukraine conflict which seems to have fallen out of favour with the news cycles is still a reality and the aftermath of sorts of the conflict is that nations are preparing and moving towards a world that is beyond the accepted supremacy of the US and the west, as well as that of the US Dollar.

Another area of significance that was covered widely in the summit was that of digital financial transactions and a focus of digital currencies. It is now an accepted fact by economists, politicians, and world leaders that there is no escape from technology and its entanglement in every aspect of not just our daily lives but also statecraft. This realisation has catalysed the process of nations moving towards an acceptance of digital currencies and shifting away from traditional methods of transactions.

While the SCO summit was dominated by the above mentioned it is also important to understand the beginning and evolution of the organisation. Shanghai Cooperation Organisation Foreign Ministers Meet took place in Uzbekistan. This is in runup to the 2022 annual summit of the SCO Heads of State Council (HSC) will be held on September 15-16 in Samarkand, Uzbekistan where it will take over the chairmanship from Tajikistan. India’s EAM Dr S Jaishankar is expected to meet his Chinese counterpart, Wang Yi. On the other hand, Muttaqi reportedly met his Pakistani counterpart Bilawal Bhutto Zardari last Thursday.

The HSC meeting this year would be an anticipated event. If Modi holds bilateral meetings with Sharif in Tashkent, it will be the first such engagement between the leaders of India and Pakistan after a gap of almost seven years after his surprise visit to Lahore.  If the Prime Minister holds a bilateral meeting with Chinese President Xi Jinping, it will be the first such occasion after the military stand-off along the Line of Actual Control between the two nations in eastern Ladakh started in April-May 2020.

 Importance of SCO

SCO with a membership of eight countries comprises 60% of Eurasian region, home to almost 44 % humanity with a contribution of  20% to the global GDP and has a crucial geostrategic position in the Eurasian landmass. SCO includes four nuclear powers in one single organization. Fundamentally SCO on collectively counteracting terrorism, separatism and extremism with its core permanent body- Regional Anti-Terrorism Structure or RATS based in Tashkent.

Expansion of SCO

What emerged as a series of border demarcation and demilitarization talks by China in 1996, with its neighbours Kazakhstan, Kyrgyzstan, Russia and Tajikistan in 1996 as Shanghai Five, has emerged to be one of the crucial multilateral regional organisations. Post border settlements, the group transformed itself to the Shanghai Cooperation Organisation in 2001 with the addition of Uzbekistan as its newest member and also expanded its relations with the UN and other international organisations. In a historic move in Astana in 2017, India was accorded full membership to SCO with Russia’s support. In the same meeting, Pakistan was given the full membership supported by China. Since then SCO has been striving to transform itself as a regional political, economic and security organisation adapting to the new challenges and opportunities. 

Anti -Terrorism

On the sidelines of the Shanghai Cooperation Organisation (SCO) foreign ministers meeting in Tashkent, foreign affairs minister S Jaishankar is likely to hold a bilateral meeting with Afghanistan’s foreign minister Amir Khan Muttaqi. Afghanistan is an observer state at SCO. The Taliban government has been requesting the meeting since June.  Jaishankar is expected to keep a strong anti-terrorism stance on the lines of the UNSC Resolution 2593, passed last year at the UN Security Council (UNSC). It was in continuation of our efforts to engage with the international community on issues related to Afghanistan. India reiterated its commitment to assist the Afghan people in this difficult time and provide humanitarian assistance. In June 2022, the Indian government reopened its embassy in Kabul after it was shut after the Taliban took over the country in 2021.

India is the current chair of the executive council of SCO RATS. A four-day meeting of Shanghai Cooperation Organization’s Regional Anti-Terrorist Structure was held in May 2022 at New Delhi that was participated by all the nine member states including Pakistan, China and Russia.

India’s multilateral focus on ICT and Digital economy

Digital economy has played an important role in the post-COVID-19 global economic recovery where economies are struggling with inflation, bankruptcy and rising unemployment. India’s consumer digital economy which was pegged at $85-90 billion in calendar year 2020 is expected to become a $800 billion market by 2030, according to reports. 

This would also provide an alternate solution to the demand for common currency for trade among SCO members. Iran has proposed a common Eurasian currency for trade amongst the SCO members. In 2021, SCO members reportedly disclosed a document studying using local currency settlement while exchanging experience in financial areas, a move that experts said will be helpful to fend off US dollar hegemony .Several members of the SCO, including Russia, Iran, and China, have been sanctioned by the US. Therefore, there is growing argument about de-dollarise the economies to avoid weaponization of American dollars

India has established itself as a global forerunner in ICT. India is interacting with various countries under different multilateral forums like WTO, UN, G20, SCO, BIMSTEC, RCEP, Commonwealth, SAARC, ASEAN, World Bank and Asian Development Bank (ADB) etc. to showcase its strength in ICT sector and to explore new economic linkages with other countries.


SCO is not new to evolution and adaptation to shifting global environments. However, despite continued challenges toward its territorial integrity and national sovereignty towards its northern borders by China-Pak joint CPEC projects, Chinese ongoing infrastructure development in disputed Aksai Chin area and further inroads into Bhutan, India has shown its commitment to take multilateral approach towards issues of regional importance. New Delhi can propose its own strengths to devising solutions and agenda setting for a resilient post pandemic region. The evolution of SCO is in keeping with the transformation that is happening in the world order and one should expect more such transformations in the future.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.