SCO
The Shanghai Cooperation Organisation (SCO) is
a Eurasian political, economic and international security organization of ten member states. It
was established in 2001 by China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. In
June 2017, it expanded to eight states, with India and Pakistan. Iran joined the group in July
2023, and Belarus in July 2024. Several countries are engaged as observers or dialogue partners.
Its most recent meeting was held in September 2025 in Tianjin, China.
The SCO is the successor to the Shanghai Five, formed in 1996
between China, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan.[5] In June 2001, the leaders of
these nations and Uzbekistan met in Shanghai to announce a new organization with deeper
political and economic cooperation.
The SCO is governed by the Heads of State Council (HSC), its supreme decision-making body,
which meets once a year. The organization also contains the Regional Anti-Terrorist
Structure (RATS).
Significance of SCO
SCO emerged as an important actor at the regional and international level since its inception
and its expansion has further enhanced its vitality.
The SCO aspires to ensure a secure and stable regional environment that is conducive for the
development and prosperity of its member states through joint efforts.
Promoting trade and economic cooperation is an important priority of the Organization. SCO’s
key importance stems from the fact that it is a resource rich region. One-quarter of the world’s
oil reserves, and one-third of gas reserves as well as almost half of the known reserves of
uranium are located in the current SCO countries. The region also has abundant food
production capability, technological prowess and quality human resources.
SCO’s current membership represents 41 percent of the global population and 23 percent of its
GDP. Future expansions in membership would further improve these statistics.
It, however, is rightly following a cautious, step-by-step approach as rapid expansion could also
disturb the organization’s harmonious decision-making process.
In the realm of global political and security strength SCO includes two permanent Security
Council members and four nuclear weapon possessing states. Significantly SCO does not define
security cooperation as a traditional military pact to defend members from an external attack
but rather a regionally coordinated approach to address nontraditional security threats.
The founding principles of SCO inter-alia include mutual respect of sovereignty, independence,
territorial integrity of States and inviolability of State borders, nonaggression, non-interference
in internal affairs, non-use of force or threat of its use in international relations, seeking no
unilateral military supremacy in neighboring region and the SCO not being directed against
other States and international organizations. SCO is guided by its core values and aspirations
popularly known as the ‘Shanghai Spirit’ emphasizing mutual trust, mutual benefit, equality,
consultation, respect for diverse civilizations, and a commitment to the peaceful resolution of
disputes.
Positives for Pakistan
The hosting of SCO-CHG provided Pakistan a vital platform to promote regional economic
integration and connectivity initiatives that align with its national interest, reinforcing Pakistan’s
commitment to the SCO.
Additionally, bilateral meetings on the sidelines with participating leaders from member states
such as China, Central Asian Republics, and Russia, helped Pakistan reinforce the groundwork
for advancing enhanced cooperation in trade, counter-terrorism, infrastructure, and
connectivity.
The ‘Astana Declaration’ and SCO’s Development Strategy were the prominent ones among
others, together setting ambitious goals for regional security, sustainable development, and
economic collaboration.
Pakistan specifically advocated for a unified front against rise of terrorism, extremism, and
separatism in the region, promoting collective interests which align with Pakistan’s national
interests.
In the realm of trade, Pakistan actively extended support for frameworks that encourage
connectivity and cross-border commerce, aiming to facilitate the achievement of greater level
of regional economic integration within the SCO.
Pakistan chaired the 23rd meeting of SCO ministers responsible for foreign economic and trade
activities. Effectively steering the discussions focused on trade, connectivity, and economic
growth, Pakistan as the chair was successful in advancement of a proposal to strengthen
cooperation among Trade Promotion Organizations (TPOs) under the framework of SCO.
Challenges
the current financial mechanisms within the SCO countries are weak, with issues such as
insufficient information, lack of proper financial integration, and heavy reliance on the China
Development Bank for financial resources. Informal channels, like Hawala and Hundi, still
operate widely.
there are multiple challenges which Pakistan faces within the framework of SCO such as trade
deficit with overall SCO states, security concerns, and effects of climate change etc.
Pakistan’s trade deficit with overall SCO member states grew from $8.298 billion to $11.703
billion over the last FY 2023-24. This increase accounts to almost 40%, particularly owing to
large amounts of imports from China, Russia, and India
FY 2024 witnessed an increase in imports from China by nearly 39.78%, from Russia by36.58%,
and imports from India (although indirect) increased from $190.4 million to $206.89 million.4 In
comparison to imports, Pakistan’s exports to these states witnessed a very minimal increase,
pushing Pakistan into a trade deficit of 40% with all SCO member states.
Pakistan’s total trade with CARs remained around $325 million in 2023-24, with imports worth
$41 million and exports of $284 million. The trade balance is in favor of Pakistan, but the overall
trade volume is significantly lower than the actual potential.6 In comparison, India’s exports to
Uzbekistan amounted to $512 million, nearly 64% more than Pakistan’s total trade volume with
CARs.
Since the U.S. exit from Afghanistan, Pakistan has faced a significant surge in terrorism and
terrorist attacks have soared in a substantial number. Figures indicate that terror attacks in
Pakistan increased 73% during the first two years of the return of Taliban regime in
Afghanistan.8 Terrorism is not just a concern for Pakistan, but a matter of serious concern for all
SCO member states.
Afghanistan (an observer state with SCO) has been on the SCO’s agenda for a long time. The SCO
Afghanistan Contact Group was established in 2006 with a purpose of establishing cooperation
between SCO and Afghanistan on issues of mutual interest. The group has been inactive for
three years now.
Pakistan is ranked 18th among the 193 countries of the world in terms of countries facing
severe disaster risk, hit by severe climate change devastations.9 In the year 2022, over 33
million people were affected by the devastating floods triggered by torrential monsoon rains.10
Furthermore, as per Red Cross, over 1,700 people lost their lives and 13,000 were injured during
the devastating floods of 2022
Opportunities and Future Prospects
Pakistan’s active role in the Shanghai Cooperation Organization (SCO) presents significant
opportunities for advancing its economic and security priorities. Leveraging its strategic
location, Pakistan can enhance trade and connectivity with Central Asia and beyond. Advocating
for Free Trade Agreements (FTAs), reducing trade barriers, and integrating digital trade
mechanisms can boost exports and strengthen regional commerce.
Synergies between the Belt and Road Initiative (BRI) and SCO connectivity projects further
position Pakistan as a key regional trade hub.
In security, the SCO enables Pakistan to lead efforts against terrorism and extremism. Hosting
the upcoming Regional Anti-Terrorist Structure (RATS) meeting provides an avenue for
advancing intelligence-sharing and capacity-building initiatives.
Reviving the SCO-Afghanistan Contact Group also offers a platform to address regional security
concerns collaboratively.
On climate change, Pakistan can champion adaptation and resilience strategies within the SCO
framework. Proposals for a regional climate fund and technological cooperation can support
disaster-affected states and foster sustainable development.
Through these initiatives, Pakistan can further reinforce its role as a proactive SCO member,
advancing the goals of regional integration, stability, and economic growth while enhancing its
diplomatic and strategic standing.
Conclusion
Pakistan has been proactively playing its role in the Shanghai Cooperation Organization and it
underscores Pakistan’s commitment to regional cooperation, collective security, and economic
integration. By successfully hosting high-profile SCO events, including the Council of Heads of
Government and the Trade Ministers meetings during 2024, Pakistan has helped to significantly
promote SCO’s objectives. The achievements notwithstanding, there are also challenges in
deepening trade, enhancing security, and mitigating climate change vulnerability. Through
employment of strategic initiatives in these areas, Pakistan can further strengthen its
positioning within the SCO and the region
Economic Oppurtunities
offers Pakistan a valuable platform to explore trade avenues, attract investments, integrate
financially, and improve economic growth.
This regional intergovernmental organization is expected to provide Pakistan access to larger
markets, increasing export opportunities and economies of scale. The country is expected to
attract more foreign investment and a more stable standing in global trade negotiations.
Reduced tariffs and streamlined customs procedures are expected to lower trade costs, and
boost competitiveness.
The SCO will definitely encourage employment opportunities, and services diversification while
promoting technology transfer and innovation.
Stronger economic ties contribute to stability, and regulatory harmonization simplifies cross-
border business which is direly needed. Overall, regional cooperation brings development and
resilience in member countries while the same is expected in the case of Pakistan.
One of the main benefits of the SCO for Pakistan is the opportunity to access larger markets in
the economies of SCO member states (China, Russia, India, and the Central Asian republics).
This diversification of export markets can assist Pakistan reduce its dependence only on existing
trading partners. Sectors like textiles, agriculture, and sports goods hold strong potential for
export to Central Asia and Russia. While more opportunities can also be hunted. Deepening
trade ties with these countries will not only boost Pakistan’s export volumes but also encourage
local industries to improve their quality, and productivity and look towards export
opportunities. The SCO offers Pakistan some substantial opportunities for export-driven growth
by reducing trade barriers and facilitating cross-border trade, benefiting small and medium-
sized enterprises. Initiatives like China’s Belt and Road Initiative (BRI) and investments through
the ChinaPakistan Economic Corridor (CPEC) enhance infrastructure, lower transportation costs,
and boost economic cooperation. Pakistan can adopt technology transfer, joint ventures, and
energy imports from Central Asian states to address its energy shortages and modernize
industries. By encouraging investment-infrastructure development, Pakistan can strengthen its
geopolitical position, and ensure long-term economic growth. The financial integration of
Pakistan with SCO countries is on a medium level and pinpoints several important aspects.
Pakistan’s participation in the SCO Interbank Consortium supports investment and financial
services for trade, with HBL Pakistan as a key member of the consortium. Financial institutions
like HBL, and EXIM Bank may offer banking services to both domestic and international traders.
Efforts to reduce reliance on the US dollar are in progress, particularly through a shift to national
currencies.