When the media covers the Shanghai Co-operation Organization's (SCO) activities, the subject of economic co-operation remains undeservedly in the shadow of the attention paid to the co-operation of the six member nations in resisting terrorism, extremism, separatism and drug trafficking.

This is hardly justified because such coverage does not give a full picture of the essence of SCO, and encourages various inventions about the purely power profile of the organization.

All member countries emphasized the importance of the economic sphere from the very start. The SCO founding declaration and Charter clearly state that the encouragement of all-round balanced growth, and social and cultural development in the region are a major objective and key task of SCO.

Presently active work is under way in the SCO's economic sector.

The main objectives of economic co-operation are defined in the intergovernmental memorandum on key objectives and directions of regional economic co-operation, the beginning of the process of creating favourable conditions for trade and investments.

The memorandum was adopted at the first meeting of the heads of governments of SCO in September 2001.

The programme of multilateral trade and economic co-operation of the six countries was approved in September 2003 at the session of the Council of Heads of Governments.

The programme is far-reaching and covers a period until 2020.

In the medium term, until 2010, it will put forward the task of adopting stable, predictable and transparent rules and procedures in the SCO relating to trade and investments, developing joint projects and programmes, and setting up a system of encouraging priority directions to advance trade and economic co-operation.

The Council of the Heads of Governments adopted the plan of implementing the programme in September 2004, in Bishkek, and a mechanism of fulfilling the plan in October 2005 in Moscow.

Thus, the organization is steadily advancing towards practical understandings from a framework co-operation programme to the implementation plan, and from the plan to the mechanism of carrying it out.

Large-scale economic interaction in the framework of SCO is impossible without the involvement of the non-state sector in the member countries, though it should be kept in mind that the degree of economic denationalization greatly varies from country to country.

Therefore, flexible forms of trade and economic co-operation are implied. For instance, the SCO programme of multilateral economic co-operation clearly states that its provisions will be carried out by government institutions, as well as economic entities on the basis of agreements and contracts.

A flexible approach will also be applied to financing economic projects in the framework of the organization. It also implies both public and private channels.

The development of a special system for the non-state sector is nearing completion.

The SCO Business Council will be the cornerstone of the system. It should become a locomotive of business partnership and economic interaction in the framework of the organization.

It is the Business Council uniting representatives of major business entities of the member nations that will have direct access to the real sectors of the economy. The pattern is successfully functioning in the Asia-Pacific Economic Co-operation (APEC).

The Business Council held its founding meeting ahead of the June summit where all the founding documents were signed and the place and role of the council were clearly defined. In general, the Business Council is likely to assume a significant part of the functions of choosing economic projects for fulfilment in the framework of SCO.

It is also the responsibility of the Business Council's terms of reference to work out recommendations to government institutions on specific measures to create a favourable investment environment in the framework of the SCO.

Thus, the idea is that government institutions and business entities should complement each other and closely interact, instead of government institutions dealing with only one sphere and the Business Council with another.

The funding of joint projects is the second crucial aspect of the economic component. The Inter-Bank Association mechanism has been set up to tackle these complex issues, uniting leading banks of the SCO member states. Vnesheconom bank represents Russia on it.

Consortiums may be set up in the framework of the association to finance specific projects.

One more important aspect of economic co-operation in the framework of SCO should be singled out.

The SCO mechanism does not imply the mandatory involvement of all six member states in all projects. Projects may have the SCO format even if they do not involve all sides. The practice already exists. Many SCO countries on a bilateral or trilateral basis have found mutually acceptable solutions to economic problems thanks to SCO membership.

There is also one more important matter. SCO is an open organization, therefore economic partnership implies the involvement of other countries and organizations. They are not necessarily observer nations. Much work remains to be done on all of these issues.

Source: China Daily