98
However, the SCO energy club achieves more in terms of serving Russia’s
broader interests than a group limited to CIS members. Not only does the membership of the group accommodate China’s growing role in regional energy diplomacy,
but with Russia’s energy resources as leverage, the group could tempt observer
states such as India to join, thereby signaling Russia’s readiness to redirect European
supplies eastwards, and frustrating European diversification attempts. In this way,
the SCO energy club could amount to a Russian counterbalance to NATO (Overland
et al. 2010:165).
In recent years, China has begun to acquire oil through the Kazakhstan-China
pipeline, prompting the development of energy partnerships within the SCO energy
club framework; allowing such relationships to transcend the bilateral and acquire a
multilateral dimension (Denoon 2015:350). At its purest however the SCO energy
club was created to advocate dialog on energy-related issues, allowing its member
states to better coordinate their energy policies and investments. As Stephan Blank
argues, “the formation of a genuine energy club in the SCO might not be far away,”
and “if it does materialize, then it would be the next major step in a far-sighted and
profoundly important global Russian strategy, aimed at playing a monopolistic role
in Asia, and thus the World’s, gas market” (Overland et al. 2010:163–165).
The financial and economic institutions established by SCO members have had
a marked effect on regional cooperation and stability, as manifested in the establishment of working relationships, knowledge sharing, and a healthy measure of trust
between the member states. However, as a vehicle for Chinese economic interests,
these may be as obsolete as similar US and EU-led market frameworks for global
trade. Only if member nations were to adopt a new energy-as-a-service market paradigm, might we imagine the AIIB and other Chinese financial situations playing a
major role in acting as a risk manager and facilitator—thereby increasing economic
convergence between signatories (Author’s Interview with Chis Cook 2017).
Prospects of the SCO Energy Club
There are several potential hurdles the SCO energy club is bound to come across
which may impede its fruition. The first entails the difficulty of harmonizing the
interests of all energy exporter, importer, and transit state signatories, which may be
too disparate to unite in a meaningful way. Secondly, Russia’s determination (not to
mention capacity) to promote the creation of the club, ought not to be taken as a
fact. Lastly, many of the energy initiatives currently taking place in the region make
the actual realization of the SCO Energy Club at-odds with realities on the ground
(Overland et al. 2010:174).
However, the potential benefits it may bring, well expressed, could be enough to
carry it through for policymakers. Relieving tensions between upstream and downstream countries, the Energy Club could bolster regional security. The SCO energy
club would reflect a changing geopolitical balance in Caspian Basin with regard to
China’s growing role in the region and would hold the key to creating a more cooperative framework for Sino-Russian cooperation in the region’s energy sector.
3 International Context of the New Era and the Caspian Sea Region
However, the SCO energy club achieves more in terms of serving Russia’s
broader interests than a group limited to CIS members. Not only does the membership of the group accommodate China’s growing role in regional energy diplomacy,
but with Russia’s energy resources as leverage, the group could tempt observer
states such as India to join, thereby signaling Russia’s readiness to redirect European
supplies eastwards, and frustrating European diversification attempts. In this way,
the SCO energy club could amount to a Russian counterbalance to NATO (Overland
et al. 2010:165).
In recent years, China has begun to acquire oil through the Kazakhstan-China
pipeline, prompting the development of energy partnerships within the SCO energy
club framework; allowing such relationships to transcend the bilateral and acquire a
multilateral dimension (Denoon 2015:350). At its purest however the SCO energy
club was created to advocate dialog on energy-related issues, allowing its member
states to better coordinate their energy policies and investments. As Stephan Blank
argues, “the formation of a genuine energy club in the SCO might not be far away,”
and “if it does materialize, then it would be the next major step in a far-sighted and
profoundly important global Russian strategy, aimed at playing a monopolistic role
in Asia, and thus the World’s, gas market” (Overland et al. 2010:163–165).
The financial and economic institutions established by SCO members have had
a marked effect on regional cooperation and stability, as manifested in the establishment of working relationships, knowledge sharing, and a healthy measure of trust
between the member states. However, as a vehicle for Chinese economic interests,
these may be as obsolete as similar US and EU-led market frameworks for global
trade. Only if member nations were to adopt a new energy-as-a-service market paradigm, might we imagine the AIIB and other Chinese financial situations playing a
major role in acting as a risk manager and facilitator—thereby increasing economic
convergence between signatories (Author’s Interview with Chis Cook 2017).
Prospects of the SCO Energy Club
There are several potential hurdles the SCO energy club is bound to come across
which may impede its fruition. The first entails the difficulty of harmonizing the
interests of all energy exporter, importer, and transit state signatories, which may be
too disparate to unite in a meaningful way. Secondly, Russia’s determination (not to
mention capacity) to promote the creation of the club, ought not to be taken as a
fact. Lastly, many of the energy initiatives currently taking place in the region make
the actual realization of the SCO Energy Club at-odds with realities on the ground
(Overland et al. 2010:174).
However, the potential benefits it may bring, well expressed, could be enough to
carry it through for policymakers. Relieving tensions between upstream and downstream countries, the Energy Club could bolster regional security. The SCO energy
club would reflect a changing geopolitical balance in Caspian Basin with regard to
China’s growing role in the region and would hold the key to creating a more cooperative framework for Sino-Russian cooperation in the region’s energy sector.
3 International Context of the New Era and the Caspian Sea Region