CHINESE CENTAL ASIA WATCHERS UPBEAT ON RESULTS OF

C O N F I D E N T I A L SECTION 1 OF 02 BEIJING 005776 SIPDIS SIPDIS E.O. 12958: DECL: 09/04/2017 TAGS: PREL PTER ETRD ENRG MARR ZK XD CH RS SUBJECT: CHINESE CENTAL ASIA WATCHERS UPBEAT ON RESULTS OF SCO SUMIT REF: A. (A) BISHKEK 1048 ¶B. (B) MOCOW 3996 ¶C. (C) BEIJING 5046 ¶D. () SHANGHAI 529 ¶E. (E) YEKATERINBURG 79 Classified By: Classified by Political Miniser Counselor Aubrey Carlso n for reasons 1.4 (B/D). ¶1. (C) Summary: Three Chinese observers of Central Asian affairs lauded the mid-August Shanghai Cooperation Organization (SCO) summit, citing counter-terrorism cooperation, military exercises, trade and energy. The scholars told us China is increasingly looking to its SCO partners for resources. They said that an expansion of SCO membership, even to include Turkmenistan, is unlikely in the near term and expressed doubt that the SCO would be a vehicle to pressure Kyrgyzstan to close the U.S. military airbase Manas. End Summary. The "Three Evils:" Terrorism, Extremism and Separatism -------------- -------------- ¶2. (C) Chinese Academy of Social Sciences (CASS) Institute of Russian, East European and Central Asian Studies Director Wu Hongwei and Deputy Director Dong Xiaoyang asserted to Poloff August 22 that the United States and China share strong concerns over the "three evils" of terrorism, fundamentalism and separatism, which the SCO was founded to combat. Wu said separatists invariably band together with extremists, and together they use terrorist tactics to pursue their goals. Wu criticized U.S. policy on terrorism for making distinctions among the "three evils" and insisting on a high standard of proof. Trade -------------- ¶3. (C) Separately on August 22, Cheng Yurong, Director of the Center for SCO Studies and of the MFA-affiliated China Institute of International Studies (CIIS) European-Central Asian Studies Division, agreed with the CASS scholars on the increasing attention devoted to trade in the SCO. She noted that Chinese trade with all of the Central Asian SCO member nations has risen sharply since the founding of the SCO in 2001 (when the Shanghai Five accepted Uzbekistan's membership and became the SCO). For example, trade with Kazakhstan in the first half of 2007 is up over 60 percent when compared with the same period in 2006. Market demand, trade policies, including a new free trade zone on the border with Kazakhstan, and growing transportation links, including a planned rail link with Kyrgyzstan, are driving the increase. Energy Cooperation . . . -------------- ¶4. (C) The CASS and CIIS scholars all stressed the growing role of energy in SCO deliberations. For example, at the recent summit China and Kazakhstan agreed to double the annual volume shipped through the China-Kazakhstan crude oil pipeline. In addition, Kazakhstan and Uzbekistan (as well as non-SCO member Turkmenistan) within the last month all signed new oil pipeline agreements with China. While these deals are not directly linked to the SCO, the scholars said they believe SCO cooperation played a role in developing them. . . . and Conflict -------------- ¶5. (C) The three scholars agreed hydropower could be a stumbling block for SCO cooperation. They noted Uzbek President Islam Karimov's remarks at the summit regarding use of the shared water resources of the Amu Daria and Syr Daria rivers, which have their headwaters in Tajikistan and Kyrgyzstan, respectively, and which have significant potential for hydroelectric electricity. As it stands, Kyrgyzstan exploits only ten percent of its hydroelectric resources and aims to be a major electricity exporter. China has been funding the expansion of hydroelectricity in Kyrgyzstan and Tajikistan. Karimov, however, vocally opposed any reduction in the flow of the Amu Daria and Syr Daria rivers, which are a primary source of irrigation water for Uzbek cotton. BEIJING 00005776 002 OF 002 New Members -------------- ¶6. (C) The CASS academics said new members are unlikely to join the SCO in the near term. They repeated Chinese official statements, published in Xinhua and other open sources in advance of the summit, that the SCO is too young and not yet ready for new members, saying that the relatively new organization has yet to figure out the role for existing observers. CASS Deputy Director Dong, describing the problems between India and Pakistan as "unsolvable," said China fears that those two nations would bring their bilateral problems with them to the SCO. Iran, Wu and Dong said, is dabbling in "sensitive" issues like nuclear weapons. Allowing Iran in the SCO could negatively influence other members' development. Turkmenistan, they said firmly, will not join the SCO and will continue to maintain an isolationist policy. Manas Airbase -------------- ¶7. (C) The CIIS and CASS scholars all predicted the SCO will not be a vehicle for pressuring Bishkek to expel the U.S. military presence from Kyrgyzstan. They said Kyrgyzstan would be foolish to ask America to leave Manas Airbase. The SCO leaders recognize that the United States is using Manas as a forward operating base to attack the Taliban, the single largest threat to regional stability in Central Asia. War Games: Peace Mission 2007 -------------- ¶8. (C) CIIS' Cheng said military cooperation among SCO members is nothing new; this year's joint military exercise was the third time since the founding of the SCO that joint military exercises have taken place. CASS' Wu and Dong said the exercise was designed purely to fight terrorism and was not directed at other nations. They grumbled that they did not understand reports in the U.S. press suggesting that the United States had something to fear from the exercise. The researchers conceded that the several-thousand-man-strong military maneuvers did not quite square with the exercise scenario of a small village being liberated from terrorists. However, quoting Russian President Putin's remarks that the fundamental goal of the SCO is counter-terrorism and not a military alliance, they disputed contentions that the exercises were a sign that the SCO aspires to be an "Eastern NATO." Randt