The Shanghai Co-operation Organisation’s August military exercises in Central Asia were a sign that the SCO , while no direct challenge to NATO, represents the emergence of a new security bloc that may (at Russian request) include Iran, ane even Pakistan. If so, it will more than irritate the US.  It may lead to a substantial nuclear umbrella eventually emerging to shield Tehran and it creates a new urgency in pulling Islamabad back into the democratic Western camp, even if the Bhutto-Musharraf deal is somewhat unsavoury to purists. This trajectory, alongside the current build-up to the key UN Security Council meeting on September 21st, may help to explain a recent intense upsurge in the political warfare targeting Iran. 

In the last few days, we have seen an Israeli incursion into Syrian airspace, increasing accusations that the Iranians are arming Iraqi Shia in a proxy fight against the Anglo-Americans and, yesterday, a bitter exchange by Mr. Universal Liberal himself, Bernard Kouchner, France's Foreign Minister, and the Iranians over the prospects for war.  Western enforcement of diplomatic and economic isolation on Iran, while having its effects, may involve a race against time that Iran is in danger (from a Western perspective) of winning.  This sabre-rattling is getting distinctly dangerous despite more peaceful assurances from Secretary of State Gates.

This places the Chinese interest, given its founding role in the SCO and its position on the UN-SC, in an intriguing position. Its political and economic interests are having to be managed at a time when it might reasonably be considered that capitalism was going through a bit of a crisis - to say the least.

The SCO is still not yet fully ‘in place’. It is much more aspiration in Moscow than solid bloc but, if it strengthens, it will represent 25% of the global population and 20% of global oil and gas reserves plus massive uranium resources, all operating under a broadly united authoritarian-nationalist-populist front.  At the moment, it is still rather precisely targeted at containing Sunni Islamist aspirations in Eurasia. China gets some particular geo-strategic benefits out of the SCO but it is Russia that is trying to build a base that will challenge the Western attempt to contain it and so lessen the chances of being encircled.

The issue of encirclement of Russia is scarcely mentioned in the media but, just as Germany’s history between Bismark and Hitler was often linked to reasonable fears that a war on two fronts would squeeze the country dry, so Russia will have similar fears in a global context.

To the North, it has recently laid claim to its near-Arctic. To the West, it has halted the Orange whittling away of its Belarussian and Ukrainian buffer states, made it clear to Georgia that it cannot tweak the bear’s nose with impunity and developed a strategy of maximum resistance to the US Missile Shield. The increasingly nasty rhetoric directed at Germany from members of the Polish Right may quite suit Moscow.  The relatively silent but pro-Moscow wing of Berlin political society and those, wherever in Europe, who believe that Russian energy reserves are more interesting than American capital will not want bridges broken with the energy behemoth.

The SCO largely deals with the South and the East, theoretically (from a Russian perspective) seducing China into benign neutrality rather than letting it drift into de facto alliance with a Democrat-led US that might be interested in managing capitalism alongside China to mutual benefit. Treasury Secretary Paulson's recent visit to China may have been frustrating but at least the two sides are talking - which was not what the hardline neo-cons had in mind.  Both, like Saudi Arabia inside OPEC, have a deep interest in keeping the global economic system stable.  

The SCO could be complementary and it could be competitive to the existing order.  The Financial Times, in a recent editorial, saw it as potentially complementary with some reason.  It is arguable that the SCO may bring stability through a shared Western-SCO need to exploit its energy resources.  These still require Western skills to be exploited efficiently.  There is no intrinsic reason why it should be an offensive rather than a defensive organisation - and it offers a security solution to the emergence of any insurgent Islamism seeking to capture the former Central Asian republics and so destabilize Sinkiang and the Chinese Far West. 

Chinese internal collapse suits only the most hardened anti-communist.  However, populist rudeness about Beijing in Washington suggests that common sense may not always prevail in the United States.  The Russians may yet have a decent run at building up the SCO - and wise counsels in China may suggest that bets should be hedged.

There are other things to note.  If Russia is blocked by Canada to the North, the EU and NATO to the West and China to the East, then fraternal relations with Syria and Iran, and an interest in being alternative focus to the West for any troubled state from Ankara to Islamabad and down to Khartoum, makes Russia a major potential player in the Middle East for the first time in many decades. This, in itself, is one of the reasons why Damascus’ bargaining power appears to have improved in the last two years – as it moves to turn back the Orange revolution on its own Western frontier.

On the economic front, matters still remain complex and sticky between Russia and China. Putin had proposed an SCO energy club in 2006 but it is unclear whether energy will be a tool for attempts to seduce China - Russia seems disinclined to give anything away too easily for political purposes. Iran’s crude oil exports to China also reportedly rose 24% in the first six months of 2007. Recent news that Tehran was beginning to lose patience with Total's stalling over the development of the South Pars field (where 8,000 workers have lost their jobs as a result) suggests that the economic war against Iran is reaching its own natural crisis point.  The (probably ineffective) Iranian offer to pipeline gas to Pakistan more quickly and ignore Indian stalling on the proposed joint Pakistan-Indian project suggests something similar.  Both Total (whose De Margerie is much disliked by the new Atlanticists in Paris) and New Delhi are under pressure from Washington directly or indirectly.

India is critical to this growing line-up between global factions.  Some analysts believe that the Western-Indian nuclear alliance may push China into accepting Russian proposals in regard to Iran but this is just speculation. It may be more reasonable to suppose that China has an equal or greater interest in maintaining sufficient good relations with the US (in the context of global economic management concerns). We can imagine major debates in Beijing on where its interest lies - but of which we can have no knowledge.  China might well prefer to reserve its position and to remain neutral in the US/Iranian conflict until it can exercise its UN-SC power to best effect. It may also be keen to wait and see whether a new US President will use his or her political capital to talk to Beijing on a more friendly basis and with more authority over Congress.

Russia and China do not have identical interests by any means (as Mao’s breach with Kruschev once indicated). So, there is everything to play for.  How much does China want the newly assertive Russians to develop an alternative and assertive geo-strategic focus to that presented by the US? The answer to that question may help to forecast the balance of power between states in the first half of the next century.