As China-Led Bloc Heads to Samarkand, Leaders Struggle to Find Common Aims

This week, Uzbekistan is hosting the Shanghai Cooperation Organisation (SCO) in Samarkand. The two-day summit begins on September 15. The leaders of China, Russia, India, Pakistan, Iran and other member and observer states are expected to attend. It will be the first time since the 2019 summit in Bishkek, Kyrgyzstan, that leaders will meet face to face in the SCO format.

The upcoming summit in Samarkand aims to present the organisation as a stable, capable, and evolving bloc with the capacity to address regional and global crises. For the host nation, Uzbekistan, the summit is a chance to promote the “Spirit of Samarkand” and to encourage global cooperation over global competition.

For years, the Uzbek government has sought to deepen its relations with other SCO member states. Having the opportunity to host the summit cements Uzbekistan’s position as a valuable member of the SCO community and allows it to push its regional agenda forward. Connectivity, cooperation, and the promotion of regional stability are at the core of President Shavkat Mirziyoyev’s goals, outlined on the eve of the summit.

Iran Takes Next Membership Step

One of the most important events expected to take place during the summit is Iran’s signing of binding documents related to its admission as a full member of the organisation. Iran’s accession will mark only the third time since its founding in which the SCO has admitted a new member—India and Pakistan joined in 2017. While Iran’s membership will not become official for at least another year, the procedures for its full membership will commence at the summit. Iranian leaders have faced a long wait for admission—it has been 15 years since Iran formally applied to join the bloc.

Tehran views joining the SCO as an important diplomatic achievement. The SCO represents a platform for non-western alignment and provides a platform for negotiations on tangible security and economic projects with other member states. Taking Iran on board, however, does not automatically guarantee either significant immediate benefits for Iran or an increase in the bloc’s capacity to effectively address security and economic challenges facing Asia, particularly while Iran remains under US secondary sanctions.

Eyes on Afghanistan

The situation in Afghanistan has proved strategically important for all SCO members, and especially the Central Asian republics. Security and humanitarian issues in Afghanistan were discussed in a large international conference hosted by Uzbekistan in July.

Among the Central Asian states, Uzbekistan is the loudest supporter of a taking a proactive approach towards the Taliban. While there are clear political issues with the Taliban, the Uzbek government realises that the critical south-eastern infrastructure corridor runs through Afghanistan. Development of this route promises significant economic benefits for Uzbekistan. The Uzbek president has stated that the SCO “must share the story of its success with Afghanistan.” In other words, it is a task for all regional states to engage with Kabul, and this task may become a benchmark for the capacity of SCO as an organisation. However, Afghanistan must become stable and a reliable partner to allow for its own development, as well to enable regional infrastructure projects to advance.

Tajikistan has a fundamentally different view towards the regime now in charge in Kabul. Dushanbe remains highly critical of the Taliban, raising concerns regarding terrorism and the safety of the Tajik ethnic groups in Afghanistan. However, neither Mirziyoyev or Emomali Rahmon, his Tajik counterpart, wishes to see Afghanistan further destabilised. China, India, and Russia basically hold the same position. Most regional countries are facing security threats from the Islamic State Khorasan Province and its affiliated groups. To add to the worries of the Central Asian states, Pakistan, a major player in Afghanistan, has itself faced political turmoil in the past year following the ousting of Prime Minister Imran Khan.

A Russian Dilemma

Russian president, Vladimir Putin, will face a difficult task in presenting his country as a global power in the face of unsuccessful military operations in Ukraine and economic strains caused by sanctions. The countries of Central Asia have close economic ties to Russia and are suffering the inevitable consequences of Moscow’s isolation.

As most regional countries are engaged in efforts to find ways to mitigate the negative impact of the Russian invasion of Ukraine, Moscow is expecting a not-so-warm welcome in Samarkand. Recently reported battlefield losses in Ukraine have incentivised some SCO member states to more forcefully resist Moscow's ongoing attempts to influence their foreign policy, including their aims and activities within the organisation.

The SCO is largely dominated by China rather than Russia, but Russia has long been seen as a key partner in shaping the bloc’s political and economic aims. But it appears that Russia’s future position and influence within the organisation will be increasingly determined by the priorities of other member states and not Moscow’s ambitions. Moreover, while Russia’s ties with China have been described as a “partnership with no limits” by Chinese officials, the upcoming summit will be the first time Xi and Putin meet in-person since the start of the Ukraine invasion. Their engagements on the side-line of the summit will be telling of the extent of the bilateral partnership, particularly within the framework of the SCO.

Struggling for Common Aims

According to the Uzbek foreign ministry, numerous agreements on cooperation in specific areas, ranging from digital security to climate change, are will be discussed at the summit. The SCO is also seeking to establish partnerships with countries outside its primary geographical core, namely with Egypt, Saudi Arabia, and Qatar, in an effort to further extend the bloc’s political reach. 

Until now, the greatest advantage of the SCO was that the bloc did not impose strict rules or apply pressure to prevent its members from cooperation with non-member states, even those who may be perceived as adversaries to China and Russia. This flexibility has been particularly important for Central Asian states who maintain significant security and economic relations with the United States and Europe alongside their partnerships with China, Russia, and India—as required by their multi-vector foreign policies.

Since the Russian invasion of Ukraine, however, that flexibility seems at risk. For example, Russian politician Nikolai Patrushev recently declared that military training provided by the United States to certain SCO members poses a threat to Russia. Such accusations will no doubt colour bilateral and multilateral engagements in Samarkand.

Issued at the end of the summit, the "Samarkand Declaration" will present "a comprehensive political declaration on the SCO's position on international politics, economy and a range of other aspects." To what extent the SCO will be able to accommodate its members' varied and even contradictory aims is a question yet to be answered. The Samarkand summit will convene an organisation still searching for its trajectory.

Photo: Wikicommons

Iran, Pakistan, and Afghanistan Should Take a Regional Approach to Start-Ups

Afghanistan, Iran, and Pakistan host some of most interesting and promising start-ups in Southwest Asia. Entrepreneurship and innovation are neither new nor foreign imports to the region. Cities and towns in Afghanistan, Iran, and Pakistan make up parts of the Silk Road, an ancient network of trade routes that once connected the East and West from China to the Mediterranean Sea. Historically, trade, innovation, and cultural exchanges have flourished along these trade routes.

Today, however, the entrepreneurs of this region operate in isolation from one another. Divergent political ideologies, cultural biases, and economic policies have prevented many entrepreneurs from exchanging ideas and collaborating, rendering them unaware of their neighbors’ achievements in areas of social innovation and entrepreneurship. Knowledge sharing and transfer, if sustained, can highlight the achievements of local and regional social and tech entrepreneurs.

While these three countries engage in active trade individually, building a regional start-up ecosystem would provide a space for entrepreneurs to share their experiences and collaborate further. Because of their shared cultures, histories, languages, and similar economies, Afghan, Iranian, and Pakistani entrepreneurs already share many common characteristics that could foster more collaboration and generate more economic growth and innovation. Therefore, we propose the formation of a regional start-up ecosystem to benefit the entrepreneurs and the economies of the above countries.

Entrepreneurs and ecosystems do not operate in a vacuum. Political, social, and economic realities influence entrepreneurs and shape start-ups. Establishing a regional start-up ecosystem would reduce border tensions, improve overall regional security, promote good governance, and allow the steady flow of goods and services across the region. Meanwhile, entrepreneurs and social innovators should focus on studying and understanding their regional markets, finding opportunities for growth and scaling within their own region.

Pakistan: An Established Player

Of the three countries, Pakistan has the most elaborate and developed start-up ecosystem. Urban areas of Karachi, Lahore, Peshawar, and Islamabad are home to some of the most renowned and internationally acclaimed entrepreneurs and social innovators (e.g payload, Healthwire, Dockit, Meezaj).

Since the security climate in the country has improved, the start-up landscape has grown and attracted venture capitalists from Silicon Valley, Malaysia and the Persian Gulf. The 2012 launch of Plan9, Pakistan’s first incubator, laid the groundwork for the start-up ecosystem. Pakistan is now home to more than 20 start-up incubators and accelerators that provide co-working, office space, mentorship, networking opportunities, and access to investors.

Undoubtedly, Pakistan has the potential to become the next emerging hub in Asia. Both high mobile penetration and the well-developed telecommunication infrastructure have given rise to tech start-ups that have disrupted almost every sector—wedding, health, fashion, payments. Success stories include Convo, a social networking platform, and have captured the attention of international investors.          

Shaun Di Gregorio, CEO of Frontier Digital Ventures, a venture capital fund based in Malaysia that has previously invested in Pakistani start-ups, notes that “People who have an appetite for emerging markets will be attracted to Pakistan. It’s considered one of the next big frontier markets.”

Pakistan holds an edge over its regional counterparts primarily because of two reasons. First, Pakistan’s market does not set a limit on foreign equity, enabling investors to hold a 100 percent stake without the help of any local partners. Second, total repatriation of investment capital is allowed. Therefore, every penny earned in profit can be returned to the original investor with ease.

While serving as an example for its neighbors, Pakistan’s start-up scene continues to flourish, there is still work to do. As Khurram Zafar, executive director of Lahore University of Management Sciences’ Center for Entrepreneurship, notes “more bridges are needed between Pakistan and the outside world which are best built by the diaspora looking to stay connected with the country.” This lack of connectivity can be seen in the region. Many Afghan or Iranian start-ups are unaware of the incubators or accelerators that exist in Pakistan and unsurprisingly, there are no Iranian tech entrepreneurs in Pakistan’s accelerator programs such asInvests2Innovate or Peshawar 2.0. Collaboration among these three countries would boost productivity, increase access to investment, and promote their status to emerging markets.

Iran: A Rising Star

Iran’s entrepreneurship ecosystem remains nascent yet promising. In the past decade, Iranian policymakers have shifted their focus to entrepreneurship and innovation and there is plenty of room for progress. Iran’s overall score on the 2016 GEI Index is 28.8%, ranking 80th among the 130 countries surveyed. Among the 15 MENA countries, Iran’s ranking at 14 indicates a weak entrepreneurship ecosystem. Compared to previous years, Iran’s overall score has improved, but it has yet to fully realize its potential.

In 2008, Iranian start-ups such as Digikala emerged in the ecommerce and online retail market, becoming the largest ecommerce platform in Iran. Emulating Amazon, this start-up is considered a poster child for start-up success in Iran. In recent years, fast Internet speeds, high mobile penetration, and official support for entrepreneurship have led to creation of a flourishing start-up scene. 

There are many sectors that remain bursting with potential for disruption. They include ride sharing, people to people hospitality, online furniture, design services, and payment delivery. Certainly, there is high demand for these types of start-ups because of Iran’s sophisticated and young costumers, and underserved markets, a legacy of international sanctions which has now been largely removed.  

Despite its low entrepreneurship and productivity scores, Iran ranks fifth after India, China, Russia, and the U.S. for having a significant number of talented and well-educated engineers. Consequently, Iranian policymakers should divert their attention fully to exploiting Iran’s impressive human resources toward boosting competitiveness, promoting employment, and raising productivity levels.

Iran’s start-up scene is vibrant led by several savvy Western educated mentors and modeled after successful Silicon Valley companies. Start up Grind and Start-up Weekend events are held throughout the country. However, there too few incubators and those which do exist often struggle to provide adequate financing opportunities to promising businesses. Accelerators exist, but few are run professionally and optimally. Unfortunately, Iranian legal codes do not protect innovation and intellectual property rights. These obstacles have created setbacks for Iranian entrepreneurs, preventing them from robust growth and scaling.

Afghanistan: Underappreciated Potential

Although Afghanistan’s ecosystem and start-up scene is only now starting to grow. Particularly in urban areas of Kabul, Jalalabab, Kandahar, Mazar-i-Sharif, and Herat, new programs are being launched teaching youth how to code, teaching entrepreneurship, and many more related programs to increase capacity, knowledge, and skills.

Among such programs are Shetab Afghanistan, the first comprehensive incubation, co-working, and mentor program in Kabul that is helping entrepreneurs and social innovators. There is also Afghanistan Startup, Startup Valley, Startupistan, and many more that are entering the Afghan start-up scene.. A 2015 survey carried out including 27 start-ups in Afghanistan revealed that 70% of Afghan start-ups fail due to ecosystem and market start-up failures, including access to mentors, infrastructure, and more open regulatory environment, and access to finance. Contrary to conventional wisdom, security is not the top concern facing entrepreneurs. Instead, entrepreneurs face the following challenges: limited access to networks and regional markets, faster internet and related infrastructure, trade friendly regulatory environment, an end to corruption, as well as availability of supportive incubation, acceleration and co-working programs. These gaps can be filled within regional frameworks. 

Why Collaboration Matters

It time to put more weight on the effective implementation of new political and economic initiatives, collaborative networks, policies, and programs to regionally link start-up ecosystems across Iran, Pakistan, and Afghanistan.

The potential benefits of collaboration across regional ecosystems outnumber the disadvantages. It would lead to increased visibility and publicity for start-ups, offering an opportunity to scale into new regional markets. It would increase technical knowledge that is localized, and could potentially open up entrepreneurs from the region to sorely needed financial and mentor resources. Beyond these concrete benefits, local governments should offer incentives to attract large corporations in these countries. After all, large corporations remain vitally important for ecosystem building because they help investment in the supply chain, contract start-ups, or even possibly acquire the most promising start-ups in the long-run.

Because of the dominant Western-centric narrative widely accepted among entrepreneurs and start-up lovers, there is an overarching tendency for entrepreneurs to take examples from the West and emulate them. Therefore, there is a gap in knowledge among young entrepreneurs in these countries about exciting and new developments in their own backyard. While it is reasonable to emulate Western models, it is equally important to adopt and adjust them considering local conditions, specifically cultures, languages, and lifestyles.

For example, initiatives could include regional conferences like a TEDx talk held in Herat focusing on regional start-ups that can incorporate Tadjik entrepreneurs. Another way to foster brainstorming and collaboration among entrepreneurs could be to swap co-working spaces, as is done in Europe, so that an entrepreneur from Lahore can learn about the Iranian social technology market to scale his mobile geo-app for car parking. In addition, Iranian, Pakistani, and Afghan member investors could use shared Linked groups as a viable means to bridge cultural biases, connect board members, and enable mentor sharing between various accelerator and incubation programs in the region.

Among the most promising initiatives would be to establish a regional exchange and scholarship program between regional universities. Again looking at the region’s ‘backyard,’ the ASEAN (Association of South Eastern Asian Nations) countries have created several programs that support cross-border innovation and collaboration. For example, the very successful ASEAN University Network has helped hundreds of exchange students to study across borders since 1995. The organizations has built partnerships with other renowned universities around the world to promote knowledge sharing, collaboration, an access to opportunity through joint project-work.

Through the ASEAN Center for Entrepreneurship, regional and global initiatives support various start-ups. Recently, the Malaysian government, through its MaGIC Program, has offered ASEAN start-ups access to a regional accelerator funding and educational support services in Kuala Lumpur. Even "pariah state" North-Korea is sending its young entrepreneurs to Singapore, a powerful start-up hub, to help them in business, law, and economic policy and to learn about Lean Canvas (with the help of Choson Exchange, an NGO).

These initiatives provide compelling models of what could be done to support the achievements of local and regional entrepreneurs and social entrepreneurs among Pakistani, Iranian, and Afghan start-ups.

Unfortunately, the international media has failed to present a full and balanced view of Iran, Afghanistan, and Pakistan. Negative images of violence and terrorism have become ingrained in many entrepreneurs’ minds and rendered them oblivious to the achievements of their neighbors in the areas of social innovation and entrepreneurship. Today’s revival of the ancient trade routes as a successful model for a regional start-up ecosystem highlights not only their historical legacy, but also their contemporary relevance to regional commerce, trade, and advancement of Southwest Asia.

Photo Credit: Bourse & Bazaar