THE RECENT SUMMIT of the Shanghai Cooperation Organization--a group consisting of China, Russia, and four Central Asian countries--has evoked alarm about a potent anti-American bloc emerging in the heart of Eurasia. The presence in Shanghai of fiery Iranian president Mahmoud Ahmadinejad, and the prospects for exclusive ties among some of the world's leading energy and military powers, has generated fears about a renewed Cold War between a democratic West and an authoritarian East. But these concerns are, at present, exaggerated.

The SCO lacks the internal cohesion and capabilities of strong multilateral security institutions like NATO. Its members disagree over the desirability of a Western military presence in Central Asia. They also differ over the SCO's role in traditional defense matters and whether member governments should collectively suppress domestic unrest. Furthermore, granting full membership to Iran, Pakistan, or other SCO observers could just as easily weaken the organization as strengthen it.

The SCO has a strikingly broad agenda. Cooperation against terrorism--broadly defined to include "separatists" and "extremists"--has become a core activity, with members conducting increasingly large joint "anti-terrorist" exercises. Other initiatives encompass combating organized crime, managing natural disasters, and promoting economic and energy collaboration.

Not surprisingly, many of the SCO's weaknesses stem from this expansive agenda and diverse membership. Agreements adopted under its auspices often consist primarily of bilateral deals, with the organization merely providing a convenient negotiating venue. While some current and aspiring members seem most interested in the SCO's economic potential, others mainly value its regional security role. Also, serious rivalries and disputes exist among its Central Asian members--especially between Uzbekistan and Kazakhstan, perennial competitors for regional primacy.

Russia has repeatedly opposed Chinese efforts to establish a SCO free-trade zone, acquire control over Eurasian energy resources, or give the body a military dimension. As a result, the SCO remains primarily a security organization, focused on countering transnational threats from non-state actors, rather than implementing a collective defense structure like NATO. The SCO does not have its own military forces, an integrated command structure, or even a combined planning staff. Russia favors the status quo because it can veto SCO actions. Conversely, China lacks equivalent influence over the decisions of the Collective Security Treaty Organization, a genuine multinational military alliance that includes all SCO members except China and Uzbekistan.

Member governments also diverge regarding whether the SCO should protect one another against further "colored" revolutions. They accept that the organization should defend incumbent regimes against terrorist threats, which they characterize as foreign-inspired, but remain divided over whether to respond collectively to major but nonviolent domestic challenges. During the March 2005 government crisis in Kyrgyzstan, SCO members could not agree on joint action, with military intervention reportedly favored by China and opposed by Russia.

Despite the July 2005 Astana summit declaration calling on Western militaries to establish a timetable for their withdrawal from Central Asia, the SCO governments remain divided over the desirability of a continued NATO role in Eurasia. Uzbekistan clearly wanted to eliminate an unwelcome Western military presence, but Kyrgyzstan has artfully used the declaration to extract greater rents from NATO countries for continued use of its military bases. Although Russia and China desire a much reduced Western military footprint in the region, they recognize that an immediate NATO withdrawal would create a security vacuum that the SCO could not soon fill.

Expanding the organization further looks to be problematic as well. If India and Pakistan became full members, the SCO would encompass more than half the world's population. If Iran joined, the SCO's share of the world's oil and gas resources would sharply increase. However, granting India or Pakistan full membership could intensify differences within the SCO regarding the desirability of a long-term Western military presence in Eurasia and bringing in Iran risks introducing myriad Middle Eastern complexities.

On balance, the SCO's growing importance in this volatile region warrants a NATO initiative to establish direct ties. At a minimum, a formal dialogue between the organizations would avoid misunderstandings and dampen competitive pressures. Earlier this month, SCO executive secretary Zhang Deguang said his institution was "open for cooperation" with NATO on issues of mutual interest. Western governments should pursue this opening and propose initiatives for joint action to combat narcotics trafficking, regional terrorist movements, and potential biological threats such as Avian influenza.

Richard Weitz is a Senior Fellow and Associate Director of the Center for Future Security Strategies at the Hudson Institute.