He rejected claims that the Shanghai group - which focuses on security
issues and economic cooperation - was emerging as a rival military bloc to
the Western-led North Atlantic Treaty Organisation (NATO).
"It's not a military bloc, it's open to all," he said.
"There's a feeling of alarm that Russia and China are combining forces. But
this organisation is open. There's nothing covered up," Putin said.
The Shanghai group had been a "good instrument" after the fall of the Soviet
Union for settling border demarcation questions that had remained unresolved for
decades, he said.
"It was a good instrument for solving them and became a good way for solving
other problems. It was a natural process," Putin said.
In addition to China and Russia, the SCO also comprises Kazakhstan,
Kyrgyzstan, Tajikistan and Uzbekistan.
Iran, Pakistan, India and Mongolia are observer nations of the SCO.
Putin also reiterated his optimism that a recent set of Western proposals to
Iran aimed at resolving the standoff over Tehran's nuclear programme would ease
tensions.
"It's a real move forward thanks to the six countries who sought a solution
and thanks to Iran which didn't reject the proposals," Putin said of the deal
put forward by Britain, China, France, Germany, Russia and the United States.
Putin, who met here with Iranian counterpart President Mahmoud Ahmadinejad on
Thursday, also said that Moscow hoped to create a joint venture with Tehran on
exploiting natural gas reserves in the two countries.
"We're talking about getting a Russian deposit and an Iranian deposit and
creating a joint venture. It is only an idea for now, not worked out at a
technical level," he said.
Asked about recent polls suggesting that most Russians would support a change
in the constitution to allow Putin to stand for a third term in 2008, the
Russian leader rejected the idea, echoing earlier comments he has made on the
subject.
While such polls were "objective", such a constitutional change would
undermine public faith in Russia as a rules-based society, he said.
"I thank our citizens who think I have the right to stay" beyond 2008. But
"you can't ask others to observe the law if you break it yourself," Putin said.
The Russian leader was due to leave Shanghai later Friday bound for
Kazakhstan, where he was to participate in another regional
forum.
