What Iran's membership of Shanghai Cooperation Organisation means

Since its formation in 2001, the SCO has attracted Iran's attention. It centred on two major world powers, China and Russia. Now, Iran's membership in the organisation is a harbinger of expanding economic and political cooperation in the region.

Hyderabad: Iran’s bid to become a full member of the Shanghai Cooperation Organisation (SCO) was approved after almost 15 years by the bloc’s seven permanent members. After the technical and legal process concludes – which could take up to two years – Iran will formally join a group that accounts for about one-third of the world’s land and exports trillions of dollars annually – as it counts China, Russia and India, in addition to several Central Asian states, among its members.

Iranian President Ebrahim Raisi termed the approval a “diplomatic success” as it will link Iran to the economic infrastructures of Asia and its vast resources. Raisi had denounced “unilateralism” by the United States and called for a concerted effort to fight sanctions.

The main issue with Iran’s approach towards the SCO is that it looks at it as a “concert of non-Western great powers” rather than a modern international organisation, and views it from an anti-Western or anti-US perspective. This is because countries such as Pakistan and India are US’s close partners, and even Russia and China have never been willing to openly challenge the US on the global scene.

SCO members are reluctant to entangle themselves in Iran’s rivalries. Hence, they also admitted Saudi Arabia, Qatar and Egypt as “dialogue partners” in a balancing effort. Iran’s previous bids for SCO membership were blocked because it was under United Nations sanctions, and some members, including Tajikistan, were against it due to Tehran’s perceived support for the Islamic Movement of Tajikistan.

This marks the first time Iran becomes a full member of a major regional bloc since its 1979 revolution. Iran is eyeing political and economic gains, especially with China, with which Iran signed a 25-year comprehensive cooperation agreement in March, and Russia, with which Iran is looking to expand a pre-existing cooperation agreement. Iran could gain significant access to the Central Asian region, which can be regarded as a market for exports of Iranian goods. US sanctions could prove to be roadblocks on the way to achieving those potentials should they persist, but will not halt Iran’s economic progress.

The SCO, which grew from the “Shanghai Five” pact of the mid-1990s, is governed by consensus, which limits the scope of major cooperation between its member states. It also functions more as a venue for discussion and engagement where high-level dignitaries from across the region can gather to confer, rather than an alliance like the EU, whose members have a common currency, or NATO.

The volume of trade with national currencies of Iran, Russia and China has been modest even as they have discussed de-dollarisation for decades, and they are not close to launching an alternative financial messaging service to the Society for Worldwide Inter-bank Financial Telecommunication (SWIFT) global financial network. The SCO is mainly a geopolitical and security organisation with limited infrastructures to pursue economic integration. The direct economic benefits from the SCO are marginal but member states could pursue bilateral agreements.

Among the regional organisations, the SCO has attracted Iran's attention since its formation in 2001. It centred on two major world powers, China and Russia. Now, Iran's membership in the organisation is a harbinger of expanding economic and political cooperation in the region.

Tensions and the continuation of the US sanctions have always acted as a deterrent to the development of Iran's foreign trade, depriving it from the benefits of international markets or attracting foreign investment for infrastructure projects, including transportation and communications. The sanctions have mostly affected the tourism and oil and gas sectors. Aware of this issue, the Islamic Republic of Iran has chosen the strategy of “looking to the East” in order to expand regional cooperation and confront the sanctions system.

The volume of economy and trade and, most importantly, China's technical and technological knowledge has persuaded not only Iran but also a large number of countries to establish close trade and economic relations with the Asian giant. The Chinese interest in Iran’s 80-million-population market and investing in various Iranian industries have created a kind of common strategic interest for closer cooperation between the two Asian countries. Under the 25-year Iran-China partnership, the Chinese have agreed to invest $400 billion in Iran’s infrastructure projects.

Basically, Iran is an important partner in China’s Belt and Road Initiative (BRI). China's interest in Chabahar port which can help advance the large-scale project reflects the fact that Iran has a special place in Beijing’s economic and political outlook. Iran's official membership in the SCO, which is centered on two major Eastern powers, China and Russia, can bring great economic and trade opportunities for the country. US officials see China as a key rival in challenging their power in the Asia-Pacific region and are using various means to contain Beijing. But the reality is that today China, as an economic superpower, seeks to strengthen regional cooperation to protect and perpetuate its status. Membership of Iran in this organisation promotes the regional and international position of the Islamic republic in an effective and desirable way.

Another benefit for Iran in joining the SCO is to enhance the country's position internationally. Today, two of the nine main members of the organisation (China and Russia) have veto power in the UN Security Council. The membership of India as a large and emerging economic power, a non-permanent member of the UN Security Council and one of the leading regional and global powers, is also very important.

Iran has a coastline of 2040 km with the high seas in the south, and if Shanghai members use Iran's infrastructure to increase cooperation capacity, there are common interests for all members, especially China and Central Asian countries that do not have access to the high seas. In other words, Iran, with its special geographical location, can serve as a North-South and East-West bridge in the SCO. Achieving this goal requires the expansion of transport cooperation, especially in transportation infrastructure. At present, the railway line to Herat has progressed and certainly the development of this line needs the support of the great powers of the organization.

Iran's membership in the SCO is also important from the point of view of strengthening and developing transport infrastructure of the region. Iran has a coastline of 2,040 km with the high seas in the south, and if SCO members use Iran's infrastructure to increase cooperation capacity, there are common benefits for all members, especially China and Central Asian countries, that do not have access to the high seas. In other words, Iran, with its special geographical location, can serve as a North-South and East-West bridge in the SCO.

In the field of energy, according to available statistics, Iran has the combined largest oil and gas reserves in the world, which is mostly needed by China and India, both important members of the SCO. By becoming a permanent member of the organisation, Iran will be connected to the vast markets of the member states.