Iran in SCO

Iran came one step closer to becoming a full member of the Shanghai Cooperation
Organization (SCO) last week with the approval of its bid, 15 years after it first applied. The
organization, which includes China, Russia, and India, in addition to Tajikistan, Kazakhstan,
Kyrgyzstan, Uzbekistan, and Pakistan as members, accounts for about one-third of the world’s
landmass and nearly one-quarter of global GDP. The accession process is expected to take up to
two years to complete.
The Iranian media hailed the decision as "a great victory” for the country’s new president,
Ebrahim Raisi, who took office in August. The approval highlights Iran’s closer ties with
China and Russia at a time when all three countries are facing mounting pressure from
Washington.
Iran’s hardline president, who did not come to New York for the United Nations General
Assembly last week but went to Dushanbe, Tajikistan for the SCO meeting, thanked all eight
member states for allowing Iran to join the organization as a full member. “The world has
entered a new era,” Raisi said, repeating that “hegemony and unilateralism are failing.” Back
in Tehran, he called SCO membership a “strategic move.”
While Iran may not see much short-term benefit, the move signals closer ties to China, one
of the organization’s most powerful member states, as well as Russia. Iranian media described
the membership as evidence that Iran and China “are moving extremely close,” claiming that
perhaps pressure by China and Russia led to admitting Iran into the organization.
Iran has traditionally looked west toward Europe for trade and investment partners.
Increasingly though, it has grown frustrated with European countries that opposed former
President Donald Trump’s policy of “maximum pressure” on Iran but quietly withdrew from
the kinds of deals that the 2015 nuclear agreement once promised.
Both Raisi and Iranian Supreme Leader Ali Khamenei have repeatedly stressed that the
country must "look to the East" not only to resist its economic isolation from the West, but also
to find strategic allies that would help it reach a new agreement on the nuclear program, address
the banking and trade problems, U.S. sanctions imposed on Iran, and strengthen its role in the
Middle East and Asia.
Over the past few decades, China and Iran have developed a broad and deep partnership
centered on China's energy needs and Iran's resources as well as significant non-energy
economic ties, arms sales and defense cooperation, and geostrategic balancing against the
United States.
Iran-China relations
Iran and China have divergent regional interests, but a common adversary, the United States,
has prompted the two countries to work together.
China has become Iran's number one oil customer and trading partner. In return, China has
provided Iran with the technological know-how to develop its energy resources, modernize its
military hardware, and develop its infrastructure. China's economic ties to Iran have
shielded the Iranian regime from the full effects of international sanctions.
Last spring, Iran and China announced that the two countries were working on the details of a
25-year agreement. The news came after renewed American sanctions had succeeded in
suffocating the Iranian economy by scaring away badly needed foreign investment. The
sanctions cut off Iran’s access to the international banking system or that of any company that
did business there. Iran’s oil exports and trade dropped. As a result, earnings from Tehran’s
largest source of revenue plunged dramatically.
China was quick to take advantage of the situation and Tehran’s desperation pushed it into
Beijing’s arms. Both China and Iran have been discreet about the details of the agreement. A
document obtained by The New York Times revealed that the two countries quietly drafted
a sweeping economic and security partnership that would clear the way for billions of
dollars of Chinese investments in energy and other sectors. The partnership, detailed in an
18-page document, would vastly expand Chinese presence in banking, telecommunications,
ports, railways, and dozens of other projects. In exchange, China would receive a regular
— and, according to an Iranian official and an oil trader, heavily discounted — supply of
Iranian oil over the next 25 years.
Many worry that the agreement would potentially give China a foothold in a region that has
been a strategic preoccupation of the United States for decades. The agreement has not yet
been submitted to Iran’s parliament for approval or made public, stoking concerns about how
much the government is willing to give away to China.
There have been suggestions that Iran could sign a similar agreement with Russia.
What is Iran seeking from the SCO?
Iran could be seeking access to the Central Asian region, which can be regarded as a market
for exports of Iranian goods. The SCO includes both the largest fuel producers and the
largest buyers of hydrocarbons.
It’s highly unlikely the organization, which is mostly focused on security and stability in the
vast Eurasian region, would provide that kind of opportunity for Iran. Critics in Iran were quick
to point out that joining the organization would not address the country’s economic
dilemma. The conservative daily Kayhan went as far as cautioning officials “to avoid turning
Iran into a market for products from the East,” a reference to Chinese goods. Analysts
urged the government to pursue constructive nuclear talks with the West and to comply with the
global anti-money laundering task force regulations to address the country’s trade problems. Iran
is on the Financial Action Task Force blacklist and the conservatives, including Raisi, have
refused to pass bills required by the watchdog.
Afghanistan, and the ramifications of the Taliban takeover, was a top issue for discussion
at the Tajikistan summit. The U.S. exit from Afghanistan has changed the regional
landscape. Iran shares a long border with Afghanistan and thousands of refugees have poured
into the country, which is already home to 2 million legal and undocumented Afghans. An
Iranian official said over the weekend the government has barred 2,000 Afghan refugees a day
from illegally crossing the northeastern border of Taybad into Iran since the Taliban took over.
The foreign ministers of China, Russia, Pakistan, and Iran held a meeting to discuss
Afghanistan on Sept. 16, the first day of the summit, in Dushanbe. All the SCO member
countries, including Iran, are concerned about Afghan stability, and the U.S. withdrawal provides
them with an issue to cooperate on.
Iran’s strategy of using ties with China and Russia as leverage against Western capitals
worked to some extent over the years. Yet, Iran never deviated completely from its slogan,
“Neither East, Nor West,” which has been a pillar of its foreign policy since the 1979
revolution. But different times require different policies. The SCO summit was the first
foreign trip for Raisi. Perhaps the Islamic Republic is changing course by replacing symbolic
acts with concrete measures.
However, analysts in Iran were skeptical if joining the SCO would create any real
opportunities for Iran. Fardin Eftekhari, a postdoctoral candidate at Tehran University, argued
that in fact, Iran’s insistence on having a seat at the table would generate more leverage for
Moscow and Beijing to bolster the country’s overreliance on the East. “There is a
misconception in Iran’s foreign policy that merely being a part of the different regional bodies
in neighborhood regions, including Eurasia, could spontaneously break the ‘sanctions wall’ and
lead to diversified fruitful foreign relations,” he wrote.

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Iran came one step closer to becoming a full member of the Shanghai Cooperation

What is Iran seeking from the SCO?

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