Iran’s inclusion in SCO: Implications for India and the region

The expansion of the SCO to include Iran as a full-fledged member at the Samarkand summit opens doors for a Central Asia pivot to West Asia, says Dr. Meena Singh Roy.

The Shanghai Cooperation Organisation (SCO) summer held in the historic city of Samarkand drew global attention as it was held in the backdrop of new geo-strategic and geo-economic developments in the region and beyond. These were mainly the Ukraine-Russia conflict and the increasing rift between Moscow and the West, growing US-China tensions, the pandemic and its global impact, the possibility of the emergence of a new economic order, the unfolding of a new regional and global order, the advent of new energy game, and finally, the return of the Taliban regime in Afghanistan and its security implications for the region.

SCO’s Growing Stature

Over the years, the SCO has grown to become the world’s largest regional organisation. It began as Shanghai Five in 1996, and moved on to become the SCO in 2001. Since then, its role and profile has grown manifold. It has drawn regional and international attention in recent times. The combined landmass of the SCO member nations exceeds 34 million sqkm, accounting for more than 60 per cent of the Eurasian continent’s total land area. The SCO accounts for 40 per cent of the world’s population and around 28 per cent of global GDP. More than 10 per cent of total foreign direct investment in 2018 was directed to the “Shanghai Eight,” giving rise to tens of thousands of new enterprises in the SCO space. This makes the SCO space more attractive for the other countries which are looking at joining the grouping.

In this regard, Rashid Alimov, former Secretary General of the SCO, highlighted the importance of the organisation stating that “…the SCO holds enormous potential in each of a number of unique parameters, and the ongoing search for new opportunities determines the direction of its further development. Still, the SCO is relatively young, and as the history of other international associations suggests, it exhibits the characteristic signs and problems of any young and growing organism.”

Interestingly, it is the only organisation that does not have members from the West, thus making it purely an Asian grouping. The SCO represents countries from south, central, west and east Asia. The organisation includes eight permanent members including China, Russia, India, and Pakistan, as well as four observer countries and nine dialogue partners. Now, the Islamic Republic of Iran has been approved as the organisation’s ninth full member. More countries have been added as observers and some Arab and Gulf states have been included as dialogue partners, thus expanding the organisation’s membership. In other words, the SCO opens the door to the Middle East, which is a strategically important region.

What is important to note is that four Central Asian countries-Uzbekistan, Kazakhstan, Kyrgyzstan, and Tajikistan joined the SCO as founders and continue to actively participate in its activities, indicating that this organisation is significantly crucial for maintaining Central Asian stability and cooperation. While there are many achievements to this organisation’s credit, new threats and challenges continue to confront the member states, demanding that the SCO countries come up with innovative ways to deal with new challenges through the means of greater cooperation.

Expansion into West Asia and beyond

The Samarkand Declaration includes many issues like regional stability, sustainable economic development, connectivity, countering terrorism, nuclear disarmament, poverty reduction, traditional medicine, safeguarding food security, climate change and maintaining stable and diversified supply chain. Amidst all this, a significant development that deserves attention is the expansion of the SCO membership to include some countries as observers and others as dialogue partners.

The process of Iran’s membership in the grouping was initiated. Iran will formally become a full member after completing the technical and legal processes. The decision to start the procedure of accepting the Republic of Belarus as a member of the SCO was noted by the member states. The Kingdom of Bahrain, the Maldives, the State of Kuwait, the United Arab Emirates and the Republic of the Union of Myanmar were granted the status of SCO dialogue partners. In addition, a memorandum on granting the status of SCO dialogue partner with the Arab Republic of Egypt, the Kingdom of Saudi Arabia and the State of Qatar was inked during this Summit thus, expanding the organisation to Arab and Gulf countries. An equally important development was the announcement of the signing of Memorandums of understanding (MoU) with the Arab League, UNESCO and Economic and Social Commission for Asia and the Pacific, with the aim of expanding SCO’s cooperation with international organisations.

These inclusions signal the growing importance and relevance of the West Asian region for the SCO and the increasing interest of the Gulf and Arab countries in this significant Asian grouping. In the changing regional order, where the US is viewed as moving away from West Asia to the Asia Pacific, and there is a growing rift between Russia and the West, and an increasing tension between China and the US, the Gulf countries are looking at expanding and diversifying their ties with the Asian countries, particularly towards growing economies of India and China. They do not want to be seen siding with one power or the other, but want to secure their economic and strategic interests by pursuing a multi vector foreign policy.

More importantly, for the Gulf states, Asian countries are a major export destination of their hydrocarbon resources. They also view India, China, South and East Asian countries as major destinations for their investments. Equally important is the fact that, in the recent past, India and China have emerged as major trade and economic partners of Gulf countries. For Gulf states, the Asian economies offer greater opportunities in the light of their present economic diversification policy to reduce their dependence on oil. Additionally, the presence of Iran, their arch rival in this grouping, is also one of the driving factors for their growing interest in the SCO.

It is important to note that the Eurasian region has been an area of interest for the Gulf countries, given their religious identity, energy and trade ties. At the same time, Central Asian countries view the Gulf region as opening many economic opportunities for them. They have been enhancing their economic and trade relations with their Gulf partners. These factors are likely to enhance future cooperation between the SCO member states and West Asian countries. From India’s perspective, the presence of its strategic Gulf partners is a positive development and could be utilised to further its economic and security cooperation. It offers New Delhi an additional opportunity of dialogue and interaction on the side lines of the SCO meetings with its West Asian partners.

Opportunities for Iran

The procedure for the admission of Islamic Republic of Iran to the SCO membership was approved on September 17, 2021, during the 21^st SCO Summit meeting in Dushanbe, Tajikistan. This was after it was an observer state for 15 years. Having applied for the full membership twice, in 2008, and again in 2010, Iran finally signed the memorandum of commitments in 2022, during the 22nd SCO Summit meeting in Samarkand. This is the first time that Iran becomes a full member of a major regional block since its 1979 revolution. For Iran to formally join the SCO, the technical and legal process may take up to two years.

Highlighting the importance of the inclusion of Iran in the SCO, Iranian President Ayatollah Seyed Ebrahim Raisi stated, in his speech at the Summit in Samarkand, that, “Certainly, with the active and effective presence of the Islamic Republic of Iran in the activities of the Shanghai Cooperation Organisation, this membership will be recorded as one of the most important developments in the history of this organization.”

Faced with increasing isolation and economic sanctions, particularly by the US and the West, Iran has been looking at strengthening its relations with countries in the east. In recent past, Iran’s foreign policy has shifted from ‘neither East nor West’, to ‘Look to the East’, mainly to overcome its isolation and neutralise the negative impact of economic sanctions on its economy. In this context, Tehran’s full membership in the SCO can be viewed as a big diplomatic success.

Iranian media reported that “a new axis is now taking shape on the world stage.” This needs to be viewed in the context of increasing cooperation between Iran, China and Russia, as tensions between US-China and US-Russia continue to rise. Russia, China and Iran have been subject to Western sanctions and it is this common ground that brings all three countries together, enhancing their cooperation. One witnesses growing support for each other between Iran, China and Russia at this point in time. “China is willing to make efforts with Russia to assume the role of great powers, and play a guiding role to inject stability and positive energy into a world rocked by social turmoil,” Chinese President Xi Jinping told his Russian counterpart Vladimir Putin in Samarkand. Expressing his views on the world order, President Putin commented that, “I have to say that attempts at creating a unipolar world have been quite ugly and unacceptable as of late for the majority of the nations on this planet.” Similarly, Iranian President Raisi stated in his interview that, “People around the world have bad memories of the era which has come to an end. It was a time of hegemony, unipolar world order and violations of the legitimate rights of many nations”. He believes that, “a new era will be marked by the establishment of a multipolar world order.”

Cooperation between Iran, Russia, China, the SCO, the Eurasian Economic Union (EAEU) and the Economic Cooperation Organisation (ECO) “may lead to the creation of a new power’’. Thus, one finds Russia, China and Iran, for now, on the same page fighting the unfair system imposed by the US and the West. Iran is looking at expanding its existing cooperation agreements with Russia and with China under the 25-year comprehensive cooperation agreement signed in March 2021.

For Iran, the full membership means the emergence of a new regional axis to counter US isolation, recognition of Iran’s importance for the Eurasian region in terms of its potential as a connectivity hub and cooperation in energy sector. This also means the opening of Iran’s economic access to the SCO countries, ending its isolation and opening of new economic opportunities. It is believed that Iran’s inclusion into SCO possibly links the country to the economic infrastructures of Asia and its vast resources.

For Iran, the Central Asian region can possibly be the market for the export of Iranian goods. According to some reports, Iran can export more than 500 goods without tariff to the Eurasian region. This could also mean bringing back many Iranian industries into operations, thus creating more jobs in the country. At the bilateral level, Iran’s cooperation has been growing with the Central Asian countries, particularly with Tajikistan, Uzbekistan and Kazakhstan. In last few years, Iran and Uzbekistan have developed cooperation in enhancing connectivity and energy sector. India, Iran and Uzbekistan have already signed agreements to develop connectivity through the Chabahar port.

On the side lines of the SCO summit, Iran and Uzbekistan signed an MoU on cooperation in different energy sectors. They discussed joint implementation of petrochemical projects in Iran, conducting geological and exploration activities in the field of oil and gas, supply of Iranian petrochemical products in Uzbekistan, exchange of crude oil and petroleum products, and joint research for the development and commercialisation of catalysts and chemicals for petrochemical plants.

In addition, issues about providing financial aid and supporting banking cooperation for the development of oil, gas and petrochemical industries in both countries, offering equipment needed by the oil and gas industry, cooperation in the field of producing and giving laboratory equipment and exchange of knowledge in the field of oil and gas industries, as well as the training of skilled manpower in the oil industry, were also agreed upon. Iran has also expressed its readiness to establish a house of innovation in Uzbekistan, in a bid to broaden bilateral cooperation in the field of technology. It was noted that the Iranian house of innovation will be established in cooperation with the private sector.

Indian Perspective

From India’s perspective, the inclusion of Iran offers both opportunities and limitations. Regionally, Iran is an important country for establishing connectivity with the land locked region of Central Asia and building energy cooperation. Additionally, the situation in Afghanistan also demands greater cooperation with Iran. There are many new developments, like cooperation between India-Iran and Central Asian countries on Chabahar, that could be furthered, both at the regional grouping as well as at bilateral and trilateral levels. Similarly, the entry of Gulf countries also helps India in terms of enhancing economic and security cooperation. However, the challenge for India would be to navigate carefully in its relations, given its increasing engagement with the US amidst growing tensions that the US has with Iran, Russia and China.

While there are many who believe that Iran’s membership is going to bring greater cooperation in the energy sector and in connectivity, others are of the opinion that it may be a slow process which will take time. According to Prof. Sanjay Panday, “Iran’s SCO membership will enhance the organisation’s profile and its ability to manage issues relating to regional security, e.g. Afghanistan, and those of connectivity. It will help Russia’s strategic objectives, but may further complicate its ties with US/West.”

In the view of Nicole Grajewski, a research fellow with the International Security Program at the Belfer Center for Science and International Affairs, “There is no Russia-China-Iran axis with formalised commitments akin to an alliance, and the SCO certainly will not provide the institutional structure for such an alliance…The SCO membership will provide a forum for closer engagement with the region for Iran, but that was something Tehran already enjoyed as an observer state.”

Similarly, an Iranian expert is of the opinion that the SCO membership is mostly a political project for Tehran. Domestically, President Raisi’s administration aims to sell the accession to the SCO as evidence of the success of its “look to the East” policy. Iran’s membership is viewed as a message to the West that it can enter multilateral formats outside the Western club and that it is not strategically bound to work within the U.S.-dominated order. According to him, “the China and Russia-dominated bloc notably does not provide its regional members with European Union-style regulations to facilitate deeper economic integration. Nor does it offer security guarantees or conflict resolution processes for its members, akin to what countries enjoy upon joining the North Atlantic Treaty Organisation (NATO). Being an SCO member will hardly ease Iran’s difficult economic situation in a meaningful way, particularly for as long as the Islamic Republic remains under U.S. sanctions and while it has still not ratified global anti-terrorism treaties like the United Nations Convention Against Transnational Organised Crime (Palermo Protocols) or the Financial Action Task Force (FATF).”

While one gets diverse views on Iran’s inclusion as full member in the SCO, a careful analysis of the subject does indicate that expansion of the SCO to Iran, the Arab and Gulf countries is definitely the beginning of new era of engagement between the Asian countries on common issues. The success of economic and security cooperation will depend on how the member states are able to work collectively and to convert challenges into opportunities. Without security and stability in the SCO space, it is going to be difficult to enhance cooperation in the economic arena. Thus, it would be imperative on the part of the SCO countries to create greater cooperation in securing peace and security in the region, while they work simultaneously on economic engagement and other common issues. India is going to host the next meeting of the SCO Council of Heads of State in 2023 as the presidency of the grouping has been passed to India. India’s growing economy, its ability to balance ties with both East and West under the leadership of Prime Minister Narendra Modi offers New Delhi a chance to capitalise on new opportunities of cooperation amongst the SCO member states.

(Dr. Meena Singh Roy is a Senior Fellow and head Eurasia and West Asia Centre, Tillotoma Foundation, Distinguished Fellow, Middle East Institute (MEI), New Delhi and former Head Eurasia and West Asia Centre at the Institute for Defence Studies and Analyses (IDSA). Her area of specialisation is Eurasia and West Asia. Prior to joining IDSA, she was a senior research scholar in the Department of African Studies, Delhi University.)

Second, Raisi’s government depicts the act of having joined the SCO as a message to the West that Iran is not isolated: that it can enter multilateral formats outside the Western club and that it is not strategically bound to work within the U.S.-dominated order.

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