Iran’s growing involvement in the Shanghai Cooperation Organization (SCO) and its quest for permanent membership represent a potential strategic turning point for the organisation. The SCO is already an important global player - including both China and Russia among its members, encompassing strategic locations such as the Persian Gulf, the strait of Hormoz, and Central Asia, and having one of the world’s the highest rate of energy production and consumption. However, the degree of global influence and the role of the organisation could be additionally enhanced by the entry of Iran as permanent member, and by the subsequent rise of a triple Iranian-Russian-Chinese alliance.
The SCO is a permanent intergovernmental organisation created in 2001 as an evolution of the "Shanghai Five" mechanism devised in the aftermath of the Cold War and aimed at fostering security, political, and economic co-operation among its regional members. It is composed of China, Kazakhstan, Russia, Kyrgyzstan, Tajikistan and Uzbekistan as permanent members, and Iran, India, Pakistan, Afghanistan and Mongolia attending with observer status.
In the past few months, the SCO has adopted a series of measures to improve its internal security and defense mechanisms, and its economic co-operation.
First, in the course of the past summer, SCO members agreed on a shared protocol to conduct joint military exercises and anti-terrorism operations.
Additionally, during the organisation’s annual summit in Dushanbe (Tajikistan), in August 2008 the member states further boosted their mutual security arrangements by creating a common system to assess and tackle external threats. On that occasion, Chinese President Hu Jintao stressed the need to increase the role of the SCO regionally and proposed a five-point plan to further common security arrangements, economic and trade co-operation, as well as cultural, scientific and technological exchanges both between permanent members and observer states.
Finally, in October 2008, during the Council of Heads of Governments of the SCO Russian President Vladimir Putin suggested the need to develop space co-operation among SCO members, including practical use of space-based telecoms, navigation and Earth observation systems.
Iranian participation and strategic vision
The Islamic Republic of Iran - an observer state since 2005 - has been playing an important role within the SCO, sharing the vision of those who are seeking to enhance the organisation’s regional and global role. In this sense, Iran recently proposed to rely exclusively on SCO-states currencies when trading among members “to maintain and strengthen the value of the foreign exchange reserves of member states,” as explained by Iranian President Ahmadinejad during the August 2008 meeting.
The President also suggested the creation of a SCO bank to increase and facilitate monetary transactions, as well as the adoption of a single trading currency between members. Similarly, during the October Council of Heads of Governments Summit, the Islamic Republic asked the member states to include Tehran as a member of the SCO Banking Consortium to lower trade costs. “Iran's presence in the members' banking consortium can reduce the costs of economic ties and increase the volume of trade,” said Iran's First Vice President Parviz Davoudi.
Moreover, Iran has been using the SCO framework to boost bilateral and multilateral ties with other members, with the objective of raising the level political support for the Islamic Republic. For example, during the August 2008 meeting, Iran held substantial talks with Persian-speaking countries of Tajikistan and Afghanistan - and the three states agreed to increase reciprocal economic, security, and political ties, and to discuss further the idea of creating a Farsi-speaking union.
However, despite the important results achieved by Iran in the last SCO meetings, the country’s most important objective - namely the full membership in the organisation - has not been yet attained. There are several reasons as to why Iran has been pursuing full membership into the SCO. These efforts have to be read in the context of the country’s quest to increase both its role within regional organisations, as well as to upgrade status and global influence of the organisations themselves. The strategy behind this move is twofold.
First, from a political perspective, achieving full integration within the SCO would upgrade and enhance both Iran’s regional and global role. Moreover, by seeking new and increasingly solid alliances with regional organisations and emerging global powers like China and Russia, Iran is gradually reducing its international isolation - thus improving its strategic position when dealing with the United States and the “West” in the context of the nuclear crisis.
In this sense, Iran sees a stronger SCO as a strategic asset. In fact “(…) The SCO can emerge as an effective weight in the international arena and play an effective role in improving the new world order upon interests of the countries of the region,” as explained by Iranian Vice-President Parviz Davoudi during the 2007 SCO annual meeting.