Iran’s Proposed Membership in SCO – What it Means for China

Iran’s economic & security integration with China and Russia is one of the prime priorities of Ebrahim Raisi Government.  If Iran enters the Shanghai Cooperation Organization (SCO) as a member, it may be a significant advancement in economic and strategic direction. Unlike the Rouhani Government, there is a clear focus on economic advancement through ties with China, and leveraging economic strength for advancing geopolitical and strategic objectives. (SCO) summit is scheduled in Dushanbe.

SCO is primarily a Chinese and Russian initiative to foster alliance for safeguarding their economic and strategic interest and countering the common threat. It has eight members and four observer states. Pakistan and India are also its members and Iran is currently an observer state.

Earlier this year, Iran and China entered into a 25-year strategic partnership. According to media reports, the deal may ensure billions of dollars of investment by Beijing in Tehran. Apart from the undisclosed contours of the deal, it may provide long term energy security to Beijing and a market to Tehran for its oil.

Raisi’s predecessor Rouhani was regarded as moderate, as he tried to work with US for working out the nuclear deal and consequently lost election. Iran under Raisi Government is moving closer to China and Russia for strengthening alliances with countries sharing common strategic objectives. Timings are crucial, as Taliban has entered the power in Afghanistan and China is also cementing its relation with the new Government, supported by Pakistan. China is acting swiftly to rebalance the dynamics of power in its favour and also strengthen its support with Iran, which is set to emerge as a stronger regional power post United States withdrawal.

US withdrawal from Afghanistan was long anticipated and was in process. However, the complete collapse of the Afghan Government has invited doubts, whether there are gaps in the capabilities of United States to continue as Super Power. US withdrawal from Afghanistan has given a way to Iran and China to extend the area of influence in the region and have also highlighted the fact that sustained cost of the war, may eventually be the deciding factor, weighing over the Geopolitical factors. US has lost trillions of dollars in Afghanistan war. The cost becomes imperative, as Biden’s Government is struggling for the Infrastructure spending, back at home.

If Iran joins the Shanghai Cooperation Organization (SCO), will it give more bargaining power to Iran on issues of nuclear deal and economic sanctions, this remains to be seen. Will Iran gain substantially from multilateral partnerships with the SCO countries, will be answered in long term. However, it may be a more significant for China, for widening her influence and portraying influence as a major military and economic power. China’s Belt and Road Initiative and proposed digital currency may gain significantly from this move. China is set to launch its Sovereign Digital currency by next year. An early mover advantage and widening umbrella of influence over number of countries, will enable it to push its digitized currency. Trading in Chinese digital currency by number of countries, will throw a bigger challenge to dollar as a World Reserve Currency, which it could not achieve through internationalization of Yuan.   

Bureau Galactik Views

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