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Troubled Iran Bets on SCO

Economic ties with Iran, Central Asia a focus of Shanghai group meeting

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China hosted a meeting of the Shanghai Cooperation Organization (SCO) last weekend focusing on expanding economic ties with Iran and Central Asia. Iranian President Hassan Rohani attended the meeting of the regional security bloc created by Russia and China in the coastal city of Qingdao on June 9 and 10. The invitation to Mr. Rouhani came at a crucial time after the U.S. withdrew from the nuclear deal signed in 2015 between Iran, the European Union and the P5+1 group (five permanent members of the UN Security Council, plus Germany), of which China is a member.

(Photo: press service of the Russian President)

Iran is currently an observer member of the organization and it is only the second time an Iranian president has attended a summit. However, Russian President Vladimir Putin held talks with Iran’s Hassan Rouhani on the sidelines of the Qingdao event and expressed support for Tehran’s desire to obtain full SCO membership.

Chinese President Xi Jinping met Rohani on the sidelines of the summit, but the nuclear deal is not on the formal agenda. The presence of the leaders of China and Russia may facilitate conversations about the recent U.S. decision to withdraw from Iran’s 2015 nuclear deal with world powers.

China’s Deputy Foreign Minister Zhang Hanhui said that Beijing hoped the Joint Comprehensive Plan of Action (JCPoA) would continue to be implemented and said China was in contact with European countries involved in the agreement, as well as with Russia. He said:

If the JCPoA cannot be further implemented, the normal economic cooperation between the relevant countries will be affected […] We hope China and Iran avoid major disruption to the cooperation projects between the two sides.

As the counterparts of Russia and Iran are becoming increasingly unpredictable, both Moscow and Tehran are looking for support from reliable partners, such as China, India and other SCO members. According to Chinese President Xi Jinping, the organization, which was originally formed to serve as an example of multi-polarity where powerful nations co-exist despite their differences, sees common security as one of its key goals:

With the number of member states increasing we are becoming stronger, and the international community pays more attention to the SCO and places hopes on it. So, we also have a growing need for security, stability and regional prosperity.

China is Iran’s top trade partner and one of the biggest buyers of its oil, and Chinese leaders have pledged to forge ahead with plans to expand business ties with Tehran despite the threat posed by a revival of U.S. sanctions later this year.

One giant Chinese corporation — ZTE — has been hit with nearly $2 bln in sanctions this year for its alleged violations of U.S. sanctions against Iran and North Korea.

Chinese officials hope the meeting will promote Beijing’s massive Belt and Road Infrastructure (BRI) project in Central and South Asia. Not only was the IMF present at this year’s SCO Summit, but it was the first time the World Bank was seated with the inner circle of SCO members. In addition, China offered to extend its “debt trap” practice by announcing an additional $4.7 bln in potential loans through the SCO Inter-bank Consortium.

The Shanghai cooperation organization originated from The Shanghai Five, which was formed in 1996 when Russia, China, Kazakhstan, Kyrgyzstan and Tajikistan signed a treaty on the security of their borders. SCO, which Beijing began in 2001 as an alternative to American-dominated diplomatic groups, includes China, Russia, India, Pakistan and the nations of Central Asia.

These nations have more people, more land and, Mr. Putin said, more economic power when output is calculated by purchasing power parity, than the Group of 7, a grouping of American allies, mostly in Europe. The G-7 countries used to dominate the world economy, but lost their edge as China and India surged and Europe and Japan stagnated.

The summit was the first after the inclusion of India and Pakistan as members of the organisation in 2017, which made the SCO a bloc whose member countries account for almost half of the world’s population. ■

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