As U.S.-Iran frictions show no sign of easing, Tehran is forced to change its direction and look eastwards. Tilting towards China, ties were recently upgraded to the level of a “comprehensive strategic partnership” at a meeting between Chinese President Xi Jinping and his Iranian counterpart Hassan Rouhani.
By continuing energy trade with Iran even after the second phase of U.S. sanctions sunk in, China has already been a big support. Because Iran lacks access to the U.S.-led global financial system, being able to trade in local currencies like the Chinese yuan ensures Iran’s survival.
When Xi and Rouhani met on the sidelines of a Shanghai Cooperation Organization (SCO) summit earlier this month, Xi affirmed that Beijing would maintain steady relations with Tehran no matter how the international situation changes. This does, however, not mean that Iran will become a full SCO member anytime soon.
Iran and Shanghai Cooperation Organization
Often likened to NATO, the SCO is a Eurasian economic and security alliance formed in 1996. It comprises of China, Russia, India, Pakistan and the four Central Asian states of Uzbekistan, Tajikistan, Kazakhstan, and Kyrgyzstan. Iran is an observer since 2005, but it is waiting to become a full member ever since it tendered its formal application in 2008.
Mostly dependent on the approval of the founding members Russia and China, even though SCO decisions require consensus, Iran’s membership remains pending. Considering the upbeat mood at the summit, there could not have been a better time to accept a new member.
Ostensibly, while Russia has no specific reason to object, China has grounds to keep the SCO membership inconclusive. Having Iran as a full member carries certain implications, and Beijing is not ready to face this ensuing scenario.
Iran’s Sanctions
For starters, the hurdle of sanctions on Iran prevented its accession to the forum when it applied in 2008. Being under U.N. sanctions then, Tehran’s application was not considered seriously and it remained stuck as the organization stated that no country facing U.N. sanctions could join.
After the nuclear deal with Iran was struck in 2015 and sanctions ended, the country’s accession became a hot topic though the actual progress remained slow. Now, in 2019, the sanctions are back completely as the nuclear deal got derailed. Iran’s SCO membership is out of the question even with the current sanctions being imposed by the U.S. instead of U.N.
Even though Beijing has not discontinued its oil imports from Tehran, it would not ignore the U.S. sanctions on Iran, especially during its ongoing trade war with Washington. Accepting Iran into the SCO at this point would symbolically pitch China in direct opposition to the West and further complicate its worsening relations with the United States.
Furthermore, China is committed to the continued, full, and effective implementation of the Iran nuclear deal and cannot afford to bring Tehran onto a new platform before negotiations get the nuclear deal back on track.
China’s Stakes in Middle East
Second, China depends on the Middle Eastern oil industry for its energy security, and it has invested lavishly in infrastructure and construction projects across the Gulf. Becoming the largest investor and trade partner of the Gulf Cooperation Council, China has too much at stake in the region.
With Saudi Arabia and the United Arab Emirates as its largest trading partners in the region, China dreads being caught up in their rivalry with Iran. As the bitterness between the two sides is only getting worse, China cannot afford to show much partiality for Iran.
Predictably, if Iran gets its membership, the Gulf states would also wish to be a permanent part of the forum. Up till now, neither Saudi Arabia nor UAE has been accorded observer or even dialogue-partner status.
Expecting to be asked to pick sides at some point, China offered to mediate between Iran and Saudi Arabia in 2017. Any endorsement of Iran’s membership of the SCO can spoil Beijing’s rapport with Saudi Arabia which also has strong defense ties with Washington. This could have repercussions for China’s mega project, the Belt and Road Initiative, as both Saudi Arabia and Iran are essential nodes in the network.
Rivals in SCO
Third, the SCO accepted the membership of the South Asian rivals India and Pakistan only in 2018. Dealing with the erratic ties between Islamabad and New Delhi has not been easy, and confidence is being gained only gradually with joint counter-terrorism exercises and military conferences under the SCO umbrella.
If Iran were to join the SCO, Saudi Arabia would also push for membership. However, one more pair of rivals could permanently endanger the ideological harmony, stability, and efficacy of the SCO. In the long run, continuing discord can distract attention from the objectives of the SCO and prevent it from becoming an important global forum.
Iran’s Membership of SCO
Iran’s immediate membership of the SCO is not possible. Not only would it jeopardize Beijing’s Middle East policy, it can harm the stability and long-term outlook of the organization. China may want to wait for a better time when U.S. sanctions end and Saudi-Iran ties are back on a positive track.
Employing delay tactics in the SCO matter, Beijing would carry on trade with Iran as it is an important part of the Belt and Road Initiative as well as an energy provider. Even though China-Iran ties are on an upward trajectory and Xi has signified his support to Iran at the SCO, it was not a joint, official declaration.
Stopping short of formalizing Iran as an SCO member, it is likely that China will deal with the matter pleasantly and diplomatically.