Why Iran Is Relying Ever More On Russia And China
Iran can expect few real economic benefits from joining the China-dominated SCO, but its leaders hope China and Russia will help the regime tighten its grip at home.
After trying for years, the Islamic Republic of Iran finally joined the Shanghai Cooperation Organisation (SCO), the Asian security partnership founded in 2001 and based in Beijing. The Islamic Republic's first stab at joining this gathering was in the second half of 2008, when the populist President Mahmoud Ahmadinejad attended a summit of SCO leaders. He returned after his contested reelection in 2009.
The organization first emerged in 1996 as the Shanghai 5, consisting of China, Russia, Kazakhstan, Tajikistan and Kyrgyzstan, then expanding to include Uzbekistan, India and Pakistan. Its stated goals include political, economic and security cooperation between members and promoting peace and security with other regional states. Some observers saw it as a reaction to the fall of the Soviet Union and bid to block the spread of "velvet" revolutions and NATO influence in an area that was broadly part of the communist eastern bloc.
Analysts believe Iran could not have joined on July 4 without a green light from the Russian President Vladimir Putin. The secretary of the Iranian government's Information Council (Shura-ye ettelarasani), Ihsan Salehi, recently cited the Iranian president's own role, saying "without Ibrahim Raisi, they would not have made Iran a member."
Raisi, head of the 13th administration since the 1979 revolution, told an online summit of the SCO on July 4 that the benefits of joining the group would "go down in history."
These, he said, will include greater economic convergence, security benefits and an end to the "rule of the dollar." But the organization may fail to meet the Iranian regime's grandiose hopes of military, strategic or security backing. Likewise, how far are its chief powers willing to become involved with a sanctions-ridden economy like Iran's?
Milking Iran for all it's worth
The group's three main powers, China, India and Russia, have so far pursued strictly interested policies toward Iran. With Iran under sanctions, they have bought its oil below regional prices and sought to pay in goods, not cash. In fact Western sanctions have become a business opportunity for actors in some of these states, like the UCO Bank in India.
According to the Iranian business daily Donya-ye eqtesad, it has, most profitably, been handling the purchase of Iranian crude and managing billions of dollars of blocked Iranian funds, and is now facilitating rupee-based trade with Russia. China is also importing Iranian iron ore and paying in goods, or offering to pay later.
It is an opportunity for old-style bartering.
In 2018, Aliakbar Velayati, an adviser to the Iranian supreme leader and one of the articulators of the regime's Look East policy, visited Moscow and returned claiming the Russians had promised to invest $50 billion in Iran's oil and gas sectors. The Russian side never confirmed his claims, although Russia's energy minister has clarified that Russia would only barter Iranian oil for Russian goods. In late May 2023, a deputy-head of the Iranian central bank again boasted that Iran and Russia were breaking Western sanctions with plans for a Russian bank, VTB, to open a branch in Tehran. That too was denied a few days later.
Iran's entry into the SCO is indeed a golden opportunity — for big Eastern powers to offload goods and products in exchange for crude oil. It is an opportunity for old-style bartering, and Iran can barely refuse, when it has refused to join the international pact against money-laundering. For Iranians it will mean, at best, the ability to buy overpriced and low-quality Chinese cars, or low-grade Indian rice. Joining the SCO will not change this dynamic.
After trying for years, the Islamic Republic of Iran finally joined on July 4 the Shanghai Cooperation Organisation (SCO), the Asian security partnership founded in 2001 and based in Beijing.
Help yourself to our wealth
Perhaps the most obvious benefit the Iranian regime expects is the security backing it hopes to receive from Russia and China. In exchange for letting their firms help themselves to Iranian natural resources, through public or very private deals, China and Russia would bolster the regime not just against the West but against Iran's own, restive and hostile population. The regime's military chiefs are viewing SCO as a kind of eastern NATO that will boost the Islamic Republic's defenses.
Its defense minister, Muhammad Reza Ashtiani, has written about the accrued importance of joining SCO in the context of Western hostility, ignoring the fact that SCO is not a NATO-style alliance. Thus Iran could not expect a level of collaboration, aid or armaments like those NATO gives its members or Western allies like Israel and Ukraine.
Iranian Revolutionary guards chiefs have evidently concluded that a new order is afoot under the aegis of communist China, and the West is already in decline. This new order, as several of them have claimed, will lead the Shia regime to its "final victory" over Western "arrogance."
Yet as Iran observers might point out, when these shady friends were loath to aid Iran's economy in the toughest of times, so why would they boost its armies? China's biggest trading partners remain for now, the United States and the EU. Tensions over Taiwan are being managed, and the sides have sought to keep it that way, for trade and prosperity's sake.
At the very last, Iran hopes to get more of the stuff it needs to control and suppress its population. As an anonymous military source in Tehran told this paper last March, Russia and China have sent Iran "jamming" equipment, to block communications, while the Wall Street Journal has also reported on similar transfers.
Tehran has certainly found its friends and a fitting home in the international community — in a group of ruthless regimes.
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