Iran Doubles Down on China to Hedge Against the West

26 Oct 2021

Iran Doubles Down on China to Hedge Against the West

For Iran’s new president, the acceptance into the Shanghai Cooperation Organization is an important diplomatic achievement as Raisi tries to bolster his image as a statesman and look toward the East for economic and strategic partnerships.

By Roie Yellinek and Danny Citrinowicz

The Arab Gulf States Institute in Washington (AGSIW)

October 26, 2021


Iran is on the verge of being accepted into the Shanghai Cooperation Organization as a full member. The SCO was formed in 2001 as a political, economic, and security alliance that to some extent functions like a Eurasian NATO. The organization includes China, Russia, India, Tajikistan, Kazakhstan, Kyrgyzstan, Uzbekistan, and Pakistan. It accounts for about one-third of the world’s landmass and nearly one-quarter of global gross domestic product. The timing of Iran’s acceptance into the SCO, 15 years after it first applied, is significant as Iran faces mounting political and economic challenges. For Iran’s new president, Ebrahim Raisi, the acceptance into the SCO is an important diplomatic achievement as he tries to bolster his image as a statesman and look toward the East, specifically China, for economic and strategic partnerships.

Former Iranian President Hassan Rouhani had pushed for Iran’s inclusion in the SCO during his term, seeking to diversify Iran’s economic and strategic partners by cultivating relations with both the East and West. However, as talks with the United States over Iran’s nuclear development program have yet to lead to a new agreement, Raisi seems to be pivoting to China and Russia as a means to block a renewed United Nations sanctions regime and reduce the chances of China and Russia joining the United States and other Western countries in imposing economic or political pressure on Iran. The move also works as a hedge to signal to the international community that Iran has other ways to strengthen its economy, regardless of the outcome of the current round of nuclear talks. And that Raisi chose to travel to Dushanbe, Tajikistan for the SCO summit in September for his first trip abroad as president rather than to the U.N. General Assembly in New York highlights the new set of priorities for Iran.

China’s failure to reduce imports of Iranian oil despite U.S. pressure suggests to Iranian leaders that their approach to Asia as a whole, and specifically China, is proving to be the best way for Iran to survive financially. And, as the decision to accept Iran into the SCO was made by China, it sent a message to the United States and the international community of Chinese support for Iran amid negotiations over a return to the nuclear deal. It also seems to send a direct message to the United States and its allies in the Middle East, including Israel, the United Arab Emirates, and Saudi Arabia, that China will not support a new sanctions regime against Tehran.

This move to formally join the SCO seems to suggest Tehran is putting most of its eggs in the China basket. It has come after Iran and China signed a 25-year cooperation agreement in March and held joint military exercises along with Russia on August 23. However, the SCO admission and closer relations with China will not rescue Iran from all its economic difficulties. Western sanctions will stay in place and continue putting pressure on Iran and its economy, although Iran’s moves might ease some of the pressure. How much remains to be seen.

There are related benefits for Iran in joining the SCO. It will help to open the sputtering Iranian economy, especially to the central Asian members of the organization. Iran can also use this platform to strengthen its security posture, particularly in Asia.

The U.S. and NATO withdrawal from Afghanistan in August left an opening for more Iranian involvement in the neighborhood. Iran and Afghanistan share a long border, and alongside other countries in the region, Iran is concerned about its neighbor’s stability. Afghanistan is an observer country in the SCO rather than a full member. But the SCO, nonetheless, can be an economic vehicle for Iran to provide greater investment in and assistance to Afghanistan. Saeed Khatibzadeh, the spokesperson for Iran’s Ministry of Foreign Affairs, referred to the SCO’s decision to approve Iran’s membership as “a major step toward enhanced ties with neighbors & an important impetus for our Asia-centered foreign policy. We’ll continue our efforts to build on indigenous initiatives for the good of the region.”

The border between Iran and Afghanistan is also one of the land lines between China and Iran (the other one traverses Pakistan). In theory, Iran and China will be able to use it, subject to infrastructure construction and geopolitical stability, for an overland trade route, with transit times much shorter than for sea routes. Such a route could prove particularly useful to Iran if tensions with the United States and international community continue.

The international arena for this decade, and maybe even this century, could well be characterized by regionally focused multinational organizations such as the SCO. Another example of this phenomenon is the AUKUS, a trilateral security pact among Australia, the United Kingdom, and the United States, announced on September 15 for the Indo-Pacific region. The unofficial (but clear) mission for the AUKUS is to counter the influence of China in the region, particularly in the realms of maritime security and trade routes. As the world’s two largest economies compete with each other, with mounting distrust, other countries are seeking the benefits of multilateral alliances. Furthermore, neither of the two economic superpowers can win this struggle without the help from other countries, making these alliances mutually beneficial.