SCO East’s Shield in Face of US Trade War

In addition to the presidents of China and Russia, Iran’s President Hasan Rouhani also joined the gathering of the regional bloc.

While the trade war between the US and China is tightening and the tensions in West Asia are escalating, the question is that how this regional bloc will play its role to influence the regional and global equations, especially that Iran, under increasing US sanctions, is giving the economic alliance a special focus. One debate case at Bishkek meeting is the Iranian membership.

Shanghai Cooperation Organization

Shanghai Cooperation Organization was founded in 2001 by China, Russia, Kazakhstan, Tajikistan, and Uzbekistan. With membership of India and Pakistan in 2017, the SCO now has eight members. The observer states are Iran, Mongolia, Afghanistan, and Belarus. Iran was among the first to become an observer state, following Mongolia, and placed a membership application. The organization’s total states account for one-fourths of the solid surface of the earth and 40 percent of global population. These make it the biggest regional organization.

SCO security cooperation

China and Russia are the two regional powers and permanent members of the United Nations Security Council. The US deems close relations of the two the biggest threat to its hegemony. The SCO, first founded to reduce the number of the military forces on the shared borders of the member states, after two decades has brought China and Russia into a close relationship. They now call their bonds “strategic.”

The security partnership of Moscow and Beijing automatically spread to cover other member states, something led to what the analysts call “soft balance of power” with Washington. The 2004 statement of the SCO on the necessity of the US to move out of Central Asia is a proof to this balance. In 2005, Peace Mission military drills marked the biggest joint military practices of a regional bloc. It was in this year that the US quitted its military base, Khanabad, in Uzbekistan.

When in 2017 Trump administration in its national security document deemed China and Russia two sources of threat to the US, the two powers engaged in even broader cooperation. Only in this year, China bought from Russia $13 billion worth of strategic arms including the S-400 air defense systems as well as Su-35 fighter jets. The two held joint war games, dubbed Vostok 2018, the biggest drills in the past 37 years.

The cooperation of the two heavyweights has led to fight against terrorism out of the sphere of influence and description of the US. By 2018, 13 joint anti-terror training drills were held among SCO members.

SCO in trade war

The SCO members are the world’s top energy consumers and producers. They also account for one-thirds of the world’s GDP. Up to 2011, the gold and hard currency reserves of the six members were told to be $3.6 trillion. Their trade in the same year touched $5 trillion, showing 25.1 percent increase compared to the year before. In 2016, the members published a roadmap to continue trade boost. The roadmap included 38 projects for partnership in seven areas of trade and investment, finance, agriculture, science and technology, information technology, environment protection, and transportation infrastructure improvement. This policy in 2017, while the trade war with the US war unfolding, led to China increasing its trade with SCO members to 217.6 billion, up 19 percent in comparison to the previous year.

Following India’s membership in the organization, the Chinese-Indian commercial exchange hit $84.4 billion, showing 20.3 percent growth. China’s investment in India reached $8 billion, making Beijing the biggest trade partner to New Delhi.

In late 2017, Russia’s ambassador to China said that his country’s trade volume with Beijing grew 27 percent in 2018 to reach $97.2 billion. They predict it to hit $200 billion by the end of 2019.

Having in mind that the US-China trade is $500 billion and Trump increased tariffs on $200 billion of the Chinese products imported to the US, their trade practically is cut to $300 billion. So, SCO states are nearly equal to the US in the volume of trade with China. Cheaper transportation can even make SCO market more attractive to Beijing.

Iran and SCO

Fighting terrorism, drugs smuggling, and separatism are the key goals of the SCO. Iran’s successful experience in dealing with the three challenges and its closeness to the crisis zones make it one of the most favorable choices for SCO’s fight against terrorism. Vladimir Norov, the secretary-general of the SCO, in a press conference in Beijing said that it is possible to effectively respond to the challenges to the stability and security. This opens the door, he continued, to economic and humanitarian cooperation. The SCO, he added, shares approaches with Iran in many areas.

Iran is home to 10 percent of global oil reserves, as it holds 17 percent of the world’s gas reserves. It is located in a geo-economic area that links Central Asia to the Persian Gulf. Additionally, Tehran is opposed to the American toehold in Central Asia, something in line with SCO policy. This promotes the significance of Iran partnership in economic and security aspects.

The SCO summit coincides with the fifth Conference on Interaction and Confidence-Building Measures in Asia (CICA) in the Tajik capital Dushanbe. The coincidence gives Iran a big chance to promote its “look to the East” doctrine and thwart the American measures to isolate Tehran on the international stage.