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EghtesadOnline: Iran’s accession to the Shanghai Cooperation Organization is a watershed event for diplomacy, which can also open up new frontiers for the country’s economy.

Mohammad Lahouti, the head of Iran Export Confederation, made the statement in a write-up for the Persian economic daily Donya-e-Eqtesad. The translation of the full text follows:

With the decisive vote of member states, the Shanghai Cooperation Organization accepted Iran as its ninth member.

Since 2001, this Russian/Chinese-led bloc has played a significant role in the world economy.  

In 2003, SCO set trade development among its members as the main goal, and in 2004, it placed the improvement of regional cooperation for the exchange of energy carriers on its agenda. 

The establishment of a coordinating council for trade in 2006 spurred the growth of SCO and member states have sustained their cooperation by setting specific goals year after year.

Iran is now a member of an organization that accounts for one-third of the Earth’s land surface and 42% of the world population. Close to 25% of the global GDP are being generated by SCO members. 

Besides their economic influence, the membership of four nuclear powers namely Russia, China, India and Pakistan, provides a political clout to the organization.

Iran has been eying the full membership of SCO since 2005. Over the years, the reservation of some countries, coupled with sanctions imposed by the United Nations Security Council, was the main barrier in the way of Iran’s accession to SCO. But after the new Iranian government took office this year, the country was officially admitted as a permanent member. 

A good opportunity has been provided for the country to shift its economic approach to development of foreign trade (both export and import) with these countries and boost its economic cooperation with the members of Shanghai Pact. In doing so, the country will contribute to the 25% global GDP and increase its economic profile. 



Unparalleled Capacities

Iran has unparalleled capacities through which cooperation with SCO members can be facilitated. The country is practically located on corridors linking north to south and west to east; Iran remains the most important corridor to cross West Asia, though many countries tried to somehow replace it over these years.

According to official statistics, the country possesses one of the largest oil and gas reserves in the world, which is needed by China and India, two key members of SCO. 

On the other hand, the Iran-China 25-Year Cooperation Agreement, signed in May this year, could complement the win-win relationship through this economic pact. 

Not being a member of World Trade Organization, Iran’s accession to SCO takes on added significance. But it must be noted that a number of requirements must be met to enjoy trade capacities offered by this economic organization, including the removal of sanctions and resolving uncertainties regarding the Financial Action Task Force. 

Sound policymaking at the domestic level must be pursued as well: export-oriented production and improving the competitiveness of manufacturing enterprises must be a priority. Factories need to undergo specialized, updated training. In addition, transportation infrastructures must be developed to facilitate the mobility of goods. 

Export to SCO states requires a change in the packaging and quality of products as well; standards need to be improved to match those of target markets. If not, the accession to SCO or other international organizations per se won’t guarantee the actualization of mutual economic capacities, though it could be a major political privilege. 

Precise planning and policymaking are preconditions for promoting trade. After all, it is important for SCO members to have close relations and mutual projects with stable regional countries that possess rich natural resources and serve as the bridge connecting East Asia to West Asia and north to south. The two sides need to design a win-win relationship in economic cooperation. 

Hopefully, a detailed plan would create a competitive environment for acquiring technical know-how and technology. 

By securing the full membership of SCO, Iran will access large markets of its member states and establish positive economic interactions in various fields, including trade, transit and energy. 

Given the engagement of Iran with the Eurasian Economic Union as an observer member, the country’s accession to SCO would supplement this trend of tapping into the region’s economic capacities. 


VISTA Global Interaction