On July 4, Iran officially joined the Shanghai Cooperation Organization (SCO) at the virtual 23rd SCO Summit. The SCO, a major organization in Eurasia, comprises four out of five Central Asian countries as permanent members, with Turkmenistan being the exception. As Iran interlaces itself within the fabric of Central Asian affairs, its inclusion within the SCO aims to fortify cooperation within the region. However, this move could have inadvertent repercussions, diluting the efficiency of decision-making processes by posing new security concerns and introducing the complexities of the Western-sanctioned measures imposed on Iran.

Acting as a crucial communication platform for regional issues, the SCO plays a critical role in Central Asian politics. During the summit, the member states collectively acknowledged Central Asia's status as the "key region" of the SCO, necessitating collective support to ensure regional peace and prosperity.

This SCO summit, hosted by India, yielded several positive outcomes, with the signing of 14 documents in different fields, including the New Delhi Declaration of the Council of Heads of the State, agreements on combating terrorism, and the advancement of digitalization. The main focus of the summit was to emphasize the core values of the organization to foster mutually beneficial cooperation on security, economy, and trade and outline a roadmap for the future development of the organization. The conclusion of the Summit marked the official completion of the Indian SCO chairmanship, with Kazakhstan following as the next SCO leader country until July 2024. 

Notably, this SCO Summit officially welcomed Iran as the ninth permanent member of the organization. Iran acquired an observer-country status in 2005 and applied for full membership in 2008. The application was finally approved during the 21st Summit of the SCO Heads of State in Tajikistan in September 2021 following the resolution of the political obstacles. The summit also discussed further expansion of the SCO with a plan to accept Belarus as a permanent member next year. 

Source: Ministry of Trade and Integration of the Republic of Kazakhstan 

Kazakhstan, succeeding in the chairmanship of the SCO from India after the summit in July, will take responsibility for promoting the partnerships among the SCO countries. Prior to the SCO Summit and assuming the rotating presidency term, Kazakhstan hosted a Kazakh-Iran business forum in Astana on June 27, with the participation of over 100 companies from both nations. Following the forum, Deputy Agriculture Minister of Iran Alizera Peyman-Pak and Deputy Prime Minister and Minister of Trade and Integration of Kazakhstan Serik Zhumangarin held a meeting to foster bilateral cooperation. During the meeting, the leaders signed projects worth $1 billion, primarily in the agricultural sector, and discussed further expansion of their bilateral trade to $3 billion.

The signing of the Declaration at the Summit marks a promising future for the development of the SCO. It can contribute to regional security and the resolution of geopolitical conflicts. By fostering a peaceful and stable environment, the SCO is also expected to create more opportunities and boost the regional economy. 

However, the accession of Iran to the SCO, along with regional superpowers like Russia and China, has raised security concerns among Western countries. SCO has received multiple criticisms from the West, labeling the organization as a “Rogue NATO” and a potential threat. The speech of Iran President Ebrahim Raisi after his country’s official inclusion into the SCO demonstrated his commitment and ambition to counterbalance Western dominance: “…along with militarism, what forms the basis of the Western domination system has been the dominance of the dollar and, therefore, any attempt to shape a fair international system requires the removal of this instrument of dominance in intra-regional relations.'.

Iran’s intentions to utilize the SCO as a political tool to diminish the dominance of U.S. dollars and mitigate the effects of the U..S. sanctions have become clear. Chinese leader Xi Jinping and Russian President Vladimir Putin expressed a similar interest in promoting local currencies to offset the influence of U.S. dollars. President Putin also made it clear that he is ready to combat Western sanctions because of his war on Ukraine, identifying SCO member states like China, India, and Iran as its key allies in confronting the West. Those assertive comments made during the summit pose a significant concern to the West.

Iran’s inclusion in the SCO can facilitate closer cooperation with Russia and China and strengthen military and economic ties among the three countries. The influence of the cooperation among Russia, China, and Iran might also extend to the Central Asian region. Central Asian close partnership with three “rivals” of the West might diminish the West’s economic interests in the region. Although Central Asia’s proximity to its strong neighbors is evident due to the geopolitical landscape, the addition of Iran might further exacerbate the imbalance of the political position and hinder the multi-vector foreign policy that the Central Asian countries aim to achieve.

While the SCO can undoubtedly bring profound economic opportunities, Central Asia's strengthened relations with Iran, coupled with an ambiguous stance on the Ukraine war and close ties with Russia, might make it a prime target for Western sanctions. Such political risks might intensify the existing European Union’s 11th package of sanctions against Russia, which also targeted Central Asian countries, leading to significant economic loss to the region. 

Nevertheless, Central Asia’s membership in the organization with the three adversaries of the West might not necessarily lead to its complete abandonment by the rest of the world. The recent visit of the Indian Prime Minister to the Unioted States, with the signing of important bilateral agreements on defense and technology, demonstrated the continued Western interests regardless of its permanent membership in the SCO and close ties with Iran. The increasing FDI inflows to Central Asia in 2023 also represent growing global attention in the region and a promising future for the region’s multi-vector foreign policy. 

The SCO creates both economic opportunities and political risks for the region. To maximize the benefits and mitigate the challenges, Central Asian nations should adopt a proactive approach to balance regional powers and ensure a multilateral foreign policy. Central Asian countries should promote regional cooperation, mutual understanding, and collective values to protect their own regional agenda and influence decision-making processes within the SCO.