Iran’s trade with the Shanghai Cooperation Organization member states stood at 28.22 million tons worth $18.09 billion during the current fiscal year’s first seven months (March 21-Oct. 22), according to the latest statistics announced by the Islamic Republic of Iran Customs Administration.
China with 18.82 million tons worth $13.8 billion, India with 4.21 million tons worth $1.78 billion and Russia with 2.46 million tons worth $1.17 billion were Iran’s top trade partners in the bloc.
Exports to the eight SCO member states hit 23.41 million tons worth $10.1 billion.
With 16.89 million tons of imports worth $7.69 billion, China led the pack and was followed by India with 3.54 million tons worth $999.86 million and Pakistan with 1.59 million tons worth $655.15 million.
Imports stood at 4.8 million tons worth $8.03 billion.
China also topped the list of exporters to Iran among SCO members with 1.93 million tons worth $6.11 billion. It was followed by Russia with 1.86 million tons worth $852.82 million and India with 672,776 tons worth $783.68 million.
Iran’s trade with SCO hit 47.93 million tons worth $25.63 billion in the fiscal 2020-21 (ended March 20, 2021).
Exports to SCO members stood at 38.88 million tons worth $12.26 billion during the period.
The top three export destinations were China with 26.96 million tons worth $8.08 billion, India with 7.6 million tons worth $1.28 billion and Pakistan with 2.55 million tons worth $1 billion during the period under review.
Imports from SCO member states hit 9.05 million tons worth $13.37 billion in the last fiscal year.
The imports mainly came from China with 3.56 million tons worth $9.84 billion, India with 2.21 million tons worth $2.14 billion and 2.93 million worth $1.07 billion during the period.
Shanghai Cooperation Organization’s member states are China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan, India and Pakistan.
SCO Accounts for One-Third of Iran’s Foreign Trade
Iran traded a total of 98.7 million tons of non-oil goods worth $54.8 billion with other countries during the seven months under review to register an increase of 16.5% in weight and 43% in value compared with the corresponding period of last year.
This means SCO accounted for around one-third of Iran’s trade with the world.
According to Mehdi Mirashrafi, the head of the Islamic Republic of Iran Customs Administration, total exports stood at 75.2 million tons worth $27.1 billion, which shows year-on-year growth rates of 15% and 47% in weight and value respectively.
“Iran’s imports hit 23.5 million tons worth $27.7 billion, registering an increase of 21% in weight and 38% in value compared with last year’s same period. Essential goods, machinery, industrial parts, raw materials and intermediate goods accounted for the lion’s share of imports,” he was quoted as saying by the news portal of IRICA.
Also known as necessity goods, essential goods are products consumers will buy, regardless of changes in income levels.
Top exports mainly included natural gas, methanol, polyethylene, semi-finished steel products, liquefied polyethylene, steel ingots, rebar, urea, copper cathode and bitumen.
“Essential goods accounted for 16.6 million tons worth $11 billion of total imports, which indicate an increase of 71% in weight and 40% in value YOY. Subsidized foreign currency at a rate of 42,000 rials per US dollar were allocated to import 14.4 million tons of essential goods worth $8.8 billion, registering a 61% rise in weight and 32% increase in value YOY,” the IRICA chief said.
Cellphones, animal corn, wheat, soybeans, sunflower oil, soymeal, barley, rice, sugar and palm oil were the main imports during the period.
Iran’s Accession Process Begins
In an SCO summit held in Dushanbe, Tajikistan, last month, Chinese President Xi Jinping announced the commencement of procedures to grant Iran full membership in SCO.
Iran will join the process of becoming a full-fledged member of SCO at the next summit in September 2022, a Russian envoy to the eight-nation bloc said recently.
"We expect a memorandum to be signed in Samarkand, Uzbekistan, in September 2022. This means Iran will begin the concrete process of accession," Bakhtiyer Khakimov told reporters on the sidelines of an SCO national coordinators' meeting in Tashkent.
Uzbekistan, which holds the rotating SCO presidency, has shared a draft memorandum listing conditions for Iran's accession with other members. Khakimov said every aspiring member state has a tailored list of criteria to meet, Sputnik International reported.
“Iran’s accession to the Shanghai Cooperation Organization is a watershed event for diplomacy which can open up new frontiers for the country’s economy as well,” says Mohammad Lahouti, the head of Iran Export Confederation.
“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 … A good opportunity has been provided for the country to shift its economic approach to focus on the 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 be bound to contribute to the 25% GDP of the world and increase its role on the economic front,” he was quoted as saying by Donya-e-Eqtesad.
“Iran has unparalleled capacities through which cooperation with SCO members can be facilitated. The country is located on north-south and west-east corridors’ routes; Iran remains the most important corridor to cross West Asian region, though many countries tried to somehow replace it over these years.”
According to statistics, the country has one of the largest oil and gas reserves in the world needed by China and India, two key members of SCO.
Iran’s ascension to full SCO membership was widely considered inevitable, following the comprehensive strategic partnership agreement Iran signed with China in March and a similar agreement Iran subsequently signed with Russia.
As unsurprising as it is, Iran’s full membership in SCO is significant. With the admission of Iran, SCO now has all the relevant players to address regional issues ranging from security and connectivity to economic development, reads an article published by The Diplomat.
According to the Washington, D.C.-based think tank Jamestown Foundation, although SCO is mainly security and politically focused, membership in the organization is also supposed to have an economic dimension, although this has been hampered in recent years largely by Moscow.
Still, participation in SCO has proven important for its members in developing bilateral trade and financial relations with one another and China in particular.
The Chinese president’s visit to Iran in 2016 kick-started the process of developing a comprehensive strategic partnership between Tehran and Beijing, and previous political barriers to that process have apparently now been removed.
This past spring, the two sides signed a 25-year cooperation agreement that pledges Chinese investments of $400–600 billion. Some observers argue that permanent membership in SCO will greatly facilitate this growth of political and economic relations between the two countries as well as between Iran and the other members, reducing the bite of Western sanctions against Tehran. The bloc already registered $330 billion in trade among the member states in 2017.
Tehran’s SCO membership will undermine Washington’s ability to isolate the Islamic Republic diplomatically and geopolitically. Sanctioned heavily by the US, Iran has moved east geoeconomically and sees its future in a Chinese- and Russian-led order in Asia, wrote Inside Arabia.
According to Hamidreza Azizi, a visiting fellow at the German Institute for International and Security Affairs, Iran’s SCO membership means Tehran has entered into a “concert of non-Western great powers”, which will give Tehran new forms of leverage vis-à-vis the West. This will come with important ramifications for the stalled JCPOA talks, as Tehran is now probably less likely to sway on demands and concessions at the negotiating table.
Mohsen Jalalpour, former president of Iran Chamber of Commerce, Industries, Mines and Agriculture, is more skeptical.
“Is accession to the SCO a real historic event? I personally believe it is; such developments are very important for Iran’s economy; they shouldn’t be regarded in passing. Yet, what is central is whether the country will be able to tap into such opportunities or not. Therefore, the event per se is significant but we probably won’t achieve the favorable outcome of it all,” he wrote for Donya-e-Eqtesad.
“Where does my pessimism come from? The fact of the matter is that in the past years we did not forge any economic relation with any, I repeat again, any country. Our relations, even with our neighbors were based on security and political issues. I urge you to think twice if you believe I’m wrong. In relation with what country, did economic issues come first?”
