US Lashes Out Sanction At Indian Firm After Entry Of Iran In SCO : Trouble For India

The SCO summit was conducted in Uzbekistan recently. During this summit, held from 15 to 16th September in Samarkand, Iran became the latest country to acquire membership of SCO.

Shanghai Cooperation Organization has 8 permanent members which are Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, India and Pakistan. Now with the inclusion of Iran in the SCO group, it will have 9 members. Iran will participate in the SCO summit as an official number for the first time when India will be hosting the SCO summit in 2023. All the members of SCO meet every year to discuss their issues related to politics, economics and security.

NATO vs SCO is the new reality -

NATO or North Atlantic Treaty Organization is said to be the most important grouping of western nations including Europeans and Americans. Shanghai cooperation organization becomes important in this regard as it is also a very important group to counter NATO. If the group of NATO strengthens the confidence of Western Nations and US, SCO grouping bolsters the faith of developing Nations especially Southeast Asian nations. BRICS is also an important grouping besides NATO but the countries involved in BRICS are from different continents so it makes it difficult for countries to collaborate and cooperate quickly. Countries which are members of SCO are easily connected by the land and air routes due to their geographical locations. This gives the feasibility of reaching each other easily.

Extending influence of SCO-

The Shanghai Cooperation Organization was made on 15th June 2001 and it came into force on 19th September 2003. India and Pakistan became members of SCO in 2017.

SCO also grants observer status to some of the nations who aspire to participate or maybe become its permanent member in the future. However, the membership of SCO depends upon many different aspects and their mutual interests about a matter. Afghanistan, Belarus and Mongolia have been given the observer status for now. Along with it, some countries get involved as dialogue partners in the summit. SCO has 6 dialogue partners - Armenia, Azerbaijan, Nepal, Sri Lanka, Turkey and Cambodia. Special thing about the 2022 meeting was that Egypt and Saudi Arabia were also invited as the dialogue partners in the summit.

Currently SCO consists of 40% of the world's population with 20% of global GDP and also the 22% area of the world belongs to SCO member countries and this will only increase in future as more members are willing to join SCO in future.

Opportunity for Iran in SCO-

• Iran's economy is crippling to a new low every year. The growth of Iran in the past few years has been negative. It was +3.7% in 2017 and after that it didn't come out of negative growth rate as the US sanctions on repercussions of failure of JCPOA deal affected it badly.
• Being in FATF blacklist, Iran is unable to raise funds from west dominated institutions like world bank, IMF or any other such entity. So, the west and US have closed their doors for Iran. Looking at Russia and China for trade and investment is a good choice and only option for Iran.
• Iran is a Shia dominated country which can seek support from nations from its East like China and Russia. Other surrounding countries of Iran follow Sunni Islam and hence they are the allies of US and the West. So, technically, getting support from such big countries in Asia through the SCO group can give a leverage to Iran in politics too.
• Iran is also disturbed due to its nuclear programme and looming uncertainty over the JCPOA deal related to uranium enrichment. Iran has been suffering from sanctions for a long time and now it has found a way to bypass the sanctions and grow its economy again with the help of the SCO group.
• Trade between China and Iran has been increasing from the last few years as Iran is capable of supplying an adequate amount of energy to China.
• Oil from Russia contains less sulfur and is more expensive in comparison to oil from Iran, this gives Iran an edge over other suppliers in the market and SCO nations can be a good market for Iran.
• India's engagement in Chabahar port and project of Zahedan railway line which is a sign of good relationship between India and Iran. However,India stopped purchasing oil and it had hurt Iranian sentiments. India used to buy around 18 million tonnes of crude oil which stopped in 2019 after US sanctions. At a time Iran used to be the third biggest supplier of oil to India.
• With Joe Biden visiting Saudi Arabia and Putin visiting Iran during the Russia-Ukraine war is the indication that geopolitical situations are changing at a faster pace.

Does India support Iran?

India is in a tight spot in dealing with SCO countries and the US and the West at the same time. Inclining towards any block can cause trouble to India. India is currently maintaining the approach of "all alignment" in geopolitics.

Recently, the External Affairs Minister of India went to the US in late September and asked the Biden administration to allow the purchase of oil from Venezuela and Iran as the increasing prices of oil are 'breaking the back' of India.

The US has answered this by imposing punitive measures on an Indian firm Tibalaji Petrochem Pvt Ltd. The US has imposed sanctions and penalties on this firm. This is the first time that any Indian firm has received punitive measures from the US for buying oil from Iran. Previously, the US congress had approved India's purchase of S-400 from Russia and kept it out of CAATSA but now the scenario seems to be changed. So, India needs to be very careful in dealing with US and SCO countries at the same time.