Iran Pulse

Rouhani’s Central Asia Policies in Spotlight at SCO Summit

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Article Summary
Iran’s Central Asia policies under Iranian President Hassan Rouhani come into focus at the Shanghai Cooperation Organization (SCO) Summit in Bishkek, Kyrzygstan.

TEHRAN, Iran — With a raft of nuclear talks penciled in for the UN General Assembly (Sept. 24-Oct. 2) and a Russian plan to pluck Syrian chemical weapons from state hands, Iranian President Hassan Rouhani doubtless had plenty to discuss with Russia’s President Vladimir Putin and the Chinese Communist Party General Secretary Xi Jinping in Bishkek, the capital of Kyrgyzstan, at the Shanghai Cooperation Organization (SCO) Summit on Sept. 13-14.

But Rouhani’s two-day trip to the SCO Summit was also about meeting Central Asian’s top brass to make good on his campaign promise of pursuing a policy of “regionalism.”

With the United States pulling out of Afghanistan and an economically competent Iranian administration bent on diversifying Iran’s economy away from its sanctioned oil exports in office, Rouhani’s government is looking at its northern neighbors with a fresh pair of eyes.

Much of the new president’s regional agenda is about increasing the Islamic Republic of Iran’s economic and political power in the "Stans," its northerly neighbors that are culturally and linguistically connected to Iran, and are even known in some quarters as "Greater Khorasan," after Iran’s northeastern province.

“Iran has vast amounts of natural and human resources, and relatively it still has money,” explained a Tehran-based university professor. “It can be a major part of reconstruction of Afghanistan. Our problem is that NATO, and particularly the Americans, prohibit Iranians from entering the market.”

Iran’s powerful state sector has not got a good foothold in Afghanistan, as NATO has steered Indian and US companies into the country at the expense of those from Iran. Only a small number of private sector players from Iran work in Afghanistan. But experts in Iran are sanguine about Iran’s economic role in its eastern neighbor after the Americans leave next year.

“Afghanistan imports much oil from Iraq via Iran through the private sector, but the state is not involved because at the moment Iran can’t differentiate between Afghan demands and NATO demands,” explained the professor. “The next step will be an oil swap. Iran can use Iraqi oil in its northern and western provinces and send an equivalent amount of oil onward to Afghanistan from its refineries in the south.”

Iran is benefiting from India’s own designs in post-NATO Afghanistan. India is developing Iran’s strategically important port of Chabahar on the border of the Indian Ocean and Oman Sea as well as transport infrastructure to the Afghan border. This new channel to Central Asia will benefit Iran at the very least in transit rents. The Islamic Republic of Iran also hopes the port will strengthen the case for the so-called “North-South” corridor, which could see Indian and Chinese goods reach Europe via Iran and Russia rather than through the Red Sea and the Mediterranean Sea. Iran maintains that if Chabahar is developed, transport costs to Europe for India would be one-third.

According to a figure circulated by the American Enterprise Institute and the Institute for the Study of War, the Imam Khomeini Relief Foundation — Iran’s quasi-governmental welfare group — currently employs over 30,000 employees in Afghanistan. Though this is likely a gross overestimate, it seems clear Iran is out for "winning hearts and minds" in the country.

Afghanistan has also discovered oil reserves in its northeastern provinces, with border deposits now being jointly exploited by Iran and Turkmenistan. Iranians, as are the Americans and Russians, are hopeful to get in on the action.

Iran seeks to increase its importance as an energy corridor for Central Asia’s vast gas reserves and stymie US efforts to cut it out of the equation by implementing its so-called "New Silk Road" agenda, a series of overland energy and cargo networks linking Central and South Asia to both China and Europe. One component of this is the TAPI pipeline, which should transport Turkmen gas to Afghan, Pakistani and, finally, Indian markets.

Iran hopes to insatiate South Asian appetite for the TAPI project by pushing a simpler, cheaper Iran-Pakistan pipeline — of which the Iranian side is already complete — which will connect Iran’s underdeveloped South Pars offshore gas field to Pakistani markets. Iran has proposed that it — not Afghanistan — is a more cost-effective route for Turkmen oil to the subcontinent. The United States continues to use its political weight to prevent Pakistan from following through on any deal that will support Iran’s oil and gas export base, which Congress has committed to reduce to zero. India lost interest for the same reasons as well as discovering large offshore gas reservoirs off its eastern shore.

Access to deep, warm water ports is Iran’s biggest leverage over its landlocked Central Asian neighbors. Cotton from Uzbekistan and gas from Turkmenistan are two of the biggest Central Asian exports to transit through Iran.

Iran is developing its rail and road infrastructure to boost this kind of trade and net more in transit taxes. For example, by the end of this year, the 900 kilometer (559 mile), 5.5 million ton Uzen-Gorgan railway is due to be opened, which will connect Iran to Kazakhstan, the northernmost Central Asian state.

The Islamic Republic of Iran itself imports gas from Turkmenistan, and increased its import capacity 150% in 2010, when it opened a second pipeline and helps the landlocked state export to the outside world by “swapping” Turkmen gas (which it uses for its huge domestic consumption) with Iranian gas (which it exports on Ashgabat’s — the capital of Turkmenistan — behalf). In July, Iran and Turkmenistan announced plans to double the amount of annual trade between their countries from $5 billion to $10 billion.

Iran is building hundreds of millions worth of infrastructure projects in Farsi-speaking Tajikistan. It has a $3 billion agreement to complete the Anzab Tunnel, or “Tunnel of Death,” which will connect Iran to China via western Afghanistan and Tajikistan. Iran’s role in Tajikistan has been spurred on as the Tajik-Uzbek relationship has fallen apart over Uzbek concern over hydroelectric projects that it says will damage its cotton industry.

“Uzbek pressure has also steered Chinese and Russian companies away from Tajikistan, making Dushanbe [capital of Tajikistan] more economically dependent on Iran,” said a 2012 report by the Center for Strategic and International Studies.

The main participants for the modern version of the Great Game for Central Asia are China and Russia, but Iran has big ambitions to use its geography, industry and ancient cultural connections to the states, to become a player in its own right.

“Iran knows how to deal with these countries,” explained the university professor. “It does not want to be a superpower in the region; it wants to be an economic and political partner. That’s why it will be successful.”

Arron Merat is a journalist specializing on Iran.

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Found in: oil & gas, oil, nato, iran

Arron Reza Merat is a journalist specializing on Iran.

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