Vali Kaleji

SCO Energy Club: New Energy Silk Road

Date of publication : March 11, 2016 23:13 pm
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As Shanghai Cooperation Organization (SCO) experienced a major dynamism in political, security and economic fields, the idea of establishing an "Energy Club" aimed at coordinating the policies of supply and demand, ensuring energy supply security, enhancing economic cooperation among member countries and adapting with new developments in the global economy was ratified in 2006 during the summit meeting in Astana, Kazakhstan. But unfortunately SCO members couldn't utilize of this great potential capacity up to present time. In this lecture, I would like to discuss about the most important opportunities and challenges facing SCO in realizing the idea of the establishment of an Energy Club and its role in the New Energy Silk Road.
Regional countries have suffered from bitter and costly outcomes of exclusive approaches and the zero-sum game during two past decades. Pursuit of the policy in Central Asia, Caspian Sea and Caucasus which seeks to exclude Armenia, Russia, Iran and even China from the regional energy market, especially from Baku-Tbilisi-Ceyhan, Nabucco pipeline projects, Trans- Caspian and Trans- Afghan (TAPI) has prevented this valuable capacity to be properly taken advantage of.
In fact, such an approach has had no other consequences but it imposed heavy costs on regional countries while preventing all-out economic development of those countries and emergence of constructive regional cooperation. Therefore, regional countries including SCO members couldn't utilize great potential capacity in energy sector.  
Therefore, the implementation of plans such as the Greater Central Asia and the New Silk Road by the United States which pursues geopolitical and economic integration of Central Asia, Afghanistan and South Asia without the presence of three surrounding powers – Russia , China and Iran is the continuation of the same old path and the same zero-sum game. For example , how could prevent Iran­, with deep historical and cultural links with Afghanistan ,­and its constructing role in shaping the new national government in that country after the collapse of Taliban , from entering the geo-economics realm of this country , and expect stability and economic development for this country ? Shouldn’t we consider TAPI pipeline in continuation of Peace pipeline and don’t construct one of them at the expense of the other?
The main question is that could be any hope in future realization of cooperative security without any change in this policy? A zero-sum game does not have meaning in the world anymore. So, there is a serious need to understand this reality, and we have to encourage others to understand this reality, that in the field of foreign policy and economic cooperation including energy sector, a positive-sum game and a win-win game is in everyone’s interests.
The international environment around the region compounds the intra-regional scene. Central Asia has gained importance through its strategic location and its energy resources. The region’s strategic location between Russia, China and Iran and connecting Asia to Europe, as well as its oil and gas resources and its’ position as the main route for the westward export of Caspian energy resources, have gradually led to an increased geopolitical attention to it.  
In these circumstances, several questions should be answered. How the existing confrontational approaches taken by the great powers in Central Asia region can be replaced with an interactive approach at international level? What issue can serve as the axis of such interactive approach?
It is evident that it would be unrealistic to expect full cooperation and interaction among the Russian Federation, the United States, China and the European Union, or among the regional powers like Iran and Turkey, which pursue different and, at times, conflicting goals and interests in the various political and security areas. Therefore, it seems that in view of the realities in the region, energy is the sole field which can serve as the main axis of cooperation and interaction among all regional and international players that are present in Central Asia. The question, however, is in what way and based on what capacities and potentials such an interaction could be realized? A second factor is the overlap among the interests of various political players with regard to energy resources in the Caspian region and Central Asia. On the whole, countries with interests in energy geopolitics of these regions can be divided into two following categories:
First,­ energy-producing countries, which include Russia, Kazakhstan, Uzbekistan and Iran.
Second, energy- consuming countries, which include China, Tajikistan, Kyrgyzstan, India, Pakistan and Mongolia as well as western countries. 
Since energy serves as the common denominator among all regional countries, including those producing and consuming energy, it can play the same role in promoting future regional cooperation and convergence that coal and steel played in the 1950s in Europe.
In the past several years, various countries- such as China, United States and Turkey- have attempted to revive the historical Silk Road according to their own goals and interests. In this regard, SCO’s proactive energy policy would play an important role in ensuring sustainable growth of the organization’s member states and would also become a positive factor in regional integration. SCO members' cooperation in the framework of SCO Energy Club can revive old interactions in the Silk Road and lead to new trends that can be titled "New Energy Silk Road". Therefore considering the past experiences and current circumstances, today we need to launch practical work of the SCO Energy Club. It would create additional opportunities for implementing promising energy projects between the SCO member states, observers and dialogue partners.
As an observer state since 2005, Iran's ties with the Shanghai Cooperation Organization (SCO) have been at the highest level. At the July 2015 SCO summit in Ufa, members invited India and Pakistan to begin the formal membership accession process. Although, that summit saw no final decision about Iran ‘s full membership in the SCO, a Compromise Formula devised between Iran, Russia and China so that the subject could remain in the agenda. Today, after the successful negotiations between Iran and the P5+1 has led to beginning of the process of lifting the sanctions; the path has been paved for changing Iran’s membership status.
Two points are worth mentioning in this regard. First, the Iranian nuclear deal showed that win- win game is practically possible if all parties give up the zero-sum game. This great experience could help SCO members to left behind the zero-sum game. And second, if lifting the anti-Iran sanction could be accompanied by changing Iran’s membership status in the SCO, a new potential could be emerged in SCO energy sphere.
As a regional power that serves a vital bridge connecting the landlocked Central Asian states to the open sea, Iran's SCO connection serves both its national se On the economic front, Iran is planning to strengthen its presence at the SCO Business Council and to stimulate SCO member states' interest in trade and investment opportunities in Iran, especially in the energy sector, which is why Tehran has endorsed Moscow's pitch for an SCO energy committee. Security interests as well as the mutual interests of SCO member states. As a new member, Iran will play a constructive and active role in the region.

Vali Kaleji, an expert at Center for Strategic Research, is the senior fellow at The IRAS Institute.

This Article first appeared at the 5th international conference "Caspian Paradigm / SCO Energy Forum" in the city of Aktau, Kazakhstan, under the auspices of the SCO Business Council.
ID: 1122
Author : Vali Kaleji