BACKGROUND: President Vladimir Putin has announced that Iran views the latest incentive package offered by the West, Russia and China positively, and will negotiate. But the Iranian nuclear program was not even officially on the agenda of the SCO summit. Instead, both Russia and China went out of their way to stroke their Iranian guest, rather than rebuking his hate-mongering rhetoric or nuclear ambitions. At the summit, Iran masterfully wooed the two Eurasian giants. It invited Russia, China, and aspiring SCO members Pakistan and India to cooperate in developing its untapped vast energy resources. Russia went along. President Putin has suggested launching an SCO “energy club”, also known as a “gas OPEC”, which would likely do for natural gas what OPEC has done for oil: control production and drive up prices. Russia and Iran have the largest reserves of gas on the planet, while Russian-leaning Turkmenistan, and Qatar, right across the Gulf from Iran, are not far behind. If successful, a Russian-Iranian hydrocarbon cartel could cause a major power shift, as Russia is also the world’s second-largest oil exporter, while Iran is a founding member of OPEC. Anti-Americanism may be the glue which binds the Russia-China-Iran trinity together, but the three players have very distinct games. This is high octane geopolitics, where multi-billion dollar projects mesh with high stakes strategy. In other words, Otto von Bismarck meets John D. Rockefeller.

IMPLICATIONS: The embrace of Ahmadinejad in Shanghai implies a degree of legitimacy for the Teheran mullocracy’s anti-Semitic, wipe-Israel-off-the-map stance, as far as Moscow and Beijing are concerned. This is hardly a step towards peace in the Middle East. Moreover, the announcement that SCO member state secret services will cooperate may not only mean improving needed anti-terrorism cooperation, but further crackdowns on non-violent democratic forces in Eurasia. And while Central Asian states are legitimately concerned with the three great powers narrowing their geopolitical freedom of maneuver in three directions – North, South and East, they must be aware of conflicting agendas of these three key players. Iran wants to buy security by leading China to believe it will become what Saudi Arabia is for the U.S. while promising the Russians access to future nuclear energy markets – which in reality would be limited, as Iran has so much gas, it flares it in large amounts. In Shanghai, the Iranian game was so transparent, it would have been laughable if it were not so deadly. Ahmadinejad, a Holocaust-denying sponsor of Hizballah and Islamic Jihad – proclaimed himself in favor of “cooperation to fight terrorism”. China wants to expand energy and transportation cooperation, which would allow it to sidestep American suspicion of the SCO’s strategic intentions, position Beijing as the rational intermediary between Washington and Teheran, and allow it to build economic muscle without premature confrontation with America. President Hu Jintao is playing up China’s economic power, just like Putin is playing up Russia’s energy muscle. Putin, always the shrewdest geo-politician in the room, also curtsied towards Turkey, Russia’s historic enemy. Ankara is expressing an interest in SCO now that doubts regarding Turkey’s accession to the European Union are growing. Turkey is a key piece of real estate abutting Europe, the Caucasus, and the Middle East, and in the process of abandoning its traditional pro-American posture under the tutelage of its moderately Islamist government. With Turkey and Iran on board, the gas-rich SCO would span from the Baltic and the Mediterranean to the Pacific, denying the U.S. a military presence and political maneuver room in the Eurasian heartland. Sir Halford Mackinder and Admiral Alfred Mahan, the fathers of modern geopolitics, are no doubt watching the new, geo-economic incarnation of the Great Game from heaven, horrified. But herein lies the rub. China and Russia have conflicting goals, both economically and politically, which the SCO may in the long run not be sufficient to manage. China’s strategic priority is to assure its peaceful economic ascendancy before undertaking any major military adventures. This was the path the U.S. took in the late nineteenth and early twentieth century, before becoming a global military power after victory in World War II. For this growth, China needs cheap energy in a peaceful Middle East, something Iran is unlikely to provide. Beijing also want SCO to expand to facilitate China’s economic dominance, which Russia cannot match, while Russia is more cautious, understanding fully well that expansion will dilute its power and invite rivalries. Russia, most importantly, is a high-cost oil producer, which benefits from high oil prices and conflict around the Gulf. As a Putin adviser recently told this author, “Why would we work to calm Iran down? Every ten dollars in the price of a barrel of oil makes Russia $16 billion richer.” And while Russia has retained some of its ability to wield power after the collapse of the Soviet Union, China hasn’t regained that yet – after hundreds of years of imperial decline.

CONCLUSIONS: The U.S. should be looking for ways to expand cooperation with those Central Asian members and great power observers of SCO who are concerned about a Sino-Russian duopoly, which will diminish their sovereignty, or have concerns about Iran and China. These include India, Pakistan, Kazakhstan, as well as Mongolia. Washington should also engage Russia and China in a dialogue over Eurasia and energy security. Ignoring the SCO, as the U.S. has done for the last six years, is both short-sighted and foolish. If it continues on this track, America may one day wake up to a world where its economic and strategic power is severely constrained. It is time to face the challenge of the new, quickly evolving strategic reality in Eurasia before it is too late.

AUTHOR’S BIO: Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies and International Energy Security at the Heritage Foundation and the author of Eurasia in Balance (2005).