Iran to turn ECO into paper organization

The Economic Cooperation Organization (ECO), the gathering of 10 countries — Turkey, Iran, Pakistan, Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan — in the Eurasia region, is rapidly becoming an empty talking shop, thanks but no thanks to increasingly isolated Iran. Iran’s unilateral efforts to turn this organization into an anti-Western forum are hampering the development of ECO into a credible regional economic organization. It also complicates already existing intra-group differences within ECO.

To be frank, nothing substantial will come out of the 20th Meeting of the Council of Ministers and the 12th Summit of Heads of State/Government of ECO held on Oct. 15 and 16, respectively, in Azerbaijan. The participation of Prime Minister Recep Tayyip Erdoğan and Foreign Minister Ahmet Davutoğlu as well as other leading dignitaries to these meetings will serve merely as a photo opportunity for the press.

Though Iran is desperate to seize on the ECO summit to raise its profile, battered in the region with its nuclear ambitions and its stand on Syria, nobody expects Tehran to get anything of considerable value out of this organization. Since the last summit held in İstanbul two years ago, the regional and global outlook for Iran has deteriorated further with new sanctions slapped on by the UN as well as the US and EU. Therefore, it is not surprising to see Iranians rallying to utilize regional organizations like ECO or global ones like the Non-Aligned Movement (NAM) to mitigate the effects of sanctions.

Iran lacks the will to put anything valuable on the table in return for increased recognition from its regional partners within ECO. Despite the fact that ECO is headquartered in Tehran, we have not witnessed so far a significant effort from Iranians to turn this organization into a real hub for economic cooperation. Rather Iran has tried to use ECO as its own propaganda machine, for which it has raised eyebrows in a number of capitals in ECO member states.

There have been numerous proposals floated by member states for ECO over the years, but many remain unfulfilled. For instance, the ECO Trade Agreement (ECOTA) was not signed and ratified by all members. There was no progress to report in the last ECOTA meeting held in Ankara in early October 2012. The group announced that tariff concessions will start as of January 2013, but there is no full agreement on the list of goods that participating states see as sensitive for their national economies. As such, trade liberalization even among the few committed countries of ECO is far from realization.

ECO’s action plan to develop energy and petroleum cooperation that covers the 2011 to 2015 period was dealt a huge blow when US financial sanctions on the Iranian oil and banking industry were put into effect. Turkey has to slash its oil imports from Iran substantially while cutting back on financial transactions with Iran. The report issued by a high-level experts’ group meeting on energy within ECO, in which six countries participated in the last gathering in Ankara in September 2012, was very bleak. Turkey has also abandoned its investment schemes in developing the Iranian South Pars gas field after Tehran tried to shortchange Ankara with less-than-promising plots there. The lingering Azerbaijani and Iranian problems on Caspian delimitation issues is also thwarting energy cooperation within ECO.

ECO is planning to discuss a draft proposal to establish a Parliamentary Assembly (PAECO) for the organization in this summit. In the Baku meeting, participants will probably approve the draft, agreed to in a meeting held in Pakistan in September 2012 to establish the assembly. But judging from Iranian lawmakers’ comments on the proposal so far, I’m afraid Iran will turn the original idea of Dr. Fehmida Mirza, Pakistan’s parliament speaker, into another West-bashing club rather than an important legislative forum to discuss real issues for the region.

Again, not all members of ECO signed the agreement for the İstanbul-based ECOBANK, which was established formally in 1995 among Turkey, Iran and Pakistan but became operational only in 2008. The funds available for the bank are very limited ($450 million paid-in capital), and it can finance only a few projects. It also needs to tread carefully in order to not run afoul of UN sanctions on Iran, one of ECOBANK’s founding members, as well as with unilateral ones imposed by the US and the EU. Turkish concerns on this were made public in Parliament last May when lawmakers were debating the amendment of the ECO agreement. The lack of willingness on the part of other ECO members to join in the bank, already under surveillance by Americans, is also visible. For example, Azerbaijani President Ilham Aliyev announced his country’s intention to join the bank in 2010, but Baku signed the agreement only late last month. It has not ratified it yet. Afghanistan also signed in March 2012 but has not ratified it.

Another proposal is also delayed because of concerns over Iranian sanctions. The ECO online money order system through postal services, being developed among Azerbaijan, Iran, Kyrgyzstan and Turkey, was halted with other ECO members not looking favorably on the proposal. The fear is that Iranian businesses tied to the Revolutionary Guards may try to use this system to bypass financial sanctions. The meeting of the ECO Postal Authorities, scheduled for September 2012 in Tehran, is not expected to break any ground on this proposal.

The lackluster performance of the core group within this organization — established among Turkey, Azerbaijan and Iran in 2011 as part of the trilateral process — must be an indication that ECO is being hindered by its own internal problems as well. Iran has started to provide support to Kurdistan Workers’ Party (PKK) terrorism against Turkey while adopting a more belligerent attitude against neighboring Azerbaijan. There is a huge trust gap that Ankara and Baku feel towards Tehran.

Iran talks the talk in ostensibly assisting Azerbaijan in resolving its problems with neighboring Armenia, a country that illegally occupies some 20 percent of Azerbaijani territory. But in reality Tehran continues to throw a lifeline to Armenia with energy and trade deals. It also threatens to block the corridor linking Azerbaijan to Nakhchivan, which receives most supplies, including gas, trade and other services, from Azerbaijan via the Iranian route. The tension became evident when Azerbaijan was prepared to waive visas for Turkish nationals in 2009 during which Iran issued an ultimatum to cut off the critical supply line between Azerbaijan and Nakhchivan. Azerbaijan had to back out of the deal at the last minute.

On transportation, the fact that Iran continues to implement its practice of favoring Iranian truckers over others seriously hampers cooperation among ECO members. Since many ECO proposals regarding transportation and logistics center on Iran as the hub because of the country’s geographical location among transport routes, the uncooperative attitude of Iran on these proposals impedes the realization of proposals. There are also financial difficulties in funding projects like a container train on the Islamabad-Tehran-İstanbul route.

The ECO region boasts a market of 400 million consumers with $680 billion in total trade volume as of 2010. But intra-group trade constitutes only 7 percent of this, amounting to $47.6 billon. It has not changed much compared to earlier years. I believe ECO will not go anywhere as long as Iran is only interested in exploiting this economic organization for its own national interests at the expense of other member states while trying to take advantage of ECO’s regional role to stop Tehran’s growing international isolation.

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