China has gained a major foothold in oil-rich Iraq, shaking up Western domination in fields from energy to construction, even as some warn that infrastructure projects could leave Baghdad in debt.
After decades of conflict, Iraq is “badly in need of foreign investment, and specifically investment in energy sector infrastructure,” said John Calabrese, a senior academic at the Middle East Institute in Washington.
China, with its soaring energy needs, has stepped in to fill that gap, and is expanding its presence in Iraq under a 2019 “oil for construction” deal.
Photo: AFP
Beijing has become one of the largest importers of Iraqi crude, and last year accounted for 44 percent of Iraq’s oil exports, Iraqi prime ministerial adviser Muzhar Saleh said.
State firm PetroChina has partnered with France’s TotalEnergies and Malaysia’s Petronas to exploit the Halfaya oilfield in southern Iraq.
“China is just getting started,” Chinese Ambassador to Iraq Cui Wei (崔巍) told journalists in a videoconference.
Photo: AFP
However, Beijing is interested in more than just Iraq’s trade potential, Calabrese said.
Beyond the “obvious commercial incentives” are China’s ambitions to “deeply entrench itself in a country and a region that the West, and especially the United States, has dominated,” he said.
Iraq is among the many partners in China’s vast Belt and Road Initiative, which Western leaders say risks saddling poorer countries with debt.
Baghdad is an “important cooperation partner” in the project, a Chinese Ministry of Foreign Affairs spokesman said, adding that Beijing had “actively participated in the reconstruction of Iraq’s economy.”
From 2013 to this year, Iraq was “the third most important” Belt and Road Initiative partner “for energy engagement,” according to a paper by Christoph Nedopil of the Green Finance and Development Center at Fudan University in Shanghai.
Under the 2019 “oil for construction” deal, building projects in Iraq are funded by the sale of 100,000 barrels per day of Iraqi oil to China.
One aspect of the agreement, inked while then-Iraqi prime minister Adel Abdel Mahdi visited Beijing, was a deal to build schools.
Two Chinese partners were tapped to carry out the construction — PowerChina and Sinotech — with 8,000 education facilities to eventually be built.
Work has also begun on an airport in the southern city of Nasiriyah, built by the China State Construction Engineering Corp.
Under such projects, Chinese firms must work with local contractors that “provide manpower and raw materials,” Iraqi government spokesman Haider Majid.
Yesar al-Maleki, an analyst for the Middle East Economic Survey, said there was “a big question mark” over how the Iraqi contractors are selected.
“Many of these companies are rumored to be politically connected, and this is how they got the contracts,” he said.
Iraqi contractors could abuse the initiative for “useless projects,” he said, adding that Iraq could end up in a “death trap” of debt.
As China’s influence grows, more and more Iraqis have also been taking their business to China.
Banking on this, the Iraqi-Chinese Friendship Association in Baghdad has begun offering classes in Mandarin.
“When I returned to Iraq from China, I found that a lot of people wanted to learn the language,” 25-year-old teacher Sajjad al-Kazzaz said.
The majority of his students are businessmen, like Laith Ahmed, who imports electronics from China.
Ahmed cited challenges communicating with Chinese traders, “most of whom do not speak English,” but said that this had not stood in the way of business.
“Chinese products have flooded the Iraqi market,” Ahmed said.
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