China Cements Influence In Iraq Through Oil, Infrastructure Deals

Baghdad, (UrduPoint / Pakistan Point News - 22nd Aug, 2022 ) :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 of 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.

Beijing has become one of the largest importers of Iraqi crude, and in 2021 accounted for 44 percent of Iraq's oil exports, according to prime ministerial adviser Muzhar Saleh.

And 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," ambassador Cui Wei told journalists in a recent videoconference.

But 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.

- Belt and Road - Iraq is among the many partners in China's vast "Belt and Road" infrastructure initiative, which Western leaders say risks saddling poorer countries with debt.

Baghdad is an "important cooperation partner" in the project, a Chinese foreign ministry spokesman told AFP, adding that Beijing had "actively participated in the reconstruction of Iraq's economy".

Between 2013 and 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, 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 former Iraqi premier Adel Abdel Mahdi visited Beijing, was a deal to build Iraqi 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.