Valentin Popescu*

China is strategically leveraging Iraqi reconstruction efforts by building energy and connectivity infrastructure projects under the Belt and Road Initiative (BRI). It is also constructing schools and opening language training centers in Iraqi Universities. With the end of the US combat mission in Iraq, Beijing is pushing its energy projects with Baghdad under the BRI with overall investment to the tune of $ 10.5 billion, making Iraq the 3^rd most important partner of Chinese energy engagement.

Chinese companies, Power Corporation of China and Sinotech, are currently finalizing the sub-contracting to build 1000 schools in Iraq under the ‘oil for reconstruction’ programme signed with Iraqi government in December 2021. This investment is intended to win public goodwill keeping in view long-term advantages of establishing a sound foothold in the country.

Beijing is also promoting Chinese language and culture in Iraq. The Chinese Language Department in Salahaddin University, Erbil, offers language training and education to Iraqi students and also conducts events that create a positive image of China.  It celebrated ‘Chinese New Year’ festival, observed with the theme song of Beijing 2022 Olympics Winter Games, which was attended by Governor of Erbil, Omed Khoshnaw.

These efforts are apparently part of Beijing’s policy of fostering deeper economic ties with Middle East countries by taking advantage of a growing perception among Arab leaders that the US is disengaging from the region. It is also attributed to Beijing’s growing appetite for Middle Eastern energy and increasing trade with the Gulf States.  China has emerged as a key financial player across the region.

Iraq is already the third-biggest exporter of oil to China. Baghdad appears more than willing to receive Chinese investment to help upgrade war ravaged and decaying infrastructure. The Western development partners should be the first choice for such collaboration especially outside the oil & gas sectors but they are deterred by political instability and sporadic bouts of violence in the country.  

Beijing is forthcoming to fill the void created by perceived reservation of the US, not only for economic benefits but also strategic advantages, i.e., advancing the BRI and accessing local and African markets, eventually helping it to expand its sphere of influence.

No surprise, therefore, the number of Chinese projects is increasing in Iraq.  Last year, Sinopec had won a deal to develop Mansuriya gas field near the Iranian border snatching the contract from a group led by Turkish Petroleum Corp (TPAO). Under the 25-year deal, Sinopec will tapand process natural gas and boost output to 300 million cubic feet of gas per day (mcf/d). Sinopec has a 49% stake in the project.

Beijing views Iraq as a less controversial investment destination in the region with a great deal of untapped potential and easy access. For China, Iraqi government and people are easier to negotiate and to do business as the country is trying hard to rebuild infrastructure and push up economic growth. China also sees Iraq as a fertile base for its expansion plan in the Middle East.

However, Beijing hopes of replacing the US in the Middle East as the main development and security arbiter are no more than a pipe dream. More so, as Howard J. Shatz, an analyst with the Rand Corporation points out that the narrative of a US exit from the region is exaggerated.   If Beijing starts providing security in the region, it may have to choose sides but it does not intend to wade into the region’s myriad conflicts.  It is working simultaneously with rival countries such as Iran, Israel and Saudi Arabia due to its calculated strategy to evade the impact of instability in the region by keeping away from security issues and local political turmoil, according to the Rand analyst.

Interestingly, Iraq’s economic ties with China have come under criticism due to the country’s adverse terms of trade with China. Iraqi critics of Chinese investments compare how China takes unreasonably higher mortgage of Baghdad’s oil as payments for its investments. While China imports crude at $ 70 per barrel, Iraq imports the same volume of Chinese gasoline for $ 200 per barrel.  This shows that Beijing is getting the better of its cooperation with Iraq, thunders former lawmaker, Ghaleb Muhammad Ali. (POREG)

* The writer is a London based blogger with interest in South Asian, and regular contributor to Poreg