Is China seeking Iraq's oil to reduce its dependence on Iran?
"Beijing does not want to link more with Tehran because of its involvement in many files in the countries of the region."
Ahmed Mostafa is a journalist specializing in international affairs
Friday 4 February 2022 7:09
A general view of an oil facility in Iran (Reuters)
At a time when Chinese investments abroad are declining from their previous level, Beijing is intensifying its investments in the Middle East, specifically in Iraq, as indicated in the report issued on Wednesday by the Center for Green Finance and Development at Fudan University in Shanghai and reported by news agencies.
According to the report, China signed deals in Iraq last year worth $10.5 billion as part of the Belt and Road Initiative, which is a priority for Chinese President Xi Jinping.
The increase in the volume of Chinese investments in Iraq comes at a time when it is declining abroad, according to the Fudan University report.
Director of the Institute of Development and Green Finance at the university, Christoph Nedobel Wang, said they were surprised by the huge increase in the extent of China's pursuit of linking with the Middle East and Arab countries.
He added, "We imagined that the focus would be on the Southeast Asia region, including investment in infrastructure in the countries of that region, but the reality was that the greatest interest was Iraq and the shift towards the countries of Africa and the Middle East."
According to the report’s figures, the Chinese Ministry of Commerce’s pledges within the five-year plan to 2025 for investments within the Belt and Road Initiative and others amounted to 550 billion dollars, which is about a quarter (25 percent) less than foreign investments in the previous five-year plan 2016-2021, which included the value of 740 billion dollars.
While Chinese investments in Arab and Middle Eastern countries within the current five-year plan increase by 360 percent for construction and infrastructure investments, and by 116 percent for investments in economic and commercial contracts.
alternative to Iran
Over the past two years, Iraqis have been talking about a powerful increase in Chinese influence in the country. In the opinion of the "Financial Times" newspaper, China's strong entry into Iraq came after what appeared to be the withdrawal of the United States from the Middle East, so China is trying to fill the void.
Some analysts link the Chinese tendency towards Iraq more with the American withdrawal from Afghanistan and the return of the "Taliban" control over the country rich in natural resources.
It is not excluded that Beijing's eye on Iraq's wealth of energy and raw materials, especially since Iraq is the third largest oil producer in the Organization of Petroleum Exporting Countries (OPEC).
The start of the development of Chinese-Iraqi relations dates back to the presidency of Adel Abdul-Mahdi, the Iraqi government, who described these relations in 2019 as a "huge leap". It seems that this jump coincided with the American disengagement from the region, according to observers.
According to a semi-official source, who asked not to be named, Beijing has been working hard to increase its influence in Iraq for some time, in order to compensate for any decline in its relationship with Iran.
The Iraqi source adds: "It is clear that the Chinese have begun to abandon and develop their close relationship with the Iranians, due to the increasing difficulty in importing Iranian oil.
The Chinese do not want to link with Iran more because of its involvement in many files in the countries of the region that could constitute an obstacle to developing China's relationship with Iran." These countries.
This is the reason for their interest in switching to Iraq to compensate for their imports of Iranian oil.
In this context, the Chinese are expanding in concluding deals and agreements, even with extremist groups, warlords and militias, in order to promote the extent of benefit that can accrue to the Iraqis from increasing the Chinese role in their country.
Sources close to the Vienna talks between Iran and the major powers on reviving the 2015 nuclear deal, from which the US administration during the presidency of Donald Trump withdrew in 2018, said that China is no longer "absolutely supportive" of the Iranian position in the negotiations. China and Russia have traditionally favored Iran's position vis-à-vis the positions of the three European signatories to the agreement: Germany, France and Britain. But the Chinese in recent rounds began advising the Iranians not to be strict in their demands to lift all sanctions and to "reason" in reversing the violation of the nuclear agreement.
Iraqis from different components of the country's political spectrum fear that the significant increase in Chinese influence may not be in Iraq's interest, despite the country's need for investments in restoring the infrastructure of various sectors of the economy.
The "Financial Times" says that Western companies are reluctant to work in Iraq as a result of the instability of the political and security situation and the worrying Iranian influence in the country.
This is what China is currently trying to exploit.
It may not appear that Iraq has "become an economic colony of China," says Kirk Sowell, the author of "Inside Iraq's Politics".
But he adds: "The source of concern among critics of Chinese influence in Iraq is the amount of Iraqi oil that has already been mortgaged to pay for Chinese investments in the country, a question that no one knows the answer to."
It is noteworthy that among the contracts that China recently concluded with Iraq, in addition to building a heavy oil power station in Karbala, the Iraqi government concluded with the Power Construction Corporation and Sinotech to build about 1,000 schools, the cost of which Iraq pays in the form of oil products to China. . This is in addition to rebuilding Nasiriyah airport and developing the Iraqi Mansouriya gas field on its border with Iran.