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Iraq on the corner of "silk"... Oil in exchange for construction under the Abdul Mahdi agreement

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Iraq on the corner of "silk"... Oil in exchange for construction under the Abdul Mahdi agreement

Reports & Analytics    Iraq     China     Chinese agreement
2022-09-01 06:59
Shafaq News /
The Chinese agreement opened the door wide for Beijing to flow into the sectors of the Iraqi economy,

a move that sparked Western fears that Baghdad would become a hostage to the Chinese dragon,

like many capitals of emerging Asian countries that sank into several economic crises due to its absolute dependence on investments Chinese

Unlike the West, Beijing provides generous aid to Iraq without imposing political conditions on Iraqi leaders, such as achieving more democracy or pursuing structural reform policies for the local economy, so cooperation with China appears more attractive.

In October 2019, the then Prime Minister of Iraq, Adel Abdul-Mahdi, signed an agreement with China that activated the "oil for reconstruction" program, under which dozens of Chinese companies pledged to work in Iraqi infrastructure in exchange for Beijing receiving 100,000 barrels of oil per day.

This revived another old agreement signed by Abdul-Mahdi also with Beijing in 2015.

He carried the same principles, but at the time he was Minister of Oil during the era of Prime Minister Haider al-Abadi, after Iraq agreed to engage in the Chinese “Belt and Road” initiative in exchange for signing the "Oil for Reconstruction” agreement, which

Its provisions included allowing Chinese companies to invest heavily in all of Iraq's economic joints in return for providing China with a specified number of barrels of oil.

The "2015 agreement" was not implemented due to the political tensions experienced by Iraq, which resulted in governments being subjected to successive ministerial changes that froze the "China deal" until Abdul Mahdi took the helm and revived it again.

Under the new agreement, Chinese companies will

    build 1,000 schools in Iraq

    - with a pledge to explore building another 7,000 in the future

    - and work has begun to build an airport in Nasiriyah,

    90,000 homes in Sadr City and 1,000 medical facilities, as well as

    implementing a comprehensive sanitation improvement process. In Baghdad and

    building a "science city" in northern Iraq that will include a huge university, research laboratories and public parks,

    unlike dozens of other projects in Iraqi infrastructure implemented by Chinese companies with funding from Chinese banks.

US withdrawal

These steps come at a time when the United States is reducing its presence in the country, after

it announced the end of its “combat missions” in Iraq, and

shifted the roles of the remaining soldiers (2,500 American soldiers, and a thousand other coalition soldiers) to advisory missions,

which reflects the pursuit of Beijing is quick to fill any void that the United States may leave in Iraq.

On the economic level as well, many Western oil companies have begun to reduce their presence in Iraq due to the country being considered a “risky investment environment” and the spread of corruption in the country, most notably the exit of the American oil company ExxonMobil from the “West Qurna 2” oil field despite official government appeals. her not to do so.

The British "BP" intends to take a similar step with its investments in the "Rumeil" field, the largest oil field in Iraq.

As a result of these steps, Chinese companies do not stop acquiring concessions from Iraq's oil fields one by one.

after ISIS

Iraq succeeded in ending the control of ISIS over large parts of its territory,

but, despite the victory, the price was heavy: the country's infrastructure collapsed, and

Iraq needed 88 billion dollars to rebuild its dilapidated infrastructure, according to estimates by World Bank experts.

On the other hand, Beijing's hunger for energy does not stop,

which has put it on the throne of the country most in demand for oil in the world, so

it does not stop making deals that secure oil right and left: with Iran, Saudi Arabia and finally Iraq, which China set as a main target immediately after the fall of Hussein's system.

In 2010, 80% of Iraq's debts, amounting to 8.5 billion dollars, were written off at the time, in exchange for "strengthening economic cooperation between the two countries."

This step had its effect and Chinese companies began to penetrate Iraq little by little: in 2018, China imported 27 percent of Iraq's total oil, and thus China paid $22 billion out of the $83 billion that Iraq earned that year as a result of selling its oil to countries around the world.

On the corner of silk

In 2013, Chinese President Xi Jinping announced the "Belt and Road" initiative, which he considered to be the new Silk Road in this era, in reference to the complex network of roads used by Chinese tribes in the past to sell their goods around the world.

Iraq occupies a cornerstone of this initiative.

Therefore, Beijing is interested in developing its relationship with Baghdad so that it becomes a cornerstone in its commercial communication between the countries of the Middle East and the rest of the countries that fall within the scope of the Chinese initiative, which amounts to 125 countries, according to what Beijing announced.

Iraq, which has the fifth largest oil reserves in the world, and a strategic geographic location in the heart of the Middle East, is considered by China as its cornerstone to control trade across Europe and Asia,

in addition to its ability to play the role of a "shipping corridor" to transport its goods to other countries in the Gulf, Turkey or Israel as well as to Syria and Lebanon.

And for the historical irony, Iraq in ancient times played a key role in the Chinese trade route, which enjoyed great support from the “Han” dynasty of the Chinese empire thanks to the close relations that developed between China and the Arabs since ancient times.


As for the Kurdistan Region, China's ambition to expand into Iraq does not depend only on dealing with Baghdad, but Beijing has also shown an interest in being present within the autonomous region within the state.

In 2014, Beijing opened a consulate in Erbil, a move that Chinese Vice Foreign Minister Zhang Ming justified by his country's desire to strengthen "bilateral relations with Iraq and the Kurdistan Region in various fields."

During the Corona pandemic, Beijing provided the Kurdish region with huge aids of masks, sterilizers, and medical supplies, and

just last year, the two parties signed an agreement worth billions of dollars to build dozens of mega projects in Erbil in the fields of cement, housing, tourism and commercial centers.

In August last year, Qingcheng, the Chinese commercial consul in Erbil, said the province had become a "gold mine" for foreign investment.

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