Iraqis regard China's pursuit of investment monopoly with suspicion

By Faris al-Omran

Officials from Iraq and China sign an agreement on June 6 in Baghdad exempting some Iraqis from needing entry visas to China, as part of the latter's efforts to boost its economic influence in Iraq. [Iraqi Foreign Ministry]

Officials from Iraq and China sign an agreement on June 6 in Baghdad exempting some Iraqis from needing entry visas to China, as part of the latter's efforts to boost its economic influence in Iraq. [Iraqi Foreign Ministry]

Iraq's infrastructure, dilapidated and damaged by years of war -- most recently against the "Islamic State of Iraq and Syria" (ISIS) -- is buckling under the strain of providing services to millions of citizens.

To ensure it can provide adequate services to its population going forward, and to rebuild many sectors of the economy that are still struggling in the aftermath of the war on ISIS, Iraq needs to attract foreign investment on a large scale.

But Iraqi analysts warn that as Iraq seeks investors, and as investors court Iraq, it is important for the country's leaders not to make a bad situation worse by attracting the wrong kind of investment.

They noted that China is trying to monopolise the major foreign investment projects available in Iraq and are cautioning about negative consequences.

Students in Iraq receive a Chinese language lesson on September 19. Since last December, China has been holding courses to teach its language in Iraq. [China Network]

Students in Iraq receive a Chinese language lesson on September 19. Since last December, China has been holding courses to teach its language in Iraq. [China Network]

China has been proposing projects that have the potential to lead Iraq into debt traps similar to those faced by countries that previously opened their doors to Chinese investments, such as Sri Lanka, Kenya and Bangladesh, analysts said.

China also is using militias backed by the Islamic Revolutionary Guard Corps (IRGC) to clear the way for Chinese investment in Iraq by creating an unwelcoming climate for business interests and scaring off potential competitors.

This has sparked ire in Iraq, where many hold the militias responsible for the proliferation of corruption and lack of security, accusing them of creating an environment that chases away international investment.

Several local and international companies have been forced to withdraw their investments or transfer them to subcontractors because of the harassment to which militias subjected them.

This included extortion and demands of monthly shares of the profits, imposed as tribute payments in exchange for not harming their projects or their employees, which led to the disruption of thousands of investments.

Little support for 'unilateral investments'

Since 2019, China has been trying to expand economically in Iraq by bartering reconstruction for oil: 100,000 barrels per day of crude, in exchange for taking on reconstruction projects in various sectors.

But despite its need for support and reconstruction, Baghdad is not in favour of attracting "unilateral investments" or opening the door wide for Chinese companies.

Iraq wants investments from all countries, not from one nation to the exclusion of others, an economist told Al-Mashareq, asking that his name not be used.

"Diversity and competition are necessary to achieve integrated development," he said.

He noted that Baghdad had previously objected to Chinese plans to buy shares of international companies involved in oil exploration and production projects, for fear that Beijing would seek to take control of Iraq's energy sector.

Since last year, Iraqi officials stopped the sale of operational concessions in three southern oil fields, Qurna 1, Qurna 2 and Rumaila, to state-backed Chinese companies, most notably Sinopec.

But China's expansionist efforts continue, the economist said, as Iraq is a cornerstone of its strategy to extend its economic hegemony over the world, through what is known as the Belt and Road Initiative (BRI) or One Belt One Road (OBOR).

The BRI aims to use the countries of the Middle East as a trade route through which to funnel Chinese goods to Europe and Africa.

This is in addition to China's reliance on Iraq as a key source of oil for its energy needs, as it ranks first among importers of Iraqi crude oil, with an annual import volume of 60 million tonnes.

In a report on China's external financing within the BRI during the first half of 2022, Fudan University's Green Finance and Development Centre said that China had granted investments to Iraq worth about $1.5 billion.

Beijing also concluded contracts with Baghdad at the end of 2021, within the "Oil-for-Construction" agreement, to build 1,000 schools across Iraq, a civilian airport in al-Nasiriyah, and solar energy power plants.

Distrust of China's motives

China provides countries where it seeks investment opportunities a multitude of incentives, such as credit facilities for project financing purposes, in order to gain greater access, note analysts.

As one example, China signed an agreement with Iraq in June "exempting the holders of diplomatic, service and special passports from the requirements of entry visas to its territory", according to Iraq's Foreign Ministry.

China uses this access to expand within the economies of countries aspiring for development and impose its hegemony on them, saddling them with debt burdens and projects that do not meet quality and efficiency standards.

The Chinese penetration of Iraq also is taking on a cultural character, with the first Chinese language institute opening last December in Baghdad, the China Network reported September 19. Trainees came from several Iraqi provinces.

Yet generally speaking, analysts said, Iraqis do not consider China a trustworthy ally, given its persecution and oppression of ethnic minorities, such as the Muslim Uighurs.

"It is no different from its partner Iran, whose regime oppresses and treats its citizens cruelly, harms the interests of the peoples of the region and threatens the stability of their countries," Baghdad resident Abu Firas told Al-Mashareq.

Chinese investments are a form of controlling his country's wealth, he said.

It is "the other side of the coin" to the Iranian influence "that has driven Iraqis to protest against it repeatedly", he said.

In an August 7 protest, he said, Iraqis stormed the Halfaya oil field in Maysan that is operated by the PetroChina oil company and threatened to block production.

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8 Comment(s)

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We have to cooperate with China to reconstruct Iraq in return for oil. This is better than giving oil for free to Jordan, Egypt and Israel. However, the person who is the decision maker has no loyalty for our homeland, but unfortunately represents a foreign agenda.


China and Iraq are moving towards a prosperous and developed future; haters will have no consolation.


Iraqis welcome the Chinese investments in their country. This is a very wrong article.


This is how Iraq has turned out to be: everyone just covets it!


Are you a true Iraqi? I don't think so. You're just someone moving in the orbit of the cohorts of Americans who have destroyed peoples. Enough with lying and deception!


The future of Iraq and that of future generations is with China through the Belt and Road Initiaitve and taking part with scores of other countries in that huge project. The voice of Iraqi people will roar against those who stand in the future of Iraq and generations.


O, honest people of Iraq, we don't want unilateral investments. We want diverse investments from China, US and Germany and other countries. Let the hypocrites shut up!


I see these ideas as being motivated by motives other than the ones stated in order to discredit China in favour of the US. China is peaceful and can be trusted more than any other country; it just wants to make a profit rather than acquire. This is just a project that won't have any consequences like the ones stated in the report, or rather, the justification.