Is Iraq the Dragon’s next prey?

With dwindling US presence, China has been gradually increasing its involvement in the West Asia & North Africa (WANA) region in areas other than economy. An evident example in this case is that of Iraq where China’s increasing influence can be seen in various spheres. Though China has shown no inclination of interfering in Iraqi politics, close economic relations are in fact helping China to increase influence over the country’s politics due to dominance of pro-Iran Shiite parties in Iraqi politics.

Iraq’s energy sector is one area where China’s dominance is undisputed. China has been engaged in development of fifteen of Iraq’s twenty oil fields. China National Petroleum Corporation (CNPC) was the first foreign company to begin oil trade with Iraq in 2008 after the war ended in May 2003. Later, with British Petroleum, it won a 20-year contract to develop the largest oil field in Iraq i.e. Rumaila oil field. CNPC is engaged in development of twelve oil fields now. Besides CNPC, two other Chinese companies have also signed contracts for the development of three more oil and gas fields in Southern and Central Iraq in 2023. The total Chinese investment in Iraq was worth USD 10.5 billion by the end of 2021.

China has established good relations with southern Iraq’s tribes such as ‘Asa’ib Ahl al-Haq’, ‘Kata’ib Hezbollah’ and ‘Harakat Hezbollah al-Nujaba’. These tribes, which are designated as terrorist organizations by the US government, are influenced by pro-Iran Shiite militias. These militias have facilitated China’s entry into the oil exploration and infrastructure-building sectors in Southern Iraq where many large oil fields are located. Beijing has also established relations with former Prime Minister Nouri al-Maliki, Head of Hikma Movement Ammar al Hakim, Head of the Badr Organization Hadi Al-Amiri, etc.

In recent years, China has been increasing its investments in Karbala and Najaf provinces as well where important Shiite holy sites are located. Chinese companies have earned public goodwill by providing free food, medicine, and communications equipment (wi-fi) in Karbala during the Shiite pilgrimage season. Besides, Beijing has also been conducting propaganda activities and disseminating its narratives through TV channels in these areas. It is striving to improve its impression in Iraq through participation in religious events and outreach activities.

China has also established joint ventures with Iranian companies in these two provinces and has been carrying out infrastructure building projects. These projects are funded using the ‘Oil for Reconstruction’ fund, under which investment by Chinese companies made in infrastructure projects is in exchange for Iraqi oil. Moreover, Iraqi and Chinese Governments are negotiating widening of the “Oil-for-Projects” framework.

Strengthened economic relations, including development and operation of more than half of the total oil fields in Iraq, have provided China energy security in terms of stable oil supply from Iraq. Iraq must tread cautiously in handing over control of its oil fields to China as we have seen in Sri Lanka where the local government fell into the debt-trap of China and could not get back control of the port that it had leased out to Beijing in the name of development.



Iraq, China, USA, WANA