China is gaining ground in oil-rich Iraq, where it is undermining Western dominance in the energy and construction sectors, but at the risk of putting this Middle Eastern country in debt.
A long-standing presence in Iraq, China recently diversified its projects in the country at a time when its energy needs are increasing. After 40 years of war, Iraq "is in urgent need of foreign investment, particularly in the energy infrastructure sector", analyzes John Calabrese of the Middle East Institute in Washington.
China seized the moment and became the largest importer of Iraqi crude. It currently imports 44% of the 800,000 barrels of oil that Baghdad exports each day, according to Muzhar Saleh, adviser to the prime minister.
In the south of Iraq, the Chinese Petrochina operates the Halfaya field together with the French TotalEnergies and the Malaysian Petronas. "China is only in its infancy," its ambassador Cui Wei said recently. The embassy indicates that commercial relations exceeded 30,000 million dollars in 2020.
These exchanges reveal "the Chinese ambition to expose its potential, to gild its image and establish itself in a solid way in a country dominated by the West, in particular the United States", underlines Calabrese.
Iraq is one of Beijing's partners in its megaproject.Belt and Route«, which aims to develop land and sea infrastructure to better connect China with Asia, Europe and Africa. But Westerners see this initiative as a tool of Chinese influence in poor countries. In particular, they accuse the Asian giant of inciting over-indebtedness, of not stopping corruption and denouncing the lack of respect for human rights.
"China actively participated in the reconstruction of the Iraqi economy" and Baghdad is an "important partner" in the "Belt and Road," a spokesman for the Chinese Ministry of Foreign Affairs told AFP. Iraq remained China's "third largest partner" in the energy sector between 2013 and 2022 within the megaproject, notes Christoph Nedopil of the Center for Green Finance and Development at Fudan University in Shanghai.
To benefit from the boom in the infrastructure sector, China signed an agreement with Iraq in 2019 called "oil for construction". In Nasiriya, in the south, the Power China group is building a school, for example. It is one of two Chinese companies selected by Iraq to build a thousand schools in two years. Iraq pays for »oil-for-construction« projects by selling 100,000 barrels of oil a day to China. The income it generates must be used to finance projects developed with Chinese companies.
Instead, Chinese companies must employ Iraqi companies that "provide labor and raw materials," explains Haider Majid, a spokesman for the Iraqi prime minister's secretariat. But Yesar Al-Maleki, a researcher at the Middle East Economic Survey, warns that »most of these subcontractors are unknown«.
The researcher mentions "the rumors about his links with politics and, therefore, the risk of corruption" and warns that there is a risk that the Iraqis "abuse" the program for "useless projects". "They would end up in debt, like many African countries," he says.
China also attracts Iraqis looking for business, and to this end, the Iraqi-China Friendship Association began offering Mandarin courses. Most of the students are businessmen, like Laith Ahmed, who imports electronics from China. Without expecting it, he began to learn Mandarin. An investment that is already profitable for him, he says, because "Chinese products are flooding the Iraqi market."