About three months before his resignation, the Prime Minister, Adil Abdul Mahdi, visited China, accompanied by a delegation of ministers, governors, and advisers, in September 2019, with the aim of concluding agreements in several areas, including huge trade agreements, and other agreements included : industrial, investment, and agricultural and oil and gas exploration agreement , except for security agreements .
In his visit , Iraqi Prime Minister Adil Abdul Mahdi explained: “We belong to Asia, and we want to be part of its rise.” That is, after the passage of nearly 16 years since the end of the war in Iraq, the Mesopotamia country faces major institutional failures, most of which are directly caused by chaos which followed the fall of Saddam Hussein’s regime and the withdrawal of the United States of America.
Abdel-Mahdi, an economist who studied in the Sorbonne, pointed out during his visit that the Chinese giant had replaced India in 2018, and then became the largest trading partner for Iraq with transactions worth more than 30 billion US dollars (25 billion euros), including bilateral exchanges, explaining that Iraq is the second largest oil exporter to China.
And the advisor of the Iraqi Prime Minister for Financial Affairs, Mazhar Muhammad Salih, announced details about the economic agreements concluded by Iraq with China, about four months ago, and they entered into force recently, including opening a bank account in China, to deposit oil revenues.
Saleh said, according to the official Iraqi news agency yesterday, that “the agreements include the exchange of oil revenues for the implementation of projects in Iraq,” noting that the Iraqi government opened a bank account in one of the Chinese banks, to deposit oil revenues of 100 thousand barrels per day, within the Chinese agreement.
The atmosphere between Washington and Baghdad seemed tense in recent days, after the Iraqi parliament voted on the fifth of January this year, to remove foreign forces from the country, which angered US President Donald Trump, who hinted to the confiscation of about $ 35 billion in the account of the Central Bank of Iraq It has in the US Federal Reserve (the central bank) as well as other harsh measures.
The tension between the United States of America and Iraq came in the wake of the assassination of the prominent Iranian military commander Qassem Soleimani, in a US air strike targeting him in the vicinity of Baghdad Airport, next to leaders in the popular crowd in Iraq, at the dawn of the third of this month, while Iran responded with a missile attack last Wednesday, on Two military bases host American soldiers in Anbar and Erbil, in western and northern Iraq.
Therefore, the Iraqi government is accelerating the pace of implementing broad agreements with China, especially in the field of oil export and reconstruction, in conjunction with American threats of sanctions against Baghdad “they have never seen before” if it goes ahead with its plans to remove American forces from the country, following the skirmishes between America and Iran.
And Iraq’s move to activate its agreements with China came, while prominent officials in the Iraqi financial sector recently presented a bleak picture of the country’s economy’s future, in case the American president implemented his threat to impose sanctions on Iraq, during a high-level meeting in which deputies participated in the ethnic parliament a few days ago, where All the possibilities presented were based on the assumption that the Iraqi government will continue to be subject to the Iranian point of view, in light of the burning conflict between Tehran and Washington in the region, and Iraq in particular.
And Iraqi officials have expressed in recent days their fear of an economic collapse, if Washington imposed sanctions, including freezing bank accounts in which Baghdad holds oil revenues, which constitute 90% of the state budget.
Meanwhile, the American Wall Street Journal revealed yesterday that the Trump administration is considering reducing military aid to Iraq if the Baghdad government proceeds to remove American forces from the country.
The newspaper said that the Pentagon and the Department of State discussed options for a possible cut of $ 250 million in military aid to Iraq, funds that have already been approved by Congress.
It added, that the two ministries are reviewing a wide range of other economic and military assistance, which has not yet been committed, as emails seen by the newspaper .
According to the newspaper, emails indicate that the US Department of State’s Near East Affairs office is deducting $ 250 million in aid funds under the US military financing program for Iraq for the current fiscal year.
On January 7, the Washington Post said that the US administration had begun to formulate possible sanctions against Iraq in the event of the expulsion of US forces.
Followers of the Iraqi issue see, “The ongoing cooperation with China comes within the collision of the Iraqi government with the American administration, which comes within the framework of satisfying Iran, but China will exploit the resources of Iraq in an obscene manner, and will take over Iraqi oil, and this is not what the American administration will allow.”
America has largely controlled the joints of the Iraqi economy since the occupation of the country, especially oil. Among the possibilities that America may resort to is the prevention of some international companies from dealing with the Iraqi National Oil Marketing Company, which is known as the “Sumo”, a measure that has already been tested in the Iranian case, and its effect was fatal in relation to the unilateral economy, which is based on oil only, as is the case with the Iraqi economy, according to what was quoted by AFP two days ago from Iraqi sources.
Followers of Iraqi affairs believe that the Iraqi government should consider that there is a cold international conflict between the United States on the one hand, and Iran, China and Russia on the other side, before taking any step that has a fundamental impact on Iraq’s interests and stability.
Unlike strangling the sources of oil exports, US and Iraqi officials point out that the United States is studying other, less exciting options for the situation, one of which is that Washington refuses to renew the temporary exemption it granted to Iraq in 2018, which allows Baghdad to import gas from Iran to feed the devastated electricity grid, despite the American sanctions on the Iranian energy sector.
Observers of the Iraqi issue believe that replacing American interests with Chinese ones may succeed with the actual assistance of Iran, China and Russia, but the United States of America, the sponsor of the political system in post-2003 Iraq, rejects such a loss strongly, of course the American army can, in obstructing and failing Chinese projects, rather, it has the ability to even abolish the Iraqi state and hand over all things to its High Representative, such as Bremer or Zalmay Khalilzad, because Iraq may enter a new stage that is darker than it is going through now.
The United States of America has great control over the joints of the Iraqi economy since the occupation of the country, especially oil. Among the possibilities that America may resort to is to prevent some international companies from dealing with the Iraqi National Oil Marketing Company, which is known by the acronym “SOMO”, a measure that was previously It was tested in the Iranian case, and its effect was fatal in relation to the unilateral economy, which is based on oil only, as is the case of the Iraqi economy…
Iraqi Studies Unit
Rawabet Center for Research and Strategic Studies