china seals 3 billion dollar deal with iraq

More on China in Iraq

Posted by Helena Cobban at September 1, 2008 11:26 PM

Last week we learned that China has ‘beaten’ all those bit-champing western oil companies, and has signed a $3 billion deal to help develop Iraq’s al-Ahdab oil field.

It turns out that the relationships that Chinese economic firms have with various different sectors of the Iraqi economy is far more extensive than I– or, I suppose, most other Americans– had realized.

Bob Fonow is a veteran IT consultant and trouble-shooter who in March concluded an 18-month term as the U.S. State Department’s “Senior Telecommunications and IT Consultant to the Government of Iraq.” In the End of Assignment Report that he submitted recently, he wrote about the broad presence he saw various Chinese government bodies and corporations as having established throughout Iraq. Fonow, I should note, saw nearly all these relationships as being good for Iraq, as I do; and he urged his former clients at the State Department to continue and strengthen them.

Fonow makes many other very informative points in his report. He has kindly given me permission to publish it. It’s a 14-page PDF document, and since I don’t think I can upload it directly to JWN, I have uploaded it here instead.

He writes,

    Chinese telecommunications companies are selling equipment into every city and province in Iraq. Few, if any, American equipment vendors sell in Iraq outside the Green Zone. Chinese sales people and engineers seem to have freedom of passage. While subject to the same random dangers as everyone in Iraq, they aren’t picked out for immediate assassination at checkpoints. This is a controversial statement, perhaps more anecdotal than based on fact and research. But according to Chinese telecom executives in Iraq the last problem experienced by a Chinese telecom person was a relatively gentle mugging on the way to the airport in October 2007. If you ask MoC [Iraqi Ministry of Communications] officials if the Chinese have freedom of passage they will say no. If you phrase the question another way – why do the Chinese have freedom of passage? – the answer is that their relationships go back to the mid-1990s, and that they are our friends.

This is key, it seems to me. When I was writing here about China’s parallel plans to large amounts of investment into US-occupied Afghanistan, I noted that the security (and therefore the viability) of those vast new projects– which include a copper mining complex, a power plant, and a new nation-spanning railroad– will depend crucially on the fact that the Chinese are not NATO, and have never been associated with the occupation regime that the US and NATO have been running there since 2001.


I found some informative– if slightly dated– background about China’s economic activities in post-2003 Iraq in this article, which was published by Yufeng Mao on the Jamestown Foundation’s website in May 2005.

She wrote:

    Since 2003, China has pursued a two-pronged Iraq policy of promoting Chinese interests while avoiding antagonizing the Untied States. On the one hand, this policy addresses concerns about oil and construction contracts and the desire to use the Iraq crisis to increase Chinese political influence in the Middle East. On the other, China has carefully avoided confrontation with the United States… 

    China opposed American intervention in Iraq in 2003 partly because of its substantial economic interests there under Saddam Hussein’s regime. During the years before the war, Beijing actively pursued oil and construction contracts with Iraq under the UN Oil-for-Food program. From China’s perspective, a war in Iraq would substantially hurt Chinese interests since it would result in the loss of Iraqi contracts valued at over one billion U.S. dollars, which in turn would disrupt its oil supply and increase oil prices…

    The American decision to invade also raised concerns among Chinese leaders and analysts that the strong influence of the United States in the Middle East would hinder China’s effort to access economic resources in the region. China’s repeated call for the return of sovereignty to the Iraqis reflects a deep anxiety concerning U.S. domination of Iraq’s economic resources.

    China… jumped on the bandwagon of reconstruction after the war. Beijing’s pledge of $25 million and an agreement to forgive a large part of Iraq’s multi-billion dollar debt made China a significant donor to the country, but this generosity is not motivated by sheer goodwill. Chinese Deputy Foreign Minister Shen Guofang explicitly stated that China hoped to forgive some debt owed by Hussein’s regime in order to gain access to the bidding processes on big oil and infrastructure projects.

    Desire to do business in Iraq has contributed to intensified efforts towards improving relations with the new Iraqi authority. The Chinese embassy in Baghdad reopened less than two weeks after the transfer of authority to the Iraqi interim government in June 2004. China offered material assistance for the January election, provided fellowships for Iraqi students to study in China, and is helping to train a small number of Iraqi technicians, management personnel, and diplomats. For example on April 1, 2005, 21 Iraqi diplomats were funded by the Chinese government to start their month long training program at China Foreign Affairs University.

    … In contrast to its usual inactivity in the United Nations on Middle Eastern affairs, since the beginning of the Iraq crisis, China has engaged in a flurry of activity. In early 2003, the Chinese Foreign Minister Tang Jiaxuan flew to UN headquarters in New York four times to lobby for a political solution to the Iraq problem. Most significantly, on May 26, 2004, China submitted to the Security Council an “unofficial document,” offering Chinese views on how to revise a draft resolution proposed by the U.S. and the UK. This marked an unprecedented move by Beijing to seek a more visible role on Middle Eastern affairs. In this document, China proposed that the U.S.-led multinational force withdraw from Iraq in January 2005. Even though Resolution 1546 did not adopt this suggestion, Beijing believes that its document contributed to the resolution’s terms about full Iraqi sovereignty over its resources and security matters. Moreover, China has consistently called for a larger UN role in Iraq, both with regard to WMDs and reconstruction efforts. From China’s perspective, a more prominent UN role would not only limit American power in the region, but it would also give China more leverage in dealing with the new Iraqi authority.

If anyone has a fuller or more up-to-date assessment of China’s policy toward post-2003 Iraq that they could provide a citation or better yet a link for, I’d love to see that.


In Bob Fonow’s report, he laid special emphasis on the role he judged China could play in training a whole new generation of Iraqi IT managers.

He wrote:

    A huge training requirement remains. The situation in Iraq is comparable in effect to the period following the Cultural Revolution in China. A 15 year gap in technical knowledge and management capability is evident in Iraq, especially in middle managers who were not able to keep up to date in the most modern telecommunications technologies in the later years of the former regime. The Office of Communications [in the US Embassy in Iraq] believes 200,000 to 300,000 telecommunications and information technology specialists will need training to support a modern information economy in Iraq. The United States is not prepared for this requirement in terms of visa administration or price per student. 

    China is the best place to conduct this training. [My emphasis there, as everywhere else. ~HC] After the Cultural Revolution a system of telecommunications universities was set up to improve quickly China’s telecom infrastructure. Today this system produces the equivalent of one Regional Bell Operating Company a year. China today maintains the largest cell phone, Internet, landline networks, etc. in the world. The training requirement within China has peaked and there are sufficient places for thousands of Iraqi students a year at price points that can’t be matched in other countries.

    The Office of Communications, with the knowledge of the China desk at Main State, has introduced the Ministry of Communications to the key telecommunications education officials in China. Coordination in Iraq is necessary between the Ministry of Communications, Ministry of Foreign Affairs and Ministry of Higher Educations. The Chinese appear willing to consider training large numbers of technicians and the planning for the program is underway in 2008.

    The China training programs should be limited to specific technical and operations training requirements. Bachelor level education should be conducted in Iraq, since the education system produces acceptable entry level engineering graduates. Graduate level training and research should remain in the United States.

    This may not sit well with those in the Department of Defense who consider China to be the next strategic enemy. However, pragmatism should be the guiding principle in Iraq to achieve order, stability and rapid reconstruction, certainly in essential services. The major Chinese communications equipment vendors Huawei and ZTE already train hundreds of Iraqi students a year at their commercial training facilities in Shenzhen. Several times a year Government of Iraq ministerial officials with telecommunications and IT portfolios , in groups of 24 or so, are invited to China, flying first and business class, staying in five star hotels in Beijing, the latest limos provided and spending money passed out. The Chinese have a long term commercial and diplomatic plan for Iraq.

You’ll find a lot of other really interesting material in Fonow’s report. His description of the administrative chaos that still dogs the US’s effort to do “reconstruction” in Iraq makes extremely depressing reading. Interestingly, from his perspective, the chaos became worse in early 2007, as the State Department started pumping large numbers of extremely unqualified people into the Embassy there, as their contribution to the “surge”.


… Anyway, I can see I’m assembling the building blocks here for a really interesting article on how George Bush’s completely misplaced reliance on military assault and invasion in both Iraq and Afghanistan has not only not “resolved” the problem of violent Islamist extremism… It has not only resulted in the deaths of 4,200 Americans and uncountable scores of thousands of citizens of Iraq and Afghanistan… It has not only destroyed a lot of Iraq’s vital physical and institutional infrastructure, and failed after nearly seven years to bring public security or public order to most of Afghanistan… It has not only helped plunged the US into trillions of dollars worth of debt– that our grandchildren will be paying off for many decades to come– with much of that debt held by Japan and yes, also by China… But it has also made these Iraq and Afghanistan suddenly incredibly hospitable to Chinese mercantilism, and has considerably accelerated China’s emergence as significant political actor in both south-central Asia and the Middle East.

Heckuva job, George!

But perhaps that isn’t totally a fair assessment. It wasn’t only that George Bush and his advisers turned out to be unbelievably wrongheaded, shortsighted, and maladroit in their handling of these two countries… It was also, it seems to me, that the Chinese regime has until now played its cards in both countries incredibly well.

Also, the bigger lesson, as noted here several times before: In the modern world, we are no longer in the 19th century. Relying on military power just doesn’t get you what you want any more…


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