In 2021, Iraq more than any other time after the 2003 is facing economic and budget crisis. Meanwhile, political factions blame Prime Minister Mustafa al-Kadhimi’s economic performance and say that he did far below enough to get the country out of the current economic predicament.
AhlulBayt News Agency (ABNA): In 2021, Iraq more than any other time after the 2003 is facing economic and budget crisis. Meanwhile, political factions blame Prime Minister Mustafa al-Kadhimi’s economic performance and say that he did far below enough to get the country out of the current economic predicament.
Meanwhile, the lawmakers have recently restored to focus of the parliament the provisions of implementation of the economic agreement with China, signed in 2018 by former PM Adel Abdul Mahdi. Walid al-Sahlani, the head of Services and Reconstruction Commission at the parliament, said recently that members of parliament have lately sent a letter to the PM asking him to inform them of the accord with China and criticizing the government’s decline to implement it. “The letter says implementation of the agreement will be positive to the economy,” he added.
Now, the issue raised by this member of parliament promotes a question: Why has not yet Beijing-Baghdad agreement been implemented? Is Iraq’s financial crisis the obstacle or it is the foreign actors?
Al-Kadhimi’s distance from China and the reason behind Abdul Mahdi’s resignation
In September 2019, a month before the start of the street protests in Iraq, an economic agreement was signed between Beijing and Baghdad with a $ 500 billion contract during Adel Abdul Mahdi's five-day visit to the Chinese capital. During this trip, eight agreements and MoUs were signed, and the main agreement was implemented on October 1 by depositing $ 500 billion in a special fund set up for this purpose. Under the Beijing-Baghdad agreement, the amount was set to return from the daily sale of 100,000 barrels of Iraqi oil to China and $10 billion in funding from Chinese banks.
However, as the implementation date came, a wave of protests began in Iraq on October 1, and the project of ousting Adel Abdul Mahdi from power was practically launched. In fact, many political observers said the main root of the US fury over Abdul Mahdi was China-Iraq agreement.
However, in the government of al-Kadhimi, the implementation of this agreement is in a state of ambiguity, and it seems that the government does not have much will for the implementation. Although al-Kadhimi has always insisted that his government has not rescinded any of the agreements signed with China and that the implementation of agreements and MoUs with Arab and foreign countries depends on the approval of next year's budget bill, his cabinet actions clearly show that he seeks to find new financing sources and bring new funds to the country.
US-Arab push against al-Kadhimi to distance from China
Before the coronavirus outbreak and under normal circumstances, the Iraqi and Chinese governments recorded $30 billion trade exchange, making the Asian economic power Baghdad's largest oil buyer and trading partner. But the large-scale China-Beijing agreement caused great anger and concern in Washington since the initial moments of signing mainly because the projects were to be undertaken by the Chinese in exchange for Iraqi oil. This meant that China would turn into the largest investor in Iraq’s reconstruction and even energy in the future.
As a result, from the very first day of the implementation of this agreement, the protests in Iraq started and continued for several months in different cities. It is noteworthy that the Iraqi security forces arrested several UAE, Saudi Arabia, and the US-aligned teams during the street protests, which showed the dissatisfaction of Washington and the Arabs with the Beijing-China agreement.
But in recent months, especially after the appointment of Mustafa al-Kadhimi as prime minister on May 7, 2020, US-Arab efforts to reach economic and strategic agreements with Baghdad began. Two rounds of strategic negotiations between Baghdad and Washington were held. Also, Arab countries, with the encouragement of Washington, have made several proposals to invest in Iraq. All of this pressure has prompted the Iraqi government to, earlier, announce the signing of an agreement and MoU of cooperation with Egypt and Jordan on reconstruction, education, infrastructure and the health sectors, which experts say is an attempt to find an appropriate alternative to the Beijing agreement.
But it is mentionable that the Arab actors claiming readiness to invest in the Iraqi infrastructures not only cannot help the country but also in the long run it is Iraq that would lose the opportunity provided for reconstruction. Actually, China’s $500 billion reconstruction bid is not only impossible for the Arab states to provide but also the US cannot make such a huge investment offer. Baghdad would suffer the most should al-Kadhimi yield to the American pressures.