China Increases its Investments in Iraq

China didn’t take part in the U.S.-led invasion of Iraq or the bloody military battles that followed. It hasn’t invested in reconstruction projects or efforts by the West to fortify the struggling democracy in the heart of the Middle East.

Workers at al-Waha Oil Co. in the southern Iraqi town of Wasit are part of the growing investment China is making in the war-torn country. The company is the Iraqi affiliate of China’s state-owned China National Petroleum Corp.

But as the U.S. military draws down and Iraq opens up to foreign investment, China and a handful of other countries that weren’t part of the so-called coalition of the willing are poised to cash in.

These countries are expanding their foothold beyond Iraq’s oil reserves the world’s third-largest to areas such as construction, government services and even tourism, while American companies show little interest in investing here.

“The U.S. really doesn’t know what to do in Iraq.” Said Fawzi Hariri, Iraq’s industry minister. “I have been personally, as the minister of industry, trying to woo U.S. companies into Iraq.  There is nothing yet, nothing tangible.

In the past two years, Chinese companies have walked away with stakes in three of the 11 contracts the Iraqi Oil Ministry has signed in its bid to increase crude output by about 450 percent over the next seven years. Only two American firms won stakes in oil deals.

“They made a mistake and overestimated the risk,” said Ruba Husari, an oil analyst in Baghdad who runs the Iraq Oil Forum, a trade website.

The French and Chinese have also made forays into the cement industry. The Chinese have started building a billion-dollar power plant in the south. The Chinese and the United Arab Emirates are in talks to build residential complexes.

The French automaker Renault and Germany’s Mercedes-Benz are in advanced talks to make trucks for industrial transport, according to Iraqi officials. The South Koreans signed a memorandum of understanding to build a multimillion-dollar steel mill in the south and a power plant, and the Turks have scored a series of construction and government services contracts.

Except for a $3 billion contract with General Electric to purchase power-generating equipment for Iraq, Iraqi and U.S. officials are hard-pressed to point to any significant U.S. investment in Iraq.

The U.S. “consistently ranks in the bottom” among investors, according to a 2009 study by Dunia Frontiers Consultants, which tracks private investment in Iraq.

France, which also did not participate in the war, recently set up a center in Baghdad to support French companies seeking to test the waters.

“This is a rich country,” French Ambassador Boris Boillon said. “In this world of recession, in this period of global crisis, we need to get growth and expansion wherever you can find it.”

(Source: Washington Post)

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