The United Kingdom's Secretary of State for Foreign and Commonwealth Affairs, William Hague (pictured), has announced the closure of the British consulate in Basra.
In a statement to the House of Commons this morning, he explained the decision as follows:
"Because of the improving security situation, it is now easier and safer for staff to travel from Baghdad to Basra and around the country more generally. In particular, Embassy staff can now fly direct to Basra Airport in one hour, rather than having to undertake a 48 hour trip as was the case previously.
"This means that we can support UK interests in Basra effectively without the need for staff to be permanently based there. In turn, this allows us to reduce the cost of our presence in Basra, currently £6.5 million per annum ...
"Her Majesty’s Ambassador, his Deputy and other diplomatic staff will continue to make frequent visits across Iraq, including to Basra, to ensure that we continue to maintain the strength and depth of our relationship with Iraq."
The Iraq Britain Business Council (IBBC) told Iraq Business News that the IBBC regrets the closure as it sends the wrong signal to Baghdad and makes the job of British business pitching for contracts harder.
British business leaders are worried the closure will send the wrong signal to Baghdad as they battle to win major contracts against companies from the Far East including South Korea and China.
UK bosses are worried the move means Britain will lose vital relationships with Iraq, especially in the south where there is so much goodwill towards UK companies.
The Executive Chairman of the IBBC, Baroness Nicholson said:
"British business presence down in Basra is absolutely critical. I hope this is a step sideways and not a step backwards ...
"I’m very hopeful the Foreign Office cuts, which I think should not have happened and should not be affecting Basra may be reversed before too long."
The IBBC has recently expanded its operation in Basra, opening a new office in July and is soon to sign an memorandum of understanding with the Basra governorate.