Britain in Danger of Missing Out on Basra Boom

Subsequently, Turkey, Iran and South Korea have all invested heavily in the area. However, an increasingly key player is China – now the world’s largest oil importer and Iraq’s biggest customer.

China invests approximately $2 billion a year in Iraq. While this is less than the likes of Turkey and Iran, it has been willing to accept contracts at a less profitable rate in order to win more contracts from the Iraqi government. Chinese companies investing are state-owned, meaning there are no shareholders to keep happy and there is less incentive to focus on cold, hard cash. Its primary interest is acquiring energy resources for its expanding population, rather than significant profit.

China’s need to acquire energy has led it to buy almost half of the oil Iraq produces, at 1.5m barrels per day. It also imports significant amounts of workers, building an airport near the Iranian border in order to transport them to oil fields in southern Iraq. And with its infrastructure requiring an estimated $30 billion investment to meet its production targets, Iraq is only too happy to sell to China.

The irony here is that a country missing out on this potential Basra boom is the one that sacrificed most in ensuring Basra could now in a position to thrive: Britain.

It is true that the Iraq Britain Business Council opened in Basra in July 2012, and UK Trade & Investment hosted a conference in May this year to promote investment by small to medium businesses in Iraq (especially Basra). Yet, despite being keen to place commercial aspects at the heart of its foreign policy, the British government withdrew its consulate in Basra at the end of 2012. A decision taken seemingly with the purpose of saving £6.5 million a year, the government claimed it could represent itself adequately enough 300-odd miles away in Baghdad. Having had its army fight for years in Basra to restore some sense of security, the British government seems to be scaling down just when the situation is – at least potentially – getting better.

The two different approaches taken to Iraq by the British and Chinese governments are microcosms of the two nations’ vastly contrasting outlooks. As China scales up, Britain retreats. The British government perhaps feels it can remain economically competitive from Baghdad. Yet its comprehensive withdrawal from Basra highlights a paucity of ambition.

In the long-term, the powerful nations of the future are those expanding their global footprint, not shrinking it. And as British presence shrinks in Iraq, its influence in a place where it has sacrificed so much will diminish with it.