The United States and its allies have been working to regain their foothold in Iraq’s key political and economic institutions, following a decline in their influence since the removal of Saddam Hussein in 2003. During this period, Iran expanded its influence over Iraq, using political, economic, and military proxies. This shift intensified after the U.S. withdrew from the Iran nuclear deal (JCPOA) in May 2018 under former President Donald Trump. With the U.S. stepping back, China took the opportunity to replace Russia as the main power backing both Iran and Iraq.
In 2019, China formalized its influence in the region with Iran through the “Iran-China 25-Year Comprehensive Cooperation Agreement,” followed by a similar deal with Iraq in the form of the “Oil for Reconstruction and Investment” agreement. In 2021, this agreement evolved into the broader “Iraq-China Framework Agreement.” These deals saw China investing heavily in both countries, securing access to cheap oil and gas while strengthening its military presence in the region. This shift in power dynamics has left the U.S. and its allies seeking to reverse China’s growing influence.
China’s strategy of combining investment with a significant security presence has been central to its Belt and Road Initiative (BRI), launched in 2013. This approach mirrors the colonial strategy of the British East India Company, which used trade and investment to gain control over large parts of Asia. The U.S. has also employed similar tactics for decades, securing its influence worldwide through investments backed by military presence.
However, the West now has two key advantages in Iraq. First, Israel, a crucial U.S. ally, has reduced Iran’s threat in the region through successful strikes against Iranian-backed proxies like Hezbollah, Hamas, and the Houthis. Second, TotalEnergies, the French oil giant, has signed a $27 billion deal aimed at improving energy infrastructure across the Middle East and North Africa, which includes projects critical to Iraq’s energy independence from Iran.
Among these projects, TotalEnergies aims to reduce the flaring of gas produced during oil drilling, a move that could reduce Iraq’s reliance on Iran for energy imports. Iraq has committed to ending gas flaring by 2030, and TotalEnergies’ efforts could help the country meet this goal. Additionally, the company is advancing the Common Seawater Supply Project (CSSP), which will enable Iraq to increase its oil production by injecting seawater into oil reservoirs, a critical step in boosting the country’s crude output.
Now, UK oil giant BP has joined the effort, agreeing in December 2023 to develop Iraq’s massive Kirkuk oil fields, which hold an estimated 9 billion barrels of recoverable oil. BP’s involvement complements its existing 50% stake in the Rumaila field, which is part of TotalEnergies’ broader plans for the CSSP. Together, these efforts are aimed at increasing Iraq’s oil production, which could reach as much as 6 million barrels per day (bpd) in the coming years, providing a much-needed boost to the country’s finances and reducing its dependency on Iranian energy.
The Kirkuk and Rumaila fields, which have been in production for decades, require substantial water injection to maintain pressure and optimize output. Iraq’s oilfields, especially in the south, face a growing need for water to sustain production levels, which will require drawing water from the Tigris and Euphrates rivers. While this may put pressure on Iraq’s water resources, experts believe that with careful management, companies like TotalEnergies and BP can meet the challenges ahead.
As Iraq’s oil sector seeks to expand and reduce its dependence on Iran, the U.S. and its allies are poised to regain their influence in the region, while China’s presence continues to grow.
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