Iraq woos China for transport project linking Asia to Europe

The Development Road is intended to transform Iraq's oil-reliant economy after decades of war and crisis

Iraq is seeking to link Al Faw port on the Arabian Gulf, currently under construction, to its northern border with Turkey by rail and road. Photo: Daewoo E&C
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Iraq expects China to be a major participant in its $17 billion rail and road project linking Asia to Europe, Transport Minister Razzaq Al Saadawi said after meeting the Chinese ambassador to Baghdad.

The Development Road project, linking the under-construction Al Faw port on the Arabian Gulf coast to the border with Turkey in the north, is intended to transform Iraq's oil-reliant economy after decades of war and crisis. It involves the construction of about 1,200km of railway lines and a new motorway that will reduce transport costs and transit times between the two continents.

Iraq hopes to make the project a part of China’s Belt and Road Initiative – a global strategy involving infrastructure development and investments in about 150 countries in Asia, Africa and Europe.

“The Iraqi government welcomes China's participation in the Development Road project, whether in implementation or investment,” Mr Al Saadawi said in a statement after meeting ambassador Cui Wei on Wednesday.

“Our government welcomes the participation of Beijing in the Development Road project and the door is open to all countries to take part, first and foremost China.”

Iraq “is looking forward to an effective contribution by China” in the project, he said, and added that the Chinese ambassador had shown “clear interest in knowing many of the details and components”.

On Thursday, ambassador Wei met Iraqi Prime Minister Mohammed Shia Al Sudani and Mr Al Saadawi where they “discussed bilateral relations and co-operation between the two countries and the means to develop them in all fields” a statement issued by prime minister's office said.

The ambassador stressed that the “Development Road project is very important to Iraq, it will be a path for peace and prosperity in the region and will be a complementary to Belt and Road initiative.”

Iraq unveiled the project to transport ministers and officials from the GCC, Iran, Turkey, Syria and Jordan at a conference on Saturday, and Mr Al Saadawi hinted a second conference on project would be held to which China would be invited. He did not give a date.

China is one of the biggest buyers of Iraq's oil and one of its main trading partners. Goods worth about $53.37 billion were traded between the two countries last year, up about 43 per cent from 2021, according to the Chinese embassy. China has also invested billions of dollars in Iraq's oil, electricity and construction sectors.

Given that relationship, the Development Road project is definitely on the Chinese radar, said Nabeel Al Marsoumi, a Baghdad-based economic expert.

“Certainly, China is interested about this project because it is an important transportation node linking East to West and therefore can be used by China for its trade and because it is a short route between Asian and European markets,” he told The National.

“On the other hand, the Chinese companies are seeking a role in building this project and given that China has big investments in Iraq and China is the biggest trade partner to Iraq, they know the Iraqi environment very well and have good relations with Iraqi politicians,” he said.

But he said there were “doubts that China would pour money into this project”.

“Given the length of the road, the security situation and how hard it is to protect foreign investment in Iraq, I think in the end the [Iraqi] government will finance the project,” he said.

Iraqi Prime Minister Mohammed Shia Al Sudani told the conference the project would provide an “economic artery and a promising opportunity to bring interests, history and cultures together to make our region a destination for anyone seeking successful investment”.

“The Development Road is an ambitious and well-studied plan towards a strong and successful economy. We see it as a cornerstone for a sustainable non-oil economy, serving Iraq's neighbours and the region and contributing to efforts for economic integration.

“It will take all the peoples of the region to an unprecedented stage of communication and integration and that means more stability and capability to face challenges.”

Representatives of the invited companies welcomed the move and promised to study it. Joint legal, technical, financial and management committees were formed to discuss financing and implementation.

The project envisions high-speed trains moving goods and passengers at up to 300kph. Logistic centres and industrial cities are also planned along the network and it could include oil and gas pipelines.

It is estimated the project could generate annual revenue of $4 billion and create at least 100,000 jobs.

Despite its oil wealth, with about 145 billion barrels of proven reserves, Iraq trails neighbouring economies due to decades of war since the 1980s, UN economic sanctions imposed in the 90s and political and security instability that followed the 2003 US-led invasion that toppled Saddam Hussein.

The Opec member is struggling to diversify its oil-reliant economy. Oil revenue makes up nearly 95 per cent of Iraq's budget.

Updated: June 02, 2023, 8:55 AM