As the war in Iraq between the new Jihadist state, the government and the Kurds intensifies, 10,000 Chinese are trapped in the country, unable to leave. Flights to and from Baghdad are scarce and regularly cancelled and many roads are blocked.
While the majority want to leave, they cannot find the means to do so or their companies refuse to transfer them, fearful of losing contracts worth hundreds of millions of dollars.
In late June, the Chinese embassy in Baghdad said that 80 percent of the 10,000 people are based in the south, 10 percent in the center, including Baghdad, and 10 percent in the Kurdish region. It said that there were no Chinese in the five north and western provinces controlled by the Islamic State of Iraq and Syria (ISIS). This is where the fighting is most intense.
Most Chinese companies in Iraq are large state firms in oil, electricity, telecommunication and urban construction. They include CNPC, China Petroleum & Chemical Corp (Sinopec), China State Construction Engineering and Shanghai Electric Group. Most came after the departure of the US troops in 2011.
ZTE opened an office in 1999 and has become one of the largest phone makers in the country. Huawei opened an office in Sulaymaniyah in the Kurdish region in 2004 and has become the country’s biggest supplier of telecommunications equipment.
The main reason why Chinese companies do not want to leave is oil. Iraq has 143.1 billion barrels of oil, 9.8 percent of global reserves, and relies on it for more than 90 percent of its national revenue.
CNPC controls the Ahdab, Halfaya and West Qurna 1 oilfields, as well as many projects in the Rumaila oilfield. The average investment in each is US$2 billion and each employs at least 1,000 people. CNPC and Sinopec also have international pipeline projects in Iraq.
Last year China imported 23.51 million tons of Iraqi oil, an increase of 49 percent over 2012. And, the value of its construction projects in the country was US$5.25 billion, up 44 percent on 2012.
China’s investment in Iraq is very important in urban construction, roads and bridges and large-scale engineering projects. The Iraq government wants the companies to stay.
In 2008, for example, Shanghai Electric Group started building a power station in the southern province of Wasit. Its three 330-megawatt units started to produce power in March, June and November last year and are now operating at full capacity.
These big contracts are won by Chinese state-firms which then hire private contractors to bring labor, offering wages of 10,000 yuan a month. These workers are one of the three types of Chinese in Iraq. The others are small businessmen, especially in retail and wholesale, and those who serve these two, running hotels, restaurants and visa and tourist services.
Most small businessmen come from Zhejiang and Fujian; many daily necessities come from China – they are exempt from the 17 percent VAT.
Shen Huiyong, commercial attaché at the Chinese embassy in Baghdad, said that, except for the Kurdish region, foreigners faced the threat of armed attack, kidnapping and bombing.
“The conditions for medical help are poor. There are increasingly fewer flights and there are frequent cancellations and delays. Roads are blocked. It is extremely difficult to do emergency evacuation,” he said.
When they sign the contract, the state firms receive a small down-payment; the rest is paid on completion. If they leave the project in the middle, they will lose their investment — so they do not want to go.
Their workers are also in a quandary. If they leave before the end of their contract, they have to pay a fine that could equal all they have earned.
Wang Xu has been in Iraq for four months, working for a private company that provides services to CNPC in Basra. He is willing to pay the fine and has asked his company to go home; but it has refused his request unless he can find someone to take his position.
Yang Guang, who works at CNPC’s Ahdab oilfield south of Baghdad, was also told to stay. “Non-essential personnel have left but essential ones are not allowed to go. Most workers who come here have a lot of pressure from home. It was not easy to come here in the first place and they worry that they cannot come back after they leave,” he said.
Getting a visa for Iraq means an invitation letter and approval by the Iraqi embassy in Beijing and its Ministry of Foreign Affairs. To depart, workers need approval of their companies and the Iraqi government.
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