Al Sudani struggles to maintain Iraq’s political stability
9 May 2024
Iraq’s Prime Minister Mohammed Al Sudani is now more than halfway through his term. While there have been some notable economic developments, such as the massive energy deal with TotalEnergies signed in July 2023, his main accomplishment may well be maintaining a fragile political settlement.
When he took office in late October 2022, it ended a year of tense political infighting following the 2021 election. The next national poll is expected in October 2025, but while the government itself may appear secure, Iraqi politics is as turbulent as ever.
The Council of Representatives has not had a permanent speaker since November, when Mohammed Al Halbousi was dismissed by the Federal Supreme Court and forced to step away from parliament. Mohsen Al Mandalawi was named acting speaker, but fierce debate continues over handing the job to anyone else on a more formal basis.
The latest figure to be proposed is Salem Al Issawi, who is backed by three Sunni blocs but opposed by the largest Sunni group, Al-Halbousi’s Taqaddum (Progress) party.
Under Iraq’s ‘muhasasa’ system of dividing the political spoils along religious and ethnic lines, the speaker’s job goes to a Sunni politician, while the federal presidency goes to a Kurd and the prime minister is Shia.
Al Sudani is now also facing a fresh challenge on the domestic front in the shape of a mooted return to the political scene by rival Shia leader Moqtada Al Sadr, who announced his retirement from frontline politics in August 2022. Earlier that year, he had pulled all his MPs from parliament, effectively handing power to Al Sudani’s Coordination Framework.
Al Sadr now looks set to change course. On 10 April, he renamed his organisation from the Sadrist Movement to the National Shiite Movement and further statements since then point to a possible return to the electoral battlefield. Given his past ability to mobilise large numbers of followers, he could have a significant impact on the next election and events leading up to it.
“Al Sadr maintains strong support from parts of the street, but it may prove difficult for him to reassert himself after ceding control over powerful institutions to the Coordination Framework,” said Winthrop Rodgers, an independent analyst focused on Iraq. “However, his return will certainly complicate dynamics within Shia politics.”
His likely return will also test Iranian influence on Baghdad. Tehran has been able to exert huge influence over Iraqi politics through its allied Shia politicians and militia groups, but Al Sadr has been the most prominent Shia figure to resist such ties in recent years.
Al Sudani has, though, been reaching out to other neighbours, too. In April, he hosted Turkish President Recep Tayyip Erdogan, who was making his first trip to the country since 2011. The visit resulted in more than 20 agreements and memoranda of understanding, including one covering the contentious issue of cross-border water resources, as well as security and trade. However, there was no sign of progress on re-opening an oil export pipeline from Iraqi Kurdistan to Turkey.
Trade route
Under Al Sudani, Baghdad and Ankara have also managed to get Abu Dhabi and Doha on board with the Development Road initiative, a $17bn plan to develop a 1,200km trade route from the Gulf through Iraq to Turkey and, from there, on to Europe. The UAE had previously thrown its weight behind the India-Middle East-Europe Economic Corridor initiative, launched in New Delhi in September – but that plan involves using Israeli ports.
“In light of the Gaza war, a trade route through Israel is unlikely to be something that many Gulf rulers want to be too closely associated with at the moment,” said one regional analyst.
For the Iraqi trade route to build up real momentum, the security situation around the country will need to improve further. While the Islamic State has been largely defeated, other pro-Iran groups continue to be active, including several that have banded together as the Islamic Resistance in Iraq (IRI).
Many of that umbrella group’s recent actions have been directed against Israel, including a cruise missile attack on 2 May, which targeted Tel Aviv. Such actions hold the potential for Iraq to be drawn into any expansion of the Israel-Hamas conflict, perhaps as a proxy battleground between Iran and Israel.
Other apparent IRI attacks have been directed at local targets, such as a drone attack on the Khor Mor gas field in the Kurdistan region in late April, which killed four Yemeni workers and forced UAE-based operator Dana Gas to suspend operations for several days.
Kurdistan election in doubt
Kurdistan, meanwhile, has other all-but-intractable political problems. Most recently, the Kurdistan Democratic Party (KDP) insisted it will not participate in the regional parliamentary election planned for 10 June – two years after it should have been held.
That stance was prompted by a Federal Supreme Court ruling in February that ended the practice of reserving 11 seats for minority groups including Turkmen, Christians and Armenians after ruling that the quota was “unconstitutional”. The MPs holding those seats had generally voted in step with the KDP – something that led its rival, the Patriotic Union of Kurdistan (PUK), and others to file a court case arguing that the communities were no longer properly represented.
The KDP has emerged as the largest party from every election in the region over the past two decades and its pledge to sit out this election creates a thorny issue for Baghdad, which is now in charge of the process – after the Supreme Court also ruled in February that oversight of the elections should be handed over from the Kurdish authorities to the federal Independent High Electoral Commission.
“If the KDP does not participate in the election, the Kurdistan Regional Government will effectively cease to function as a cohesive political entity; if Baghdad gives into the KDP’s gamesmanship, it sets a bad precedent that a single party can prevent an election if it feels it will be disadvantaged,” said Rodgers.
No solution has been found as yet. Kurdistan region president Nechirvan Barzani was in Tehran on 6 May, where he held talks with Iranian President Ebrahim Raisi and Supreme Leader Ali Khamenei, among others. Trade and cross-border security issues were at the top of the agenda, but some reports suggested Barzani had also tried to persuade Tehran to put pressure on the PUK to agree to a delay to the June poll.
On 8 May, a further element of chaos was leant to the proceedings when the High Electoral Commission suspended preparation for the Kurdish election in response to a lawsuit filed by the KDP over the distribution of constituencies.
Together, the prospect of a major rival Shia bloc returning to Baghdad politics ahead of the 2025 Iraqi parliamentary election and the risk of the breakdown of the political process in Kurdistan threaten to disrupt the relative political calm that Al Sudani has worked to cultivate. Handling the shifting political landscape will require astuteness.
Image: مكتب اعلامي لرئيس الوزراء, CC BY-SA 4.0, via Wikimedia Commons
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Enowa received the initial bids for the contract on 4 March.
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Wabag confirms $317m Saudi water deal
6 September 2024
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The value of the contract for the Yanbu 5 SWRO plant is $317m, the Bombay Stock Exchange-listed company said in a statement on 6 September.
The engineering, procurement, construction and commissioning contract covers the design, engineering, supply, construction and commissioning of the desalination plant.
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MEED reported in July that Wabag submitted a lower bid for the contract.
Saudi Arabia's main producer of desalinated water, SWA – formerly Saline Water Conversion Company (SWCC) – received two bids in May for the contract to build the Yanbu 5 SWRO project.
The other bidder is understood to comprise a local contractor team and an overseas-based partner.
The bid evaluation process is ongoing for a second project, the Shuaiba 6 SWRO plant, which has a capacity of 545,000 cm/d.
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Chinese companies win 95% of all Iraqi energy projects
6 September 2024
Commentary
Wil Crisp
Oil & gas reporterCompanies headquartered in China have won 95% of all major project contracts awarded in Iraq’s oil, gas, chemicals and power sectors so far this year, as they increase their dominance in the market.
A total of $12.1bn in energy project contracts were won by Chinese companies during the first eight months of 2024, according to data gathered by regional project tracker MEED Projects.
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This contract was awarded to a consortium of Beijing-headquartered China State Construction Engineering Corporation (CSCEC) and German technology conglomerate Siemens.
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“The huge presence that China has in the country’s energy sector is a source of concern for Iraq’s leadership, which doesn’t want to cede control of so many important infrastructure projects to companies from any single country.”
“The problem is, other countries are reluctant to take on the risks of doing business in Iraq and at the same offer the competitive prices that Chinese contractors can offer.”
The biggest energy project contract won by a Chinese contractor so far this year is the agreement for the development of the Al-Faw Investment Refinery project.
The client on the project, state-owned Southern Refineries Company, signed a contract with CSCEC in May this year.
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The project will be carried out in two stages. The first phase will involve refining operations, while the second will involve constructing a petrochemicals complex with a capacity of 3 million tonnes a year.
The wider project also includes the construction of a 2,000MW power plant and the establishment of the Al-Faw Academy for Refinery Technology, to train 5,000 Iraqi workers that will eventually work at the facility.
Hualu, a subsidiary of China National Chemical Engineering Company (CNCEC), signed a preliminary principles agreement for the project in December 2021.
At the time, Iraq’s Oil Ministry said that the project would have an investment value of $7bn-$8bn.
MEED Projects has estimated that the contract value of the deal signed with CSCEC in May for the refinery project is about $4bn.
Other energy project contracts won by Chinese companies during the first eight months of this year included the contract for the Artawi 1,000MW photovoltaic solar power plant in Basra.
This contract, estimated to be worth $1bn, was awarded to China Energy Engineering International Group.
Chengdu-based DongFang Electric Corporation was awarded the main contract for a project to convert the Baghdad South power plant into a combined-cycle gas turbine power plant.
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The subsidiary, PetroChina Halfaya, was awarded the build-own-operate-transfer contract, which is estimated to be worth about $400m.
Iraq’s Oil Ministry said that the field will have an initial output capacity of 150 million cubic feet a day.
The project is expected to be completed within 36 months and will include the construction of gas-gathering facilities, storage tanks and pipeline networks to supply gas to power stations.
Strong performance
Chinese contractors also performed well in Iraq’s energy sector in terms of the value of contract awards in 2023.
Last year, Chinese contractors won $2.3bn in Iraqi energy sector contracts, almost half of the $4.8bn that was awarded.
Looking at the data for 2023 and the first eight months of 2024 together, Chinese companies won $14.5bn in contracts, 82% of the $17.6bn in energy project contracts awarded over the period.
The second closest competitors were companies from Germany, which won just over $1bn in contracts, 6% of all awards.
Iraqi companies were third, winning $816m in contracts, according to the data compiled by MEED Projects.
Contracts were also won by companies from Italy, the Netherlands and Turkiye.
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Abdel-Ghani said that he will be specifically targeting US companies in the upcoming round.
Earlier this year, the US international oil and gas company ExxonMobil completed its exit from Iraq’s West Qurna-1 oil field, handing over operatorship to PetroChina.
Exxon’s plan to exit the West Qurna-1 oil field was first announced in April 2021, when Iraq’s Oil Ministry said the US-based oil company was considering selling its 32.7% stake.
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Region plugs in to electric future
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EditorRead the September 2024 issue of MEED Business Review
Saudi Arabia is well known as one of the world’s largest oil exporters. What is less known is that the kingdom is also one of the world’s most significant consumers of oil.
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PIF and Hyundai award car plant construction deal
5 September 2024
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Saudi Arabia's sovereign wealth vehicle, the Public Investment Fund (PIF), and South Korea's Hyundai Motor Company have awarded the contract to build a vehicle manufacturing plant in Saudi Arabia.
According to media reports, the firms awarded an estimated $248m contract to Seoul-headquartered Hyundai Engineering & Contracting.
Construction of the plant is expected to start in 2024, and vehicle production in 2026.
The facility will have a production capacity of 50,000 vehicles a year, including both conventional vehicles and electric vehicles (EVs).
MEED reported in November last year that Hyundai Motor Company had appointed Seoul-headquartered Heerim Architects as the design consultant for its vehicle manufacturing plant in Saudi Arabia.
PIF and Hyundai Motor Company signed a joint venture agreement to set up a vehicle manufacturing plant in the country in October last year.
The PIF will hold a 70% share in the joint venture, with Hyundai holding the remaining 30% stake. The total investment for the project is estimated to be about $500m.
In December 2022, Saudi Arabia's Industry & Mineral Resources Ministry signed a memorandum of understanding with Hyundai Motor Company to establish a car production plant in the kingdom.
The PIF is keen to invest in the kingdom's automotive sector. Last year, it launched the National Automotive & Mobility Investment Company (Tasaru Mobility Investments) to develop the local supply chain capabilities for the automotive and mobility industry in Saudi Arabia.
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