Iraq's Basra and Indian Interests

In the wake of protests since last year in the Iraqi province of Basra, the government at Baghdad is uncertain on the possible transition of the province to an autonomous region. The oil rich Basra has been pushing forward for increased autonomy [[i]] for more than a decade and half as it produces oil roughly as much as of the entire Kuwait [[ii]]. Earlier this year, the Provincial Council of Basra unanimously voted in favour to be an autonomous region in April [[iii]]. However, the probability of approval from the Abdul Mahdi’s Government [[iv]] would be slim. The pressure is on the government and an anxiety persists on whether Basra might become like Kurdistan.

Basra- Iraq’s Commercial Hub

Situated in South eastern Iraq, bordering Iran, this predominantly Shiite populated province is home to almost two-thirds [[v]] of Iraq’s oil production. This region also has a large amount of proven and unexplored oil reserves which makes it a strategic territory. Basra also has an inland water port and the Umm Qasr port [[vi]] through which trade transits to the Persian Gulf. Since the ousting of Saddam Hussein fifteen years back[[vii]], there have been many disputes between the province and Baghdad over oil revenues and investment. Interestingly, the big four oil fields- Rumaila, Majnoon, Zubair and West Qurna are situated in southern Iraq[[viii]] which is crucial for sustenance of the Iraqi economy.

Iraq is currently the second largest oil producer[[ix]] in OPEC over passing Iran. According to a Reuters report, Iraq is set to increase the production of the country’s southern oil fields to 290,000 barrels per day (bpd) by the end of this year and to 450,000 bpd by the end of 2021 from its present production of 240,000 bpd[[x]]. However, the founding member of OPEC, has been successful in achieving a production of nearly 5 million barrels per day (mb/d) in 2018[[xi]]. Interestingly, Iraq has proven crude oil reserves of 147,223 million barrels (2015) as of OPEC’s website[[xii]]. Globally, Iraq accounts for around one-fifth of the increase in net oil supply[[xiii]] over the current period of time.  According to International Energy Agency’s (IEA) report on Iraq’s Energy Sector (2019), it is observed that Iraq would play a pivotal role in meeting global oil demands in the next decade or so[[xiv]]. The report also added that the OPEC member is expected to add 1.2 mb/d through 2030[[xv]].

Province versus Autonomous Region

Even though Iraq is reasonably diverse in its broad sectarian groupings- Shiites, Sunnis and Kurds, it is observed that it has a larger composite of Shiite population[[xvi]]. Basra is considered as the economic capital of Iraq due to its oil abundance and production. The Shiite dominated province has been pushing for an autonomy status; Due to increasing rates of unemployment [[xvii]] in the province the status could help to increase local investments as their motivation is from their energy wealth. But the provincial council in Basra has very limited control of its own revenue as the majority share goes to Baghdad[[xviii]].

If Basra becomes an autonomous region, then according to Section five (Article112- 117) of Iraqi constitution [[xix]], it would intensely gain special provisions. Though Baghdad would technically maintain the rights of currently running oil, but in a later phase Basra like the Kurdistan Regional Government(KRG) could claim the control over the rights of the oil and gas fields that is not currently producing, and have the entitlement to auction it off[[xx]]. Interestingly, if Basra gets autonomy and carry out this option, it would naturally open its doors for increased local revenues to the regional government vis-à-vis opportunities for the Basrawi companies to gain local and international contracts in the oil and gas sector fetching higher revenues[[xxi]]. Apparently, the regional autonomy status would assist Basra to gain to more control over domestic economy and expansive economic planning cum decisions. However, the chances are high for prevention from providing autonomy especially to a province from where Abdul Mahdi’s government -which is predominantly Shiite-  is dependent to  maintain the country’s economic stature.

Indian Interests

Tracing back centuries, the civilizational and historical connect between India and Iraq is commendable. In the modern times the government level relations had certain hindrances due to some wars[[xxii]] but the economic relations have been the upfront for India’s Iraqi policy. According to the Ministry of External Affairs(MEA), Government of India, “ Iraqi port of Basra was not only market par excellence of the Indian merchandise including textiles, spices, food-grains and other commodities for the Arab world but also of the famous pearl trade that flourished mainly through the Indian traders and jewellers”[[xxiii]]. However, in the current era, Basra is important to India in form of oil trade. As one of the largest producers of oil, Iraq has been one among the top exporters of oil to India.

Fig 1. Iraqi Oil Exports by Destination, 2017.

Interestingly, during the colonial era Indian soldiers and railway workers played a crucial role in maintaining security in the region and has also left their imprints which the Iraqis even today proudly express their Indian ethnic descent[[xxiv]]. Iraq has been an important economic destination for employment of skilled labour in oil sector. Basrah is quintessential for huge projects and presence of Indian companies is inevitable. While M/S Mokul Shriram JV had won a contract of USD 235 million for rebuilding the sewerage system at Basrah, in the same place M/S Shapoorji Pollonji had won USD 85 million to construct a hotel[[xxv]]. As a matter of fact the Indian Oil Corporation has provided training for Iraqi oil officials[[xxvi]] in India on various subjects pertaining to downstream oil sector. Moreover, India’s main focus has been on oil trade but in recent times other areas including pharmaceuticals, iron and steel, cosmetics, jewellery and many more  has found space in exports to Iraq[[xxvii]].

Conclusion

In the midst of the global oil supply crunch, the Iraqi government is in a situation where it has to deal with internal or well as external issues pertaining to economic and threat to national integration. Baghdad would not deny the fact that the economy is to an extent run by the oil fields in southern Iraq, majorly in Basra. However, the increasing protests and external challenges especially from major Shiite oil producers in Basra would put the government in dilemma even though they are firm on their decision by not endowing with autonomy to the province. Perhaps, if the protests get intense there is a possibility of granting a semi-autonomy provision which eventually make Basra end up like KRG. However, the bigger question rests on the whether the Iraqi government would able to sustain its national unity and economic stature.