(EnergyAsia, July 10 2014, Thursday) — With a nervous eye on its growing exposure to the Middle East, China’s envoy to the region arrived in Baghdad this week to make a high-profile declaration of support for the Iraqi government fighting to hold the country together against the twin break-up threats posed by the Islamic State of Iraq and Syria (ISIS) and ethnic Kurds.

During his meeting with Iraqi Prime Minister Nouri al-Maliki, envoy Wu Sike said China supports efforts by his Shia-dominated government to preserve the country’s sovereignty and independence while urging it to be more inclusive of Sunnis. Radical Sunnis are answering the call of ISIS leader Abu Bakr al-Baghdadi to establish a global Caliphate starting with the overthrow of established governments in the Middle East and North Africa.

The al-Maliki government is also fighting to prevent ethnic Kurds from forming a breakaway state in northern Iraq which could make off with 45 billion barrels or 30% of Iraq’s crude oil reserves.

ISIS poses the more worrying and immediate threat as it has occupied other oil-rich parts of Iraq after its well-armed and well-financed troops easily crushed a demoralised Iraqi army in a matter of weeks in June.

With more than 10,000 workers and US$10 billion invested in the war-torn country, China has the most to lose among the many foreign countries with a stake in Iraq. Led by PetroChina and CNOOC, China has gained access to nearly 13 billion barrels of Iraq’s estimated 150 billion barrels of crude oil reserves under the embattled al-Maliki who became Prime Minister in 2006. The US, which is working to depose his government, has funded and armed elements of ISIS as part of its campaign to overthrow Syria’s President Bashar Hafez Assad.

China’s emergence as Iraq’s main oil customer and reserves holder has led many in the US to view the 2003 overthrow of the Saddam Hussein regime by former President Bush as a strategic mistake that has largely benefitted Beijing at America’s expense. Without expending any troops or military involvement, China has gained access to around half of Iraq’s estimated three million b/d of production.

Adding to US resentment, Al-Maliki has often praised China as a friend and ally while his government continues to award major oil, gas, engineering and infrastructure contracts to Chinese companies. In his meeting with envoy Wu, he reiterated Baghdad’s assurance for the safety and security of Chinese companies and their staff.

Wu returned the favour by repeating Beijing’s continued support for the Al-Maliki government, but could offer little by way of concrete action to stop ISIS or the Kurds from further dismantling Iraq. In effect, neither is in a position to fulfil their guarantees to each other.

Wu’s empty assurances served only to underline the sharp contrast between China’s business deal-making prowess and its limited political influence in the region due largely to its lack of knowledge and experience in dealing with the Middle East. Without any military presence in the Middle East, China has also been exposed as a toothless tiger unable to defend its own interest or help its Iraqi ally as ISIS effortlessly marched into key Iraq cities.

China’s hallowed foreign policy principle to never interfere in the affairs of other countries has turned out to be its Achilles’ heel as it paralyses all thought and action in defending its interests abroad. In contrast, Russia has sent fighter jets to protect Baghdad while Iran has dispatched troops to fight ISIS.

Yet, China has far more at stake than just its interest in the Middle East and North Africa where it has already suffered huge losses from the civil wars in Libya and Syria. ISIS is a different threat altogether as its call for the creation of a global Sunni community appears to be increasingly heeded, including among the restive Uighur and Muslim minorities in western China. Amid recent incidents of terror attacks in Xinjiang and other Chinese provinces, Beijing is under pressure to quickly formulate new policies as well as create agencies to deal with both its growing interest in the politically unstable Middle East and its own Muslim regions.