Iraq has frozen a 20-year oil-for-projects agreement with China due to a financial and political crisis, a local news network said on Wednesday.

The OPEC member has just withdrawn nearly $1 billion deposited in the joint Iraq-China fund in order to pay its civil servants, Aliqtisad News said, quoting unnamed officials.

"Iraq has decided to freeze the agreement with China... it has not officially annulled the agreement but suspended its implementation because of internal political and security developments, the financial crisis....," the report said.

It quoted Ali Saadoun, a member of parliament's economy and investment committee, as saying the deal with China would largely benefit Iraq's economy as it would tempt many Chinese firms to execute projects and invest in Iraq.

But he added: "This agreement was supposed to gain momentum after the formation of the new government but it seems that this government has no intention to activate the agreement... it is clear that the US is pressing this government to cancel it."

The agreement, signed in mid-2019, stipulates that Chinese firms execute projects in Iraq, mainly infrastructure, in return for the supply of 3 million barrels of Iraqi oil a month.

(Writing by Nadim Kawach; Editing by Anoop Menon)

(anoop.menon@refinitiv.com)

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