Both of them - the Egyptians and the Basrawis - are able to communicate without issue using Modern Standard Arabic, and worse comes to worse, the Basrawis wouldn't have much problem to emulate the Egyptian accent (almost all of the TV dramas, films, actors and music is in a Lebanese and Egyptian accent, so pretty much every Iraqi living in Iraq would have no issue with it). It would never reach a point where they can't communicate with each other.
The paragraph itself seems slightly misleading or enhanced for dramatic effect. If this situation did actually take place as claimed, it's likely that the locals were intentionally trying to confuse the interpreter.
More likely the author misunderstood the interpreter, I would think. It sounds to me like he was saying he doesn't understand what the locals are saying when they speak in their native dialect to one another; that doesn't mean he can't understand what they're saying when speaking to him.
Also to add: any Arab will pick up any other local dialect/accent pretty quickly as well. I highly, highly doubt any Egyptian living in Iraq for a period of time would not be able to pick up the dialect rather quickly.
I highly, highly doubt any Egyptian living in Iraq for a period of time would not be able to pick up the dialect rather quickly.
Except when you're working for an occupying military force, you're not really "living" in the country you're occupying. Unless you're native, you're living on a military base -- i.e. with the occupiers, and not with the locals.
Which is one of many, many reasons why these kinds of military operations tend not to work so well.
The paragraph itself seems slightly misleading or enhanced for dramatic effect. If this situation did actually take place as claimed, it's likely that the locals were intentionally trying to confuse the interpreter.