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American adviser to Kurds Peter W.
Galbraith stands to reap oil profits
12.11.2009
By James Glanz and Walter Gibbs
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November 12, 2009
OSLO, —
Peter W. Galbraith, an influential former American
ambassador, is a powerful voice on Iraq who helped
shape the views of policy makers like Joseph R.
Biden Jr. and John Kerry. In the summer of 2005, he
was also an adviser to the Kurdish regional
government as Iraq wrote its Constitution — tough
and sensitive talks not least because of issues like
how Iraq would divide its vast oil wealth.
Now Mr. Galbraith, 58, son of the renowned economist
John Kenneth Galbraith, stands to earn perhaps a
hundred million or more dollars as a result of his
closeness to the Kurds, his relations with a
Norwegian oil company and constitutional provisions
he helped the Kurds extract.
In the constitutional negotiations, he helped the
Kurds ram through provisions that gave their region
— rather than the central Baghdad government — sole
authority over many of their internal affairs,
including clauses that he maintains will give the
Kurds virtually complete control over all new oil
finds on their territory. |
Peter Galbraith, former State Department Official and
former U.S. ambassador to Croatia |
Mr. Galbraith, widely
viewed in Washington as a smart and bold foreign
policy expert, has always described himself as an
unpaid adviser to the Kurds, although he has spoken
in general terms about having business interests in
Kurdistan, as the north of Iraq is known.
So it came as a shock to many last month when a
group of Norwegian investigative journalists at the
newspaper Dagens Naeringsliv began publishing
documents linking Mr. Galbraith to a specific
Norwegian oil company with major contracts in Iraq.
Interviews by The New York Times with more than a
dozen current and former government and business
officials in Norway, France, Iraq, the United States
and elsewhere, along with legal records and other
documents, reveal in considerable detail that he
received rights to an enormous stake in at least one
of Kurdistan’s oil fields in the spring of 2004.
As it turns out, Mr. Galbraith received the rights
after he helped negotiate a potentially lucrative
contract that allowed the Norwegian oil company DNO
to drill for oil in the promising Duhok region of
Kurdistan, the interviews and documents show.
He says his actions were proper because he was at
the time a private citizen deeply involved in
Kurdish causes, both in business and policy.
When drillers struck oil in a rich new field called
Tawke in December 2005, no one but a handful of
government and business officials and members of Mr.
Galbraith’s inner circle knew that the
constitutional provisions he had pushed through only
months earlier could enrich him so handsomely.
As the scope of Mr. Galbraith’s financial interests
in Kurdistan become clear, they have the potential
to inflame some of Iraqis’ deepest fears, including
conspiracy theories that the true reason for the
American invasion of their country was to take its
oil. It may not help that outside Kurdistan,www.ekurd.netMr.
Galbraith’s influential view that Iraq should be
broken up along ethnic lines is considered offensive
to many Iraqis’ nationalism. Mr. Biden and Mr.
Kerry, who have been influenced by Mr. Galbraith’s
thinking but do not advocate such a partitioning of
the country, were not aware of Mr. Galbraith’s oil
dealings in Iraq, aides to both politicians say.
Some officials say that his financial ties could
raise serious questions about the integrity of the
constitutional negotiations themselves. “The idea
that an oil company was participating in the
drafting of the Iraqi Constitution leaves me
speechless,” said Feisal Amin al-Istrabadi, a
principal drafter of the law that governed Iraq
after the United States ceded control to an Iraqi
government on June 28, 2004.
In effect, he said, the company “has a
representative in the room, drafting.”
DNO’s chief executive, Helge Eide, confirmed that
Mr. Galbraith helped negotiate the Tawke deal and
advised the company during 2005. But Mr. Eide said
that Mr. Galbraith acted solely as a political
adviser and that the company never discussed the
Constitution negotiations with him. “We certainly
never did give any input, language or suggestions on
the Constitution,” Mr. Eide said.
When the findings based on interviews by The Times
and other research were presented to Mr. Galbraith
last weekend, he responded in writing to The Times,
confirming that he did work as a mediator between
DNO and the Kurdish government until the oil
contract was signed in the spring of 2004, and
saying that he maintained an “ongoing business
relationship” with the company throughout the
constitutional negotiations in 2005 and later.
Mr. Galbraith says he held no official position in
the United States or Iraq during this entire period
and acted purely as a private citizen. He maintains
that his largely undeclared dual role was entirely
proper. He says that he was simply advocating
positions that the Kurds had documented before his
relationship with DNO even began.
“What is true is that I undertook business
activities that were entirely consistent with my
long-held policy views,” Mr. Galbraith said in his
response. “I believe my work with DNO (and other
companies) helped create the Kurdistan oil industry
which helps provide Kurdistan an economic base for
the autonomy its people almost unanimously desire.”
“So, while I may have had interests, I see no
conflict,” Mr. Galbraith said.
Kurdish officials said that they were informed of
Mr. Galbraith’s work for DNO and that they still
considered him a friend and advocate. Mr. Galbraith
said that during his work on the Constitution
negotiations, the Kurds “did not pay me and they
knew I was being paid by DNO.”
Mr. Istrabadi, who was also the Iraqi ambassador to
the United Nations from 2004 to 2007, said the case
was especially troubling given the influence of Mr.
Galbraith’s policy views. In his writings — some of
them on the Op-Ed page of The Times and in the New
York Review of Books — he is generally identified as
a former ambassador or with some other generic
description that gives no insight into his business
interests in the area.
Mr. Galbraith, for many years on the staff of the
Senate Foreign Relations Committee, has a long
relationship with the Kurds. In 1988, he documented
Saddam Hussein’s systematic campaign against the
Kurds, including the use of gas. He served as United
States ambassador to Croatia between 1993 and 1998.
In September, he was fired as the No. 2 official
with the United Nations mission in Afghanistan after
he accused the head of the mission of concealing
allegations of electoral fraud.
Views of Mr. Galbraith’s business ties are harsh
within the central Baghdad government, which has
long maintained, in stark opposition to Mr.
Galbraith’s interpretation of the Constitution, that
all the oil contracts signed by the Kurdish
government were illegal.
Referring to the Constitution negotiations, Abdul-Hadi
al-Hassani, vice chairman of the oil and gas
committee in the Iraqi Parliament, said that Mr.
Galbraith’s “interference was not justified, illegal
and not right, particularly because he is involved
in a company where his financial interests have been
merged with the political interest.”
Citing what he said were confidentiality agreements,
Mr. Galbraith refused to give details of his
financial arrangement with the company, and the
precise nature of his compensation remains unknown.
But several officials,www.ekurd.netincluding
Mr. Galbraith’s business partner in the deal, the
Norwegian businessman Endre Rosjo, said that in
addition to whatever consulting fees the company
paid, he and Mr. Galbraith were together granted
rights to 10 percent of the large Tawke field and
possibly others.
An internal DNO document dated Dec. 3, 2006, which
was first obtained by Dagens Naeringsliv, indicates
that a company called Porcupine, registered in
Delaware under Mr. Galbraith’s name, still held the
rights to the 5 percent stake at that time, while a
company associated with Mr. Rosjo held the other 5
percent.
Mr. Eide, the DNO executive, said that as far as the
company knew, Mr. Galbraith’s work was proper.
“To our knowledge, Mr. Galbraith in 2004 was working
as a businessman with no political assignments,” Mr.
Eide said. “Given our network model and limited
experience and knowledge from the region at that
time, our evaluation concluded that we should use
Mr. Galbraith to advise DNO in the first stage of
the project.”
As revelations began appearing in recent weeks, Mr.
Galbraith at first issued qualified denials stating
that he had never been party to any arrangement in
Iraq, technically referred to in the oil industry as
a production-sharing contract. But industry insiders
say that the rights could have been couched in
different terms — not an ownership stake, but a
conditional right or option to become part of such
an agreement at a future date.
Estimating the value of any stake in the Kurdish
fields is difficult given the political
uncertainties. But Are Martin Berntzen, an oil
analyst at Oslo’s First Securities brokerage, said
the Tawke field alone has proven reserves of about
230 million barrels, a figure likely to increase as
new wells are drilled.
“Given no political risk, a 5 percent stake should
be worth at least $115 million,” he said, though he
emphasized that he knew nothing about Mr.
Galbraith’s arrangement.
A possible indication of Mr. Galbraith’s estimate of
the deal’s worth may be discerned in a London
arbitration case in which Porcupine and a Yemeni
investor who now apparently holds Mr. Rosjo’s former
share are seeking more than $525 million from DNO,
according to a filing reported on the legal news Web
site Law.com. Oil analysts in Norway played down the
likelihood of a reward as large as the claim.
According to DNO, the claim represents up to 10
percent of the value of the regional production
contract, which the Norwegian oil firm now shares
with a Turkish energy company after Kurdish
authorities reviewed the previous deal and barred
“certain third-party interests” from participating
further. At a shareholders meeting on Wednesday, Mr.
Eide refused to name Mr. Galbraith as a claimant in
the case. He acknowledged, however, that DNO lost a
procedural ruling in the case last May, and he said
a final decision on damages was expected in early
2010.
In his response, Mr. Galbraith would say only that
“my contractual relationship was with DNO and is the
subject of pending arbitration.”
Copyright, respective author or news agency,
nytimes com
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