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Peter Galbraith's $100M Oil Patch
19.11.2009
By Ruth Wedgwood
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A glimpse at globe-trotting diplomats and
conflicting interests
November 19, 2009
Peter Galbraith is a person that I have admired for
years – not least for his work as a Senate aide in
the late-1980s when he went to northern Iraq and
smuggled out the documents that proved Saddam
Hussein's culpability in the gassing of Kurdish
civilians.
As ambassador to Croatia during the war in the
Balkans in the early-1990s, Peter bucked up the
beleaguered Bosnians and Croats by allowing planes
carrying weapons to land unimpeded -- reporting that
he had "no instructions" to stop the delivery of the
urgently needed military kit. This strategy helped
to defeat the Serb forces of Slobodan Milosevic in
the summer of 1995.
And not least, in 1999-2000, he took charge of the
economic issues in the reconstruction of East Timor,
after that small country was half destroyed by the
wanton looting and violence of the Indonesian-backed
militia,www.ekurd.netfollowing
its vote for independence. Timor is a country
lacking any obvious advantages of geography or
endowment, except for a soil good for coffee and
sandalwood.
Yet Peter negotiated an enormously favorable deal
for East Timor in that new state's dispute with
Australia over the division of the gas and oil found
in the "Timor Gap" – a pocket of wealth on the
seabed floor between the two states. One might have
supposed that Timor would not do much better than
50-50 or 60-40 in the split. But Peter served East
Timor by winning the lion's share of 90% of the
revenues for this struggling small state, though
later a portion of the funds was reportedly lost
through unwise financial investments.
Lately, in his recent service with the United
Nations in Afghanistan, alongside Richard Holbrooke
and Norwegian diplomat Kai Eide, he has shown
courage in criticizing the irregularities of the
national vote for a new president, even if the
electoral shenanigans were to be expected.
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Ruth Wedgwood
Peter Galbraith, former State Department Official and
former U.S. ambassador to Croatia |
But this makes it all
the more painful to think about the ethical swamp
waters that too often lap at the heels of
international actors in countries that are in chaos.
It has presented Peter with a choice in which it is
hard to do the right thing, but where there are
enormous consequences for the future of Iraq, and
frankly, for the future of international
post-conflict reconstruction.
In particular, it has been reported in the press
that Ambassador Galbraith, as he is formally known,
has had a fee arrangement with a Norwegian oil
company to obtain 5% of the oil revenues generated
in a particular large oil field in the Kurdish
territories of Iraq. The amount of money at issue
may be as high as $100 million, and perhaps even
more.
From one perspective, this surprising amount of
money could be dismissed as a private affair, as a
simple contractual commission from a lucky Norwegian
company that is grateful for his assistance in
cajoling the Kurdish authorities to grant an oil
lease. Certainly, Peter has banked a lot of good
will in Kurdistan over the years.
But the press has also been chewing over the fact
that since 2004, Peter has had a key role in pushing
for autonomy for the Kurds over the disposition of
their region's natural resources. His backing for
giving final authority to the Kurds in developing
the oil fields was reportedly a key variable in
Baghdad's constitutional deliberations on the
matter, and in building American support for the
idea.
There is unlikely to be any American statute or
conflict rule that covers this situation, since it
has been years since he was employed as a U.S.
diplomat. He may become a wealthy man unlikely to
slow down in his adventures abroad.
Yet there is a gnawing sense that by choosing to
stake a private financial claim of this magnitude --
in a triple play where he was publicly working for
the Kurds, and yet privately working for the DNO oil
company and himself -- this savvy former diplomat
could prejudice America's role as a credible broker
in diplomacy and reconstruction.
Since 2003, foreign critics have uttered the canard
that the United States sought to topple Saddam
Hussein simply to control Iraqi oil. Seeing an
American mediator take home a pay check of this size
will give comfort to the cynics, and may excite
resentment in a tormented country where the annual
per capita income is less than $2,000.
To be effective, international conflict resolution
depends on the disinterested conduct of
international mediators, including retired American
diplomats who act in post-conflict areas.
It is also like the proverbial "clock that struck
thirteen" -- calling into question all the chimes
that went before. It would not be surprising to see
critics looking back even at the Timorese
negotiation with a new skepticism.
Alas, this phenomenon is not a new problem. In
countries where the law has broken down, there is
often a sense that only a fool would leave gold on
the ground. But diplomats are not supposed to be
gold-diggers.
The same problem has arisen -- on a smaller scale
but also with crucial stakes -- in the
newly-declared independent state of Kosovo. After
the 1999 NATO military campaign that defeated
Slobodan Milosevic,www.ekurd.netthe
United Nations set up an international
administration in Kosovo to assist in building a
modern state, with huge sums from the European Union
and other international donors. The U.N.
transitional mission has continued -- even after
independence -- because of political disagreements
over recognition of the new state.
But international officials in the U.N. mission have
begun to switch hats with an ease and nonchalance
that would curdle the blood of any ordinary
conflict-of-interest lawyer. Two examples should
suffice. The chief legal advisor to the U.N. mission
-- who acted as de facto law-maker in Kosovo during
almost eight years of international governance --
has now changed horses, representing Kosovo's prime
minister, without any cooling-off period, in
negotiations against the ongoing U.N. mission.
So, too, the former deputy special representative of
the U.N. Secretary General -- who supervised the
privatization of the energy and transportation
sectors in Kosovo-- has gone to work for the main
political rival of the prime minister, a former
military leader of the Kosovo Liberation Army named
Ramush Haradinaj, as an "advisor." Haradinaj is
believed to have a major stake in the privatized
companies.
An investigation by a U.N. watchdog office -- called
the Office of Internal Oversight Services --
recently concluded that ordinary fiscal and auditing
controls for UN-funded privatization projects were
wanting. The energy sector aid package has a budget
estimated at 500 million Euros, and with a local
''facilitation fee" of 1%, a maiden aunt could begin
to worry.
Inconceivably, the United Nations appears to lack
any conflict-of-interest rule that forbids such a
revolving door of self-interest.
U.N. Secretary-General Ban Ki-Moon has made ethics
the touchstone for his tenure in office. Certainly,
he should promulgate a ban on such seamless acts of
commercial reincarnation.
Former U.S. Secretary of State James Baker was a
no-nonsense man who took a hard-nosed attitude when
people tried to combine their public duties with
private profit. He forbade U.S. ambassadors from
engaging in any commercial activities in the
countries that were the subject of their reporting.
That was the right attitude. Conflict areas may lie
beyond the reach of effective law enforcement. But
they do not reside beyond the demanding claims of
honor and ethics.
Ruth Wedgwood is a professor of international law at
Johns Hopkins University's School of Advanced
International Studies and a member of the Hoover
Institution task force on law and national security.
Copyright, respective author or news agency,
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