New DNO Revelations: While He Was Influencing the Shape of the Iraqi Constitution, Peter Galbraith Held Stakes in an Oilfield in Dahuk

Ambassador Peter W. Galbraith, left

It is widely known that the former US diplomat Peter Galbraith has been one of the most prominent figures in shaping the state structure of Iraq in the period after 2003, especially with his vocal advocacy of various forms of radical decentralisation and/or partition solutions for Iraq’s political problems that are reflected in his books and numerous articles in the New York Review of Books, especially in the period from 2004 to 2008. Until now, though, it has generally been assumed that Galbraith’s fervent pro-partition propaganda was rooted in an ideological belief in national self-determination and a principled view of radical federalism as the best option for Iraq’s Kurds. Many have highlighted Galbraith’s experience as a former US diplomat (especially in the Balkans in the 1990s) as key elements of his academic and policy-making credentials.

Today, however, it has emerged that the realities were probably rather different. For some time, Norway’s most respected financial newspaper, Dagens Næringsliv (DN), has been focusing on the operations of DNO, a small Norwegian private oil company in Kurdistan, especially reporting on unclear aspects concerning share ownership and its contractual partnerships related to the Tawke field in the Dahuk governorate. One particular goal has been to establish the identity of a hitherto unknown “third party” which participated with DNO in the initial production sharing agreement (PSA) for Tawke between 2004 and 2008, but was squeezed out when this deal was converted to a new contract in early 2008, prompting a huge financial claim of around 500 million US dollars against DNO which has yet to be settled. Today, DN claims to present proof that one of the two major “mystery stake-holders” involved in the claim was none other than Peter Galbraith, who allegedly held a five-percent share in the PSA for Tawke from June 2004 until 2008 through his Delaware-based company Porcupine. Galbraith’s partner was the Yemenite multi-millionaire Shahir Abd al-Haqq, whose identity was revealed by the same newspaper earlier this month. DN has published documents from Porcupine showing Galbraith’s personal signature, and today’s reports are complete with paparazzi photographs of Galbraith literally running away from reporters as they confront him in Bergen, where he is currently staying with his Norwegian wife. He refused to give any comment citing potential legal complications.

If proven correct, the implications of this revelation are so enormous that the story is almost unbelievable. As is well known, DNO has been criticised for the way its operations in the Kurdistan region interfere with Iraq’s constitutional process. To their credit, though, DNO are at the very least perfectly forthright about their mission in the area: They are a commercial enterprise set up to make a maximum profit in a high-risk area currently transitioning from conditions of war. Galbraith, however, was almost universally seen as “Ambassador Galbraith”, the statesmanlike former diplomat whose outspoken ideas about post-2003 Iraq were always believed to be rooted in idealism and never in anything else. Instead, it now emerges, he apparently wore several hats at the same time, and mixed his roles in ways that seem entirely incompatible with the capacity of an independent adviser on constitutional affairs.

It can be useful to briefly recapitulate the extent of Galbraith’s involvement in creating the institutions of government in the “new Iraq”. In fact, the best guide to this subject is Galbraith himself, who recounted his own role in the book The End of Iraq, published in 2006. It seems clear he got involved on the Kurdish side early on in 2003: “Two weeks after Saddam’s fall, I began discussions with the Kurdish leaders on the future of Kurdistan and what they could achieve in the new Iraqi constitution (italics added, p.159)”. Supposedly, according to a later book by Galbraith, he was at this point a consultant for ABC News! Later, he appears to have been a regular consultant for the Kurds. While his various books only make vague acknowledgement as far as payment is concerned (“for a few months at the end of 2003 and the beginning of 2004 I did some compensated work for Kurdish clients”, and in the second book from 2008 there is reference to unspecified “corporate clients with several of which I have an ongoing business relationship”), it seems pretty clear from the narrative in the book that at least some of this refers to consultancy work for the Kurdish political leaders in the period leading up to the drafting of the Transitional Administrative Law (TAL) which was adopted in March 2004.

…Or the beginning of Tawke-gate?

It is Galbraith’s description of the period between 2003 and 2005 that provides the fullest account of his influence on Iraq’s current system of government. Two key principles of the 2005 constitution – the idea that residual powers belong to the provinces and not to the central government, as well as the supremacy accorded to local law over federal law – stand out in particular. In many centralised states (and indeed even in certain federations), powers not explicitly granted to the regions belong to the centre. In Iraq’s constitution of 2005 it is the other way around, and the list of central government powers is hilariously short when compared to other federations of the world. This, it seems, comes directly from Galbraith and his influences on the Kurdish leadership back in 2003 and 2004. According to Galbraith, “after I left Iraq in May 2003, I realised that the Kurdish leaders had a conceptual problem in planning for a federal Iraq. They were thinking in terms of devolution of power – meaning that Baghdad grants them rights. I urged that the equation be reversed. In a memo I sent Barham [Salih] and Nechirvan [Barzani] in August, I drew a distinction between the previous autonomy proposals and federalism: ‘Federalism is a “bottom-up” system. The basic organising unit of the country is the province or state. The state or province is constituted first and then delegates certain powers (of its choice) to the central government…In a federal system residual power lies with the federal unit (i.e. state or province); under an autonomy system it rests with the central government. The central government has no ability to revoke a federal status or power’…Finally I wrote …’any conflict between laws of Kurdistan and the laws or constitution of Iraq shall be decided in favour of the former’ (160–61).”

Later, Galbraith urged the Kurds to be maximalist about their demands: “The Bush administration might not like the Kurds insisting on their rights, I said, but it would respect them for doing so (163)”. Then, leading up to the TAL negotiations in the winter of 2004, Galbraith worked specifically for the Kurds in framing their demands. It is very easy to see how the Kurdish gains in the TAL and not least in the 2005 constitution are based on this contribution from Galbraith. Galbraith writes, “On February 10 [2004], Nechirvan [Barzani] convened a meeting at the Kurdistan national assembly of the top leaders of the PUK and KDP. I presented a draft of a ‘Kurdistan chapter’ to be included in the interim constitution [i.e. the TAL]… Except for a few matters assigned to the federal government (notably foreign affairs), laws passed by the Kurdistan national assembly would be supreme within the region. The Kurdistan Regional Government could establish an armed force…The Kurdistan Region would own its land, water, minerals and oil. Kurdistan would manage future oil fields (and keep revenues) but the federal government in Baghdad would continue to manage all oil fields currently in commercial production. Because there were no commercial oil fields within Kurdistan as defined by the March 18, 2003 boundaries, this proposal had the effect of giving Kurdistan full control over its own oil…The permanent constitution of Iraq would apply in Kurdistan only if it were approved by a majority of Kurdistan’s voters (166–67).” Subsequent achievements noted by Galbraith as personal successes include staging the informal 2005 referendum on Kurdish independence (171).

Document reproduced by Dagens Næringsliv showing Peter Galbraith signing as manager for the Porcupine company that supposedly owned 5 per cent of the Tawke oil field from 2004 to 2008

The influence of Galbraith can be discerned already in the 2004 Transitional Administrative Law (where the principle of residual powers for the provincial entities was put in place), even if Galbraith was dissatisfied with the relatively long list of powers accorded to Baghdad and blamed the “centralising” policies of Paul Bremer and the Bush administration generally for this “defect”. But his hand is even more evident in the 2005 constitution, which combines residual powers for the regions with the supremacy of local law (albeit not if it contradicts the constitution, a “shortcoming” Galbraith later tried to gloss over), and which also specifically mentions the regional right to local armed forces. The narrative in Galbraith’s books turns somewhat weaker in this period, and it is less clear exactly how he continued to exercise influence – apparently less directly now, and more through the general advice on federalism given to the Kurds earlier. But at one revealing point in the book, he clearly cannot resist the urge to reveal just how influential he was until the very last minute of the constitutional process in 2005. On page 199, in a footnote, he writes, “A British treasury official serving as an advisor to his country’s embassy nearly derailed the constitution two hours before the final deadline. He was reading an English translation being made as drafts of the Arabic text became available, and realised the federal government had no tax power. He was about to charge into a meeting of Iraq’s political leaders when a quick-thinking Kurdish constitutional advisor grabbed an available Westerner – me – to explain the situation. The omission, I told him, was no mistake and he might want to consult with his ambassador before reopening an issue that could bring down Iraq’s delicate compromise”.

Almost drunk with success, it seems, and probably truly convinced that Iraq was heading for breakup, Galbraith could not disguise his satisfaction. Indeed, with the new information about his supposed economic interests, the way he engaged on specific issues relating to oil in the US public debate at this fateful point of transition seems utterly reckless. In August 2005, during the final negotiations, while he appeared to be satisfied with the way the new constitution developed as far as decentralisation was concerned, he did voice scepticism to growing Islamic influences in the new document and at one point considered the alternative of an overhaul of the TAL to make the regions stronger in that charter instead. He wrote again in the New York Review of Books, this time stressing how “the Kurdish leaders would accept its [i.e. the TAL’s] continuation provided the text was clarified to assure Kurdistan’s ownership of petroleum in the region and if the status of the disputed region of Kirkuk were resolved (italics added)”. He also expressed hope that “oil contracts made by the Kurdistan government” (one of the few at that time was of course Tawke, to which Galbraith now has been linked through the PSA) could be exempted from general federal control through separate bilateral agreements between Baghdad and Arbil.

As for the ramifications of these revelations, when they become known in Baghdad, it is really hard to predict. There has been a myriad of conspiracy theories concerning secret schemes to partition Iraq; while most of them are probably exaggerated the Tawke saga seems to be the most explicit intersection yet of international capitalism and advocacy of a divided Iraq, embodied in Peter Galbraith through his dual role as an alleged stake-holder in the Tawke oilfield and intellectual advocate of Kurdish secession from Iraq. While he was advising the Kurds on the principles of federalism and trying to persuade an American Democratic audience about the virtues of partition as an alternative to the Bush administration policies in Iraq, Galbraith supposedly held a 5 per cent stake in an oil field whose profit potential was directly governed by the constitutional and US policy decisions Galbraith was seeking to influence (his suggestions also included the idea of a permanent US airbase in Kurdistan).Under any circumstances, this new development is likely to strengthen the tendency among Iraqis to be more critical about the details of the 2005 constitution and not least the historical context in which it was conceived – a criticism that even Prime Minister Nuri al-Maliki articulated during the run-up to the last local elections. Seemingly, Maliki’s ideas of rectifying this towards greater centralism (i.e. removing some of Galbraith’s pet projects from 2005) have met with success among voters so far.

Peter Galbraith trying to escape from journalists in Bergen on 8 October after having been confronted with the Tawke revelations. Scan from Dagens Næringsliv, 10 October 2009

Another problem related to this issue is the close association in the past between Galbraith and the apparent Iraq tsar of the current Obama administration, Vice-President Joe Biden. The two often supported each other loyally, even as late as in the autumn of 2008, when Galbraith described Biden’s candidacy for vice-president as “very encouraging” because he “has been the prime proponent of a decentralized Iraq”. Of course, Biden’s own initiatives to move towards a soft partition of Iraq, though not as radical as Galbraith’s ones, were the dominant feature of “alternative” Iraq proposals in the US debate in the period between 2005 and 2008, although they are not believed to be favoured by President Obama. At one point in the summer of 2008, other Democratic senators including Chuck Schumer weighed in on this issue with specific reference to oil, warning Baghdad not to enter into any agreements with foreign companies to ramp up production until there had been an agreement with the Kurds, thereby also perpetuating the anti-centralisation oil policy to which Galbraith had contributed at a time when he is believed to have been a stake-holder in the Tawke field. David Brooks, an influential New York Times columnist, declared him “the smartest and most devastating” of the critics of the Iraq policies of George W. Bush.

It is of course somewhat ironic that these revelations should come at a time when Galbraith seems to possess the high moral ground in another controversy also involving Norwegians and Middle Eastern conflicts: The ongoing dispute with UN diplomat Kai Eide over Afghanistan’s elections result. In that case one can get the impression that Galbraith is standing up in the name of transparency, while Eide is taking a line so pragmatic that it may ultimately serve to divert attention from widespread electoral fraud.