Iraq and Gulf Analysis

An Iraq Blog by a Victim of the Human Rights Crimes of the Norwegian Government

Galbraith Confirms Oil Interests in Kurdistan

Posted by Reidar Visser on Thursday, 15 October 2009 9:18

Document from December 2006 listing Porcupine as a 5 per cent stakeholder in the Tawke oilfield

Document from December 2006 listing Porcupine as a 5 per cent "partner" in Tawke

In comments to the US newspaper The Boston Globe today, Peter Galbraith appears to admit his relationship to the Delaware-based Porcupine company as well as having “interests” in the Kurdish oil sector. At the same time, however, a statement from his Porcupine company fails to clarify the exact nature of his contractual relationship with DNO, the Norwegian oil firm involved in the affair, although for the first time the existence of some kind of economic relationship is publicly acknowledged.

That Galbraith did have an economic interest in the Kurdish region is now perfectly clear. Galbraith told the Boston Globe, “The business interest, including my investment into Kurdistan, was consistent with my political views. These were all things that I was promoting, and in fact, have brought considerable benefit to the people of Kurdistan, the Kurdistan oil industry, and also to shareholders”. Also for the first time, DNO comments publicly on its role in the Boston Globe story. The paper quotes Ben Willey, a company spokesman, who explained how “[DNO was] ‘introduced to the Kurdistan opportunity back in 2003 and 2004 by a third party’ he declined to name. He said the Kurdistan Regional Government gave that third party a 5 percent stake in the DNO deal in 2004, but that the contract was renegotiated last year and ‘somebody lost out’. Now, Willey said, that third party is asking for compensation from DNO.” Just to confuse matters somewhat, in the Norwegian press today, a press release from Porcupine has been reproduced, to the effect that Porcupine “confirms the existence of a contractual relationship to DNO” while at the same time saying the company “does not have and has not had any third party interests in DNO’s PSA in Iraqi Kurdistan”. However, Dagens Næringsliv today also reproduces a full document from 2006 explicitly showing Porcupine listed as a 5% partner in the Tawke oilfield project. The document relates to the approval of expenses for test drilling.

Predictably, perhaps, Galbraith’s comments are focused on clearing his name in an American context and from a legalistic point of view. According to the Boston Globe, “Galbraith said yesterday his role in the constitutional negotiations was unpaid and informal, and therefore he was under no obligation to disclose his business interests to the US or Iraqi governments. He also said confidentiality agreements prevented him from publicly disclosing details of the business. Galbraith said he did make a full disclosure to the UN before his recent job in Afghanistan.”

From the ethical and above all the Iraqi point of view, however, what must be more significant is the role of Galbraith in shaping the new political structure of Iraq in the years between 2003 and 2005, in particular with regard to the highly decentralised constitution. Today’s explicit admission by Galbraith that his American shareholders received economic “benefits” from his work to push the Iraqi constitution in a certain direction may perhaps not incriminate him before American courts, but it will certainly add to the growing confusion about where some of the more unusual aspects of Iraq’s highly decentralised post-2003 institutions of government really came from. It remains somewhat unclear whether it was Galbraith, the Yemeni businessman, or both who were originally given interests in the PSA by the KRG back in 2004 as a reward for having introduced the Norwegian company to the “Kurdistan opportunity” as Ben Willey called it, but the fact that the two are now involved in arbitration against DNO in London makes it perfectly clear that some kind of economic interest does exist, and that the stakes are high.

The full Boston Globe story is here.

Today’s story in Dagens Næringsliv is not yet available online.

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14 Responses to “Galbraith Confirms Oil Interests in Kurdistan”

  1. bb said

    What are the “more unusual aspects of Iraq’s highly decentralised post-2003 institutions of government” you are referring to ?

  2. Reidar Visser said

    Well, for starters, the “federal list” of central government powers is rather short, don’t you think? Why don’t we use Galbraith’s own assessment from 2006, when he triumphantly summed up the powers of the central government as follows (p. 169 in The End of Iraq) by sarcastically referring to how it is the job of Baghdad to ensure “that a meter in Basra is the same length as one in Arbil”.

  3. Kristian Ulrichsen said

    Great analysis, as ever. The Dagens Næringsliv article is now online – http://www.dn.no/energi/article1761232.ece#

  4. Al-daraji said

    Great work, thanks for keeping us updated.

  5. Dear,
    I wonder if you notes or figure the relation between the Ex ambassador Zalmi Khalil Zad and every important project in Iraq and especially in KUR and his oil investment , you can see him near the Iraqi Officials or behind the scene. Do you has write about that role and what the his interest and for whom.
    Regards

  6. Reidar Visser said

    There have been several new media reports related to this story today. A particularly interesting one is published at Iraq Oil Report by Ben Lando, who managed to obtain additional comments by Galbraith. Among them is the following one: “My views on the three state solution were expressed before I had any business relationships with DNO.” Is he trying to exonerate himself by stressing the sequencing of the whole affair, i.e. “First, I had this beautiful vision of an ethnically divided Iraq, and then, subsequently, it occurred to me that I could make money on it as well” ?!

    The truly signicant sequence here is as follows: February 2004, consultancy for the Kurds on the TAL; June 2004, became a partner in the DNO/Tawke project; August 2005, informal consultancy for the Kurds on the Iraqi constitution (adopted in October 2005); December 2006, still stakeholder in Tawke; 2006-2007, advocacy of soft partition for a mainly Democratic audience in the US trying to find an alternative Iraq policy; 2008, lost his stake in Tawke for unknown reasons (officially, the revision of the DNO contract was the result of the adoption of the Kurdish regional oil law in 2007 which required certain minor modifications).

  7. Salah said

    the powers of the central government as follows

    Reidar, there is study done by CIA and other US agencies about Iraq and its structure although their study centred mostly on Iraqi military side but they did mention briefly the central government.

    Here is the study:

    MARINE CORPS HISTORICAL PUBLICATION
    FMFRP 3-203 – Lessons Learned: Iran-Iraq War,
    10 December 1990

    Summary (pdf)

  8. Foreign Policy says you were ‘harsh’, and that ‘many say’ it was part of a retribution campaign by Eide.

  9. Reidar Visser said

    Yeah, I was rather surprised that the FP writers would buy the conspiracy theory. For one thing, the article of mine to which they linked actually ends with an assertion that Galbraith seems to have a much better case in Afghanistan, and as a non-expert I am rather more impressed by his arguments than by those of the Norwegian diplomat involved. Additionally, the whole chronology of this investigation, as detailed today by RFE/RL, should make it perfectly clear that the DN scrutiny of DNO started long before there was any friction between Eide and Galbraith, and that the Galbraith link was discovered by chance. My own criticisms of Galbraith’s “soft partition” ideas go back to 2006.

  10. Boghale said

    Reidar,

    This has been quite an interesting story and thanks for the contributions.

    My question is what made Galbraith and KRG to pull this much apart ? If this was due to the possible public relations issue, if and when the stake holders were announced, then KRG could simply roll Galbraith carried interest into the DNO interest with a confidential side agreement between DNO and Galbraith. Instead, Galbraith and the Yemeni party were simply ousted out. Additionally, why Galbraith is suing for DNO, presumably for a “finder’s fee”, rather than going after the KRG for breaking the original deal ? The AFE document clearly shows Porcupine as a carried interest party. The story needs further details here.

    Interestingly, the other 5 % partner (Ansan Wikfs) was a paid interest owner.

    Regards,

    Boghale

  11. Reidar Visser said

    Boghale, in general I try to limit myself to commenting strictly on those aspects that I work with in my research, i.e. the links between this story and the question of federalisation in Iraq more generally. Internal Kurdistan politics is not a research area of mine, and I wouldn’t want to speculate too much about the nitty-gritty of the Galbraith-KRG relationship.

    Having said that, logically, of course, one would conclude that Galbraith had fallen out either with the Kurds or DNO. Now, for what it may be worth, I looked at the prefaces of both the latest books by Galbraith, and in the 2008 book (which was written in the summer and released in the autumn, hence after his loss of the Tawke stake) Galbraith expresses thanks to the entire Kurdish leadership in exactly the same way as in 2006, with the omission of Rowsch Shaways being the only difference between the two (and I assume he is less influential today anyway). The order of some of the names has been changed, so he did not cut and paste this either! If he had a serious conflict with them, one would perhaps have expected him to omit them from his list of “friends” singled out for thanks in the second book. And, after all, he is apparently suing DNO and not KRG.

    In other developments of possible relevance, Trygve Hegnar, a Norwegian financial pundit, today made headlines by identifying Endre Røsjø, a London-based Norwegian investor who has previously promoted investments in Kurdistan, as a former “5 per-cent stakeholder in Tawke”. He did not offer any details, but it is well known that Røsjø did play a role in securing the Tawke contract for DNO back in 2004.

  12. Reidar,

    You’re now being attended to by the COIN community.
    http://www.cnas.org/blogs/abumuqawama/2009/10/one-man-two-wars.html#comment-39012

    The UNAMA story is already being referenced, I see.

    S

  13. Salah said

    برلمان كردستان يستدعي وزير الموارد الطبيعية على خلفية قضية شركة (DNO) النرويجية

    http://ar.aswataliraq.info/wp-content/themes/aswat/print.php?p=175388

  14. Reidar Visser said

    Steve, many thanks. Yeah, I am intrigued about how some Americans jump to those conspiracy theories about a Norwegian plot somehow forming the basis of the affair. What I find particularly troubling is the idea that it is the revelation that constitutes the crime!

    For the sake of the argument, let’s assume that the revelation was indeed orchestrated by the Norwegian government. Let’s pretend that Norway is a police state where the secret services penetrate every layer of society and where they can ask any research institute, newspaper, or business organisation to follow its orders to the smallest detail. Let’s speculate that from the very second when Galbraith was nominated to the UN post, Norwegian agents accessed their panopticon database and immediately identified the Galbraith connection to DNO as the best line of attack. Weeks later, as the relationship between Galbraith and Eide deteriorated, they ordered the editor of Dagens Næringsliv (a highly respected and independent financial daily) to spend one full week spewing out incriminating evidence related to Galbraith over its front page and main section.

    Let’s assume all this. (And it is a pretty rich and imaginative list of assumptions, although I’m sure some will also claim that it explains the woefully premature award of the Nobel peace prize to President Obama: Norway needed to counterbalance the Galbraith revelation with a gesture to US Democrats!) The remaining question is of course whether Galbraith’s original dual involvement in oil and constitution-making in Iraq in the period 2004–2008, long before there was any Eide-Galbraith relationship in Afghanistan, is any less problematic?

    If I were a US Democrat I would really be worried about those who are trying to shoot the messenger in this case.

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