Iraq and Gulf Analysis

Archive for September 27th, 2009

Hassani Goes after Hawrami in the DNO Dispute

Posted by Reidar Visser on Sunday, 27 September 2009 16:55

DNO, a relatively small Norwegian oil company, has hit the headlines again because of its investments in the Kurdistan region. This time, the focus of attention is a three-way quarrel involving DNO, the Oslo Stock Exchange and DNO’s Kurdish patron, the Kurdistan Regional Government (KRG), with accusations from the Norwegian bourse that the KRG minister for oil, Ashti Hawrami, has been involved in non-transparent trade with DNO shares in ways that might possibly suggest corruption – a charge vigorously denied by the Kurds, who in turn have penalised DNO by suspending its Kurdistan operations and demanding compensatory measures to address reputation damage allegedly suffered by the KRG.

The current media focus on the DNO operations has in other words been caused by changes to the relationship between KRG and DNO, which normally is a quite harmonious one. It is nevertheless interesting that Baghdad politicians have lost no time in weighing in on the affair. Yesterday, a leading member of the oil and gas committee in the Iraqi parliament, Abd al-Hadi al-Hassani from Basra, called for the formation of a parliamentary committee to investigate the possibility of unlawful involvement of a Kurdistan minister in the trading and ownership of shares in a foreign company operating on Iraqi soil. Hassani is a senior lawmaker with the Tanzim al-Iraq branch of the Daawa party, representing the wing of the party that still remains allied to Prime Minister Nuri al-Maliki in his efforts to establish a nationalist electoral ticket separate from the new Shiite-led alliance. Iraqi media, such as the Baghdadiya television channel, have also given ample coverage to the affair.

It is uncertain whether Hassani’s intervention will prompt any kind of serious follow-up once the Iraqi parliament reconvenes on Tuesday. The national assembly already has plenty on its plate to consider, including key pieces of legislation relating to the upcoming parliamentary elections, and indeed charges of corruption or misconduct against several high officials at the federal level of government.  Nevertheless, the remarks by Hassani serve as a useful reminder of the importance of the Baghdad–Arbil relationship to foreign investments in the Kurdistan region, such as that undertaken by DNO and other international companies like Addax. So far, the debate in the international media about these investments has been surprisingly insular and Arbil-centric, and apparently oblivious to the one macro driver that seems truly significant in the long term: the changing nature of the relationship between Arbil and Baghdad. With Iraqi nationalism on the rise since the last local elections it would be prudent of the Kurds to gradually climb down from the maximalist policies that brought DNO and other smaller foreign oil companies to Kurdistan in the first place. There may still be a role to play for foreign companies in the north, but it seems increasingly clear that any such project will need a green light from Baghdad in order to be sustainable.

Posted in Iraqi constitutional issues, Iraqi nationalism, Oil in Iraq | 8 Comments »