Iraq and Gulf Analysis

The Khalilzad-DNO Affair and the Galbraith Parallels

Posted by Reidar Visser on Thursday, 24 June 2010 15:14

The recent nomination of the former US ambassador to Baghdad, Zalmay Khalilzad, to a position on the board of DNO, a Norwegian private company engaged in oil deals in Kurdistan, has already generated big headlines. Part of the reason is that following Peter Galbraith, Khalilzad is the second key US figure involved in constitutional issues during the years 2003–2005 to acquire business interests in Kurdistan. Continued disagreement between the Kurds and Baghdad over supremacy and governance issues in the oil sector makes this kind of dual involvement into a particularly touchy area.

Certain parallels to Peter Galbraith do exist in this case, but the differences also remain considerable. In the first place, the timing of Khalilzad’s involvement with DNO seems somewhat tidier. Khalilzad quit his diplomatic mission in Iraq in 2007 and his involvement with DNO started after that date (and only became formalised recently after he was nominated for the DNO board by the Emirati company RAK, which has a big stake in DNO shares). Conversely, Peter Galbraith continued to advise the Kurds during the constitutional negotiations in August 2005 even after he had started receiving money from DNO and had also acquired his “stake” in the Tawke oil project.

Secondly, to the extent that he is known to have had any direct impact on legal frameworks directly relating to the oil sector, Khalilzad was unsuccessful. Khalilzad failed in his offensive to getting a package of oil legislation passed in early 2007; Galbraith, by way of contrast, was successful in obtaining constitutional accept for many of the principles he authored in late 2003 and early 2004 about regional influence in the oil sector (or at least a sufficient degree of legal ambiguity to create problems for Baghdad). In fact, the parts of the Iraqi constitution with which Khalilzad is most clearly associated are the last-minute amendments that were designed to encourage participation in Sunni Muslim areas in the 15 October 2005 constitutional referendum, including, importantly, the key point about a one-off batch of constitutional revisions with no supermajorities required in parliament (which of course could ultimately reverse everything the Kurds have been dreaming of with respect to regional influence in the oil sector and, in a worst-case scenario for DNO, the business prospects with which Khalilzad has now become associated).

The closest parallel to Galbraith is probably the fact that both he and Khalilzad appear happy to continue to advise US public opinion about the best US policy also after their involvement in Kurdish oil. Galbraith’s penmanship in support of some kind of decentralised solution for Iraq has already generated two books (The End of Iraq and Unintended Consequences), whereas Khalilzad just months ago wrote an op-ed in The Financial Times in which he advocated US support for a coalition government consisting of Iraqiyya, State of Law and the Kurdistan list, with Nuri al-Maliki and Ayad Allawi taking turns as premier. This is of course an interesting position, given that in theory, Maliki and Allawi alone actually have a sufficient number of deputies to form a government without the Kurds but that they nevertheless persist in attempts at negotiating with Arbil instead of with each other.

This position by Khalilzad on the issue of government formation is also one which is apparently being viewed with interest by the Obama administration. In a recent interview with BBC Hard Talk, Ambassador Chris Hill was asked whether the next government would include the Sadrists (apparently, this scenario is favoured by BBC reporters as the epitome of tragedy in Iraq). Hill replied by saying something to the effect that this was not necessarily the case. “There are four parties”, he began, apparently thinking of the old four-way formula once favoured by the Bush administration of Daawa-ISCI-Kurds-Sunnis, with Iraqiyya apparently serving as “Sunnis” instead of Tawafuq this time. But then he started with the details, first mentioning just State of Law and Iraqiyya, and pausing to emphasise that those parties alone held “almost” enough seats to form a government (they actually have more than enough, but it is good news that this scenario is now at least being considered in Washington). He then mentioned the Kurds briefly (as per the Khalilzad proposal) and moved on to other issues before ISCI (or the Sadrist-free rump INA) was even mentioned.

In his commentary on Iraqi affairs, Khalilzad has made it clear that he has a far better understanding of what is going on in Iraq south of Kurdistan than Galbraith, who was always on thin ice whenever he ventured to comment on Baghdad politics. But with his recent involvement as a nominee for the DNO board, Khalilzad no longer enjoys any neutrality on the Iraqi scene: He is effectively a proponent of the vision of a strongly decentralised Iraq that is favoured by those who envisage an autonomous Kurdish oil sector.  Any future policy advice on his part about any aspect of US Iraq policy – like the advisability of this or that coalition combination – will be tainted, like that of Galbraith, by business interests that dictate a preference for a weak Baghdad and an oil minister favouring regional interests over national ones.

28 Responses to “The Khalilzad-DNO Affair and the Galbraith Parallels”

  1. I think Khalilzad’s involvement works better for the Kurds while he still enjoys some clout. I hope he makes some money before getting traded for someone with more influence.

  2. Wladimir said

    Osama Nujayfi is also in favour of a government of State of Law, Iraqiya and the Kurds. See

  3. Reidar Visser said

    Interesting interview. If what Nujayfi says is correct (i.e. about the Daawa being willing to let Iraqiyya have the ministries they want if Maliki keeps the premiership) then Iraqiyya should seriously consider this alternative. They would inevitably get far more influence on general policy plus specific ministries under that kind of arrangement than in a broad power-sharing deal where they would end up with only a few ministries, no premier and no coherent overall government policy. It is high time Iraqiyya realises that INA is not going to let them have the premiership. The ultimate proof is the fact that INA joined SLA in the new tentative Shiite alliance – it is pretty obvious that they would never had done that in case they had a secret dream of an Allawi premiership.

    In sum, it seems clear that Iraqiyya will achieve more of their aims with Maliki than with INA.

  4. observer said

    Thinking about Iraq’s future viability as a democracy – don’t you think that Da3wa should take a few years out of government so that it does not root itself the way the Baath Party did? Right now, they have changed so many key figures and replaced them with Da3wa people that they almost have a strangle hold on key ministries.

    Independent of what the politicians want or do not want, isn’t the most important aspect (for the long term democratization project in the middle east) is to push Da3wa out and allow counter parties to grow ?


  5. Reidar Visser said

    Observer, I think it is more important that the idea of ethno-sectarian powersharing take a few years off so that it does not root itself. For all its problems, the Daawa has in fact at times taken a lead in challenging that paradigm. INA, on the other hand, just wants to reiterate it, with a weakened Iraqiyya playing the role as the dutiful, minority “Sunni” representative.

  6. observer said

    Reider, while SOL has “spoken” of anti-sectarianism, we all know that it is just talk. After all, the central ideology in Da3wa is “ahl al Baith” (i.e. She3a domination). With that in mind, I respectfully submit to you and the readers that it is more important at this juncture to limit Da3wa’s increasingly tight grip on the instruments of power. I am concerned about the future of democracy in Iraq, if there is no attempt at leveling the playing field and getting a law enacted for regulating political parties and access to the ballots and getting the MP’s to be responsive to their constituencies.

    Be that as it may – with regards to Allawi’ “seeming trust” in INA, I am of the opinion that Allawi is a first grade politician and he has good reasons to be behaving the way he is. I am sure that he is not a fool and will play his cards very well.

    By the way, and speaking of maneuvering, I do note that Barzani has been silent of late, but that may be due to his trip to Europe. I know that INA and SOL basically do not need the Kurds to get the government going (nor does Iraqiyya+SOL) but frankly without the Kurds, Iraq is destined to repeat the cycle of history which has resulted in violence whenever it came to resolving Kirkuk !!

  7. Reidar Visser said

    Observer, I guess we just don’t see eye to eye on this. I know there is a whole sub-genre of political writing focused on the growing authoritarianism of the Daawa, but to my mind this is a one-sided view. To start with, where are those other great democrats? The Barzanis and Bayan Jabr?? To my mind the track record is clear: Daawa has at least tried to pragmatically co-opt professionals of the old regime, whereas INA transformed de-Baathification into a witch hunt. Similarly, Daawa has spoken for a stronger centralised state; ISCI has talked about increased decentralisation.

    If there are such “good reasons” behind the continued dialogue between INA and Allawi, I would have preferred to see them spelt out.

  8. Observer,
    “I am of the opinion that Allawi is a first grade politician”
    I think you said Allawi was a statesman, not a politician in one of your comments!!
    I think Allawi is a statesman in dealing with INA in a friendly manner on the surface at least, because of a discussion I had with my late grandfather a long time ago, who explained to me that the confrontation with Iran should always be covert because there are many common values that are more important than the Persian imperial ambitions of the few. INA and Iraqyia are in a sense representatives of national currents. The friendliness of Allawi with INA is not wholly political, it is a reflection of what the state’s relationship with Iran should be: soft on the surface but firm in private.

  9. Mohammed said

    Dear All:

    With all due respect Reidar, I am sure that Allawi is well aware of the “official” party similarities and differences between Iraqiya, State of Law, Kurds, and INA/ISCI. Alignments are made based off of mutual interests, not on how friendly and how many smiles one politician gives another. Hakim smiles at everybody, but deep down inside, I doubt Allawi has any real fondness for him, and vice versa.

    The fact that Iraqiya and State of Law cannot get along leads me to conclude that their “real/ultimate agenda or interests” are very much at odds with one another. I am struggling to see what is the “vision” of each party? In fact, I would go so far as saying that at least the Kurds and ISCI have been the most honest. They have pretty much stated that they want decentralization, weak central government, and their politics reflect this. Such a weak government allows ISCI and the Kurds to maintain the relative power they want for their parties.

    The question is: what do Iraqiya and SOL want? Is a strong central government the ultimate “vision or end-goal” or is it a means to an end. Is there “an ultimate end” that is more important? For example, perhaps their real vision is for a certain segment or group of society to dominate the government, and monopolize power? Perhaps “who” holds power is the real goal.

    I am sure that SOL and Iraqiya would tell you that they want strong technocrats, etc in ministries. But their differences will be in where they go looking for such people, and who they will exclude. If the ultimate goal for both parties is “power itself” then it is totally understandable as to why they cannot get along.

    Reidar, what is your hypothesis as to why SOL and Iraqiya have not made a deal?

  10. Reidar Visser said

    Mohammed, to my mind Iraqiyya and State of Law used to compete for many of the same professionals from the pre-2003 era before the de-Baathification issue was revived. I found it interesting, for example, that in Babel last winter both INM and SLA said they had assured the loyalties of the Qays al-Mamuri list (named for the late police commander of that province).

    I think one reason the two have been unable to come closer together is that Iraqiyya seems very much focused on their “ahaqiya” claim right now (priority to form government), to the extent that they seem even happy to end up in the opposition if they are only given a shot at forming the government first! Part of the reason may also be legacies of the CPA era and the opposition years before that, when Allawi was friendly with many in the opposition. Often the “anomaly” of his good relations with Barzani is explained in this way, for example.

  11. observer said

    Faisel, I stand corrected. I suppose I should have used statesman instead of first grade politician. The point remains that Allawi is not a fool and he has good enough reasons to play his cards the way he is playing them. He did not last in the area this long by happenstance. Statesmen do think of the day after the deal is made. They do not move on tactics, but rather they have an over all strategy and mission that the believe in. On the issue of deep relations with Iran – I agree. There is a lot of “hidden rules” that need to be followed to maintain the fraternal relations while pacifying competing interests.

    Reider, time will tell if he is going to succeed in the maneuvers, but my sources from the south are telling me that the demonstrations on electricity are most genuine and the reaction of the security is reminiscent of Saddam like tactics, a fact not lost on the locals. This will heat up the arena and may make SOL back off to either SCIRI or Iraqiyya. Who will give them the better deal. There are reports that are stating that SOL want written guarantees that Maliki and higher ups will not be prosecuted (a weapon they used that now can be used against them!!!!).

    On the issue of the strong central government which IRder identifies as a common basis of agreement between Iraqiyya and Da3wa – I have a small (but not minor) comment. Iraqiyya is focused on free market (a form of decentralization of power) while Da3wa want to maintain a socialist like hold on the economic reigns. This is why Da3wa cancelled the Privatization Committee that Allawi established in 04. Iraqiyya wants a strong federal government when it comes to army, police, water and oil. The rest can be decentralized. I would say that this central difference brings them closer to SCIRI than it does to Da3wa.

    Muhammad – my opinion as to why Da3wa and Iraqiyya are not agreeing is the track record of the last 4 years. Iraqiyya was marginalized and ignored. Trust is MISSING. (many are unable to understand that in Iraqi politics, simple trust can bridge many differences)

    By the way,and speaking of missing trust worthiness – what’s up with Chalabi? He is silent these days, which means that he is up to something.

  12. bb said

    Who is Osama al-Nujaifi and where does he fit in?

  13. Reidar Visser said

    Bb, he is from Hadba/Iraqiyun in the Mosul area. Around 10 seats within the Iraqiyya contingent, not 20 as it says in the article.

    Observer, I just wondered whether the free-market preference is truly universal across the various factions of Iraqiyya, or even within Wifaq after the merger with Mutlak? Also, I guess that in the context of Iraq this will always be mitigated by the fact that Iraqiyya still wants a strong national oil company, which makes up most of the economy.

  14. observer said

    The free market preference pre-dominates members of Iraqiyya. I would not say that 100% of them accept it as a guiding principal or put it in the priority of their “actionable” items. As Iraqiyya turns into a political party, I would hazard to guess that this issue will be a main plank to differentiate Iraqiyaa from the others.

    Incidentally, Iqtasduna (our economy), the book written by the first Sade,r implicitly endorses free market, albeit with a social safety net for the poor and disabled (pretty much what you have in western Europe)! As such, I laugh out loud when I see Da3wa people endorsing state ownership of industrial enterprises.

  15. Ali W said

    Rediar, slightly off topic, but the link above mentions “other” names if Allawi is not acceptable to the rest of the parties, does this mean we are now seeing the breakdown of INM, and who would you think the other names that would be more likely to be accepted?thnx

  16. Reidar Visser said

    Ali, the part that I find most interesting (and worrying) is the apparent belief on the part of Damaluji that Iraqiyya will get the second shot at forming the government if Allawi fails. Note that according to the constitution, the “biggest bloc” criterium only applies to the first attempt. For the second try, the president can in principle select whomever he prefers, as long as it is a different person. The video from the constitutional deliberations shows that there was disagreement about this back in the summer of 2005, but in the end the final version of the constitution just stipulated that the president should choose “another candidate”, period.

  17. observer said

    do not think for a minute that Iraqiyya will back off. This is a make or break issue. As far as I can tell, the issue of other names is just a red herring to force people to say in face to face negotiations that the objection is Allawi. What is said in the press is different than what is said in private meetings. Allawi himself indicated a couple of weeks ago in interview with a TV station (I do not recall which) that Iraqiyaa is a lot more than Allawi and that if the objection is Allawi then there are others in Iraqiyya that can be the PM (that was in response to a question that stated that Iran considers Allawi a red line).

  18. Jason said

    Are there limitations to Maliki’s powers as PM during this period, or can he carry on with the usual powers indefinitely until he is unseated.

  19. Reidar Visser said

    Jason, the constitution does not change the status of the government after the election. It just specifies a timeline for forming the next government, without imposing any sanctions for a failure to do so.

  20. Ali W said

    Observer, out of curiosity, he would you choose out of INM if not Allawi? Who else in your view within INM is capable or lets say more acceptable? I cant think of anyone else more acceptable than Allawi, the rest have even bigger question marks on them.

  21. Thaqalain said

    Reidar, so what’s the timeline, any deadline or will the sitting rulers like to continue the status-quo as its in their benefits?
    Is intentional delay associated to” Americans curtailing their forces by August?” Are they waiting to see outcome of broking deals in absence of Americans as decision makers?

  22. Ali W said

    This could be of interest to everyone, we will see if anything happens

  23. Observer,
    “what’s up with Chalabi? He is silent these days”
    It seems that Chalabi was pontificating regarding his interpretation of the biggest block:
    رئيس الجمهورية ملزم بتكليف مرشح الكتلة الاكبر عددا

    Like you said, it’s a make or break..

  24. Jason said

    Then could Iraq plausibly continue to function under Maliki until the next election, or is there anything so critical riding on a deal for a new govt that it actually threatens national stability?

    Is anyone likely to file a lawsuit asking the Supreme Court to order an immediate election for a new President? And if that happened, what do you think the Court would do?

  25. Reidar Visser said

    Jason, in a word, “no”. But there is no specific mechanism in the constitution for reducing the power of a government that continues to exist because no one is successful in forming a new one. Of course that kind of situation would be “undemocratic” more broadly speaking, since there would be no accountability anymore.

  26. observer said

    Ali,a nd all

    The “other than Allawi” is a red herring intended to force the others to state in face to face negotiations that Allawi is not acceptable. it is not logical to expect other than Allawi to be the candidate of Iraqiyaa for many reasons, one being that he is the largest vote getter in his block! Further, he is the one that heads of states in the region know and he is the one with connections galore.

    Incidentally, the same argument is beign sued by Maliki within the negotiations of the “National Coalition” and even in discussions with Iraqiyya. He (Maliki) is after all the largest vote getter period. Too bad for him there is not a provision in the constitution for direct elections of the PM (I think Israel tried that sometimes ago then backed off, or maybe they are still using it – not sure).

    I think that there is a real chance that the demonstrations will boil over, if the stale mate continues. While everybody is saying that the 14th of July is the end of the line for keeping the first session open… They conveniently forget that the last time (in 06) they waited 40 days. So there is nothing sacrosanct, precedence wise, to the 30 days “constitutional window”. Thus – I would keep an eye to the street and see what is happening.

    Without a doubt, people have become quite disillusioned with ALL of the politicians, but I can tell you that in Baghdad, supporters of Allawi and Iraqiyya are insisting that Allawi sticks to his guns for PM. WHat will happen if he backs off? God knows! I hope that the easier solution be realized and that is for the NA to fail to have a candidate of their own for PM and thus come to an agreement with Allawi for power sharing (which is the line Allawi is taking). This line allays the fear of the political parties of Da3wa domination of the instruments of power. Whether Da3wa accepts this or not, is to be seen.

    On a side note, practice is showing that there is a huge need for revision of the constitution. I am not sure that the time to do it is in the next four years or not. Kirkuk has to be resolved before the Kurds agree to any discussions of changes. I suppose lets take it one step at a time. For now Maliki is in charge and there is nobody over seeing him except Chapter 7 of the UN!!

  27. Reidar Visser said

    Observer, I think the problem with the idea of a 30-day window is that this is apparently based on the timeline for selecting the president in the constitution, but that, in turn, is counted from the “first meeting” of the parliament. So if the first meeting is still going on…

  28. Salah said

    Does any one think these kisses will fruits some thing?

    I doubt it.

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