Iraq and Gulf Analysis

Archive for October 8th, 2010

Eide to Galbraith: Give the Money from the Tawke Award to the Children of Kurdistan

Posted by Reidar Visser on Friday, 8 October 2010 12:03

Earlier this week, an international court of litigation in London ruled that the former US diplomat Peter Galbraith should receive compensation from the Norwegian oil company DNO in the region of some 35 million US dollars for lost profits from Galbraith’s involvement in DNO’s Kurdistan investments. Galbraith and another claimant, the Yemeni millionaire Shahir Abd al-Haqq (who will receive the same amount from DNO), were squeezed out of the deal between DNO and the Kurdistan Regional Government (KRG) when the latter renegotiated the production sharing contract for the Tawke oilfield in 2008.

The Norwegian business daily Dagens Næringliv (DN) has been in the lead in investigating Galbraith’s role in Kurdistan and yesterday for the first time published comments on the affair by the Norwegian diplomat Kai Eide, with whom Galbraith fell out due to differing views on the conduct of the Afghanistan elections in 2009. At the time, Galbraith supporters conjured up a conspiracy theory to the effect that the revelations were part of a Norwegian plot against him motivated by the Galbraith–Eide spat in Afghanistan – a somewhat far-fetched proposition which in any rate would not have changed the facts of the case, which relate to actions by Galbraith in Kurdistan in the 2004–2008 period, long before Eide had anything to do with Afghanistan. Nonetheless, until now, Eide has been reluctant to comment publicly on the Tawke-gate affair.

In yesterday’s interview, Eide for the first time provides his own take on Galbraith’s involvement. Perhaps most importantly, Eide suggests Galbraith should give the award money to children in need in Kurdistan. Additionally, he also goes quite far in suggesting a main issue between himself and Galbraith at the time when they both served in Afghanistan was Galbraith’s alleged preference for bending or even ignoring Afghan rules and regulations that were in place at the time.

In Iraq, of course, it was different, since Galbraith played an not inconsiderable role in framing the rules himself. Nonetheless, even the highly decentralist Iraqi constitution of 2005 makes it clear that the oil and gas of the country belongs to the entire people, in all regions and governorates. Accordingly, whilst Eide’s proposal is constructive, it would be more in the spirit of the constitution if Galbraith gave the money to needy children in all of Iraq, and not only to those living in the KRG areas.

But he is probably not going to do that, is he? Galbraith’s latest passion appears to be alternative energy, reportedly a main plank of his strategy to win a seat in the Vermont senate in November. In early comments on the award, he promises to use the money to invest in alternative energy “in Vermont and Kurdistan”. And presumably he may think he can do so freely without consulting Baghdad, since controlling the wind and the sun is not listed among the exclusive prerogatives of the central government in the constitution!

On a more serious note, though, the Tawke award should be of obvious relevance to the ongoing negotiations between Maliki and his National Alliance and the Kurds. The Kurdistan oil deals are controversial precisely because so much of the profit is expected to leave Iraq altogether to the benefit of foreign investors (remember, Galbraith was just “Mr. Five Percent” and still was awarded some 35 million USD). In fact, some of the few Iraqi politicians that have dared protest Galbraith’s simultaneous triple role –  investor in Kurdish oil, author of key Iraqi constitutional provisions on energy management and adviser to the US Senate on American policy in Iraq – come from Maliki’s own party. Abd al-Hadi al-Hassani and Hussein al-Shahristani have opposed both the Tawke deal specifically and Kurdish attempts to circumvent the central government more generally. The latest development here is a claim by the Kurdish politician Ali Hassan Belo to the effect that the Kurds can export gas from the region freely to Europe, and that interference by Baghdad would be unconstitutional! The claim by Belo is wild, since the constitution at least provides for a shared role between Baghdad and the provincial authorities in devising a strategic policy for the country’s energy resources: If starting gas exports to the EU is not “strategic” then nothing is. Nonetheless, the statement (and indeed the whole Galbraith/Tawke-gate affair) is probably a bellwether of high Kurdish expectations for the forthcoming government negotiations and as such indicates the uphill struggle that Maliki faces if he wants to secure the premiership and pay attention to his electorate at the same time.

As for the Tawke-gate details themselves, one interesting point that emerged in a Boston Globe interview with DNO subsequent to the award was the suggestion that Galbraith was excluded during the revision of the contract in 2008 because the KRG assumed his participation in the deal would make Baghdad less sympathetic to the deal. There is no direct quote for that particular piece of information and it is unclear whether it is the journalist or the DNO representative that is doing the thinking, but it is nonetheless interesting – alongside the strongest indication yet that Galbraith was indeed part of the original PSA (which he has so far denied):

But subsequently, as the situation in Iraq evolved, the company was forced to renegotiate its contact. Galbraith and another third party – a Yemeni company – were cut out, apparently because Kurdish officials knew that the central government in Baghdad would not approve of their involvement.

“It wasn’t our decision to do that,” Bratlie said. “It was a revision of the production sharing agreement by the Regional government of Kurdistan. DNO was approved as a partner and the other parties were not. “

It is also interesting that the Kurds apparently thought of submitting the contract for review back then and likely deemed Galbraith’s name a potential eyesore.

Posted in Iraqi constitutional issues, Oil in Iraq | 20 Comments »