Global Policy Forum

New Information in the Tawke-Gate Affair: Galbraith Was Also a Paid DNO Consultant



By  Reidar Visser

October 19, 2009



The Norwegian newspaper Dagens Næringsliv (DN) has continued its investigations concerning the multiple roles of US former diplomat Peter Galbraith in Kurdistan in the period 2004-2008. So far, this has been confirmed as involving simultaneous business interests in the Tawke oil field, consultancy for the Kurdish regional authorities in the Iraqi constitutional process, and loud advocacy of a partition of Iraq as a policy alternative for the United States. Today, a fourth dimension has been added through the confirmation that Galbraith was also a paid consultant for the Norwegian oil company DNO.

DN has today revealed that in the period from May to November 2004, Galbraith received at least GBP 125,000 (USD 200,000) from DNO through the London-based company Pinemont Securities as payment for consultancy work. The information is based on company records and accounts. Attempts by the newspaper to obtain further comments from Galbraith were unsuccessful. Pinemont was owned by Endre Røsjø, a Norwegian investor and prominent advocate of investment in Kurdistan who himself at times did consultancy work for DNO and has recently been identified as a previous stakeholder in the Tawke PSA, possibly the five per-cent share currently claimed by a Yemeni businessman.

The significance of the new information is that it emphasises once more the multi-faceted nature of Galbraith's involvement in Iraq. Earlier revelations have shown that Galbraith through his Porcupine company had obtained a business interest in the Tawke oil field, but it remains unclear exactly how he became a stakeholder, and in particular whether his share was primarily a reward from DNO, the Kurdish regional authorities, or both. The new information makes it clear that Galbraith was considered vital enough for DNO to be hired as a well-paid consultant.

This in turn highlights the question of whether Galbraith was really serving Kurdish interests or Western investors. Of course, Galbraith has openly declared that his actions benefited both, and this is also the official line of the two dominant Kurdish parties, who pursue a pro-investment policy towards foreign companies. However, the renewed focus on Galbraith's dealings - and especially the confirmation that he was also a paid consultant of oil companies investing in Kurdistan - should give occasion to increased scrutiny of the way he influenced the Kurdish stance on oil issues towards a position that gradually became ever more irreconcilable towards Baghdad. In particular, there is a stark contrast between the approach to oil as reflected in the draft constitution prepared by the Kurdistan Democratic Party (KDP) in the 1990s and confirmed in 2002 - where the administration of the oil sector is the exclusive prerogative of Baghdad, full stop - and the ideas about local control of oil as articulated in the "Special Provisions for the Kurdistan Region of Iraq", authored by Galbraith less than two years later. More broadly speaking, whereas early Kurdish constitutional proposals around 2003 ultimately aimed at coexistence (even if the they involved some pretty tough bargaining positions), Galbraith saw the 2005 constitution, to which he contributed, primarily as an instrument for the controlled dismantling of Iraq ("the constitution is an Iraqi solution to an Iraqi problem...The Kurds and Shiites concluded that Iraq cannot function as a single state and have worked out arrangements to divide it amicably").

Today, Kurdish interests are suffering from the maximalism and contradictive policy stances that resulted from this process of radicalisation. This is seen above all in the oil sector, where the involvement of foreigners like Galbraith has created a certain Klondike mentality and unrealistic expectations in a regional administration that has very limited experience with the energy sector historically. This in turn has alienated it from Baghdad and created an impasse in negotiations about how to proceed with exports from fields that involve foreign companies. Over the weekend, Asri Musa of the Iraqi oil ministry in Baghdad repeated its standard position that it cannot pay the foreign companies involved in Kurdistan since it does not recognise their contracts. While the foreign companies need money and now have started to sell the oil locally instead, Baghdad is more focused on progress in its technical-service contracts with foreign companies for the supergiant fields in the far south, like Rumayla (which dwarf the Kurdish fields in terms of production potential: the contract for Rumayla involves a production boost from 1 million to 2,9 million barrels per day, for example). Additionally, technical service contracts are a lot less controversial among ordinary Iraqis than are the PSA contracts in Kurdistan, reflecting yet another example of how Galbraith's "consultancies" have actually served to drive a wedge between the two biggest Kurdish parties and the rest of Iraq.

With the exception of articles in the Boston Globe and the Financial Times, Western mainstream media and in particular US newspapers have so far appeared relatively reluctant to cover this story. One possible explanation relates to the extent to which Galbraith's ideas were considered acceptable and indeed progressive among high-ranking US Democrats. Less than one year ago, Richard Holbrooke provided the following endorsement of Galbraith's thoughts about Iraq on the blurb of Unintended Consequences: "In this angry and passionate book, Peter Galbraith lays out the disastrous consequence of the Bush years. The next president will inherit the mess, let's hope he absorbs the lessons of Galbraith's work, and acts on them". Pretty frightening stuff! Earlier, in 2004, the indebtedness of another Democratic presidential candidate, John Kerry, to Galbraith's ideas was recounted by Holbrooke in the New York Times as follows: "He attacks the material, he questions things, he tries to get it right ...[During a recent conversation about Iraq, he recounted] Mr. Kerry interrupts me and he says, 'Have you read Peter Galbraith's article in The New York Review of Books? You've got to read that, it's very important.'"

The leading pan-Arab daily Al-Hayat is already using the term "Tawke-gate" for the Galbraith saga. Iraqis who know their history are pointing out the obvious parallels to Calouste Gulbenkian, the Armenian also known as "Mr. Five Per Cent" for the personal shares he obtained in exploitative contracts that gave Western companies a foothold in Middle Eastern oil, including in the Iraq Petroleum Company, in the early twentieth century.  "Oil for Consultancy" screams a headline in today's Al-Bayyina, a newspaper affiliated with "Hizbollah in Iraq" which is a part of the new Shiite-led alliance in Iraq.  If President Obama's administration is to improve its credibility in the Arab and Islamic worlds, it is issues like that of Galbraith's dubious involvement in Iraq that require crystal clear positions.


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