Iraqi Kurdistan – “Sold Out!” – Part II

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Iraqi Kurdistan – “Sold Out!” – Part II

Posted on May 23, 2017 by Sheri Laizer in 1 Top News, Corruption, Exclusive, Oil & Gas

KDP leader Massoud Barzani (R) and PUK leader Jalal Talabani, Erbil, December 11, 2010. Photo: Reuters

Sheri Laizer | Exclusive to Ekurd.net

The oil predators that betray the Kurdish nation

While a significant number of ordinary Kurds suffer terror and poverty, the KDP, PUK and their foreign partners control the lion’s share of all business and invest millions in profits for themselves and their families. Turkish capitalists control 70% of other businesses enterprises and may come to dominate the region.1

The scale of the web of relations, insider trading, nepotism, cronyism and outright corruption is astonishing to outsiders and merits hundreds of pages to detail the sleight of hand and greed 2. Such is well beyond the purpose of this study which is mainly to expose how the Kurdish business model does not benefit Kurdistan and its people but primarily the ruling families and their foreign partners.

The most influential people are those who have one hand in politics and the other in the oil and gas sector along with military and mercenary cronies. According to the IBT Times, “Executives of the oil companies that operate in the region work behind the scenes on behalf of KRG officials, but the people of the region do not receive the benefit of those connections…”3

Analyst, Kawa Hassan, for the Carnegie Middle East Center refers to a system of “sultanism” having developed with the post-2003 boom in Kurdistan observing in a paper headed Kurdistan’s Politicized Society Confronts a Sultanistic System:

“This boom transformed state-society relations. It provided the KDP and the PUK with the cash to cement patronage politics and nepotistic networks, consolidating the foundations of a sultanistic system. The region’s major political and social shifts have transformed former revolutionaries into businessmen, blurring the lines between the political and economic classes. The Barzani and Talabani families hold the most powerful positions in government and in their respective parties. The two major parties and their leaders monopolize the economy, the security services, the police, and the peshmerga (army), and they control and co-opt considerable parts of media…

“The oil revenues and investments that came into the region after 2003 helped the ruling families to enrich themselves. Other factors were also at play. Thirteen years of sanctions and fuel-smuggling operations that flourished between 1991 and 2003 provided the ruling parties and businessmen tied to them with the revenues to make investments… Kurdish leaders have also used their power to pay themselves large salaries, and, to help establish their nepotistic networks and ensure the loyalty of their cronies, they have overseen a system in which countless others are generously rewarded.” 4  The entire paper deserves close reading.

2011 US troop withdrawal

Billionaire businessman, Rex Tillerson (now US Foreign Secretary, former CEO of EXOM) was just about the single reason President Barack Obama did not pursue maintaining US troops in Iraq. KDP official, Hoshyar Zebari, when still in post as Iraq’s Foreign Minister, accrued widespread support for the extension of US troops being denied. This decision later made it easier for ISIS forces to sweep in and seize control of strategic areas of Iraq containing oil reserves.

U.S. Secretary of State Rex Tillerson. Photo: Reuters

Tillerson did not work alone: the ground work was done by Zalmay Khalizad, according to James Jeffery, then Ambassador to Iraq and now an adviser to ExxonMobil.

An Iraq Oil Report published in 2013 observed: “Former American ambassador James Jeffrey is now advising ExxonMobil, which has also retained Condoleezza Rice, Stephen Hadley (Rice Hadley Gates) and other retired American officials to advise on Iraq. Bob Gates was former CIA director and Secretary of Defense.5 James Jeffrey has been “hired to help the company he once scolded, as it attempts to manage a crisis that could either be resolved, resulting in a profit-making oil bonanza, or worsen into a conflict capable of rupturing the country.”6 The reference is to Exxon signing independent oil deals with the KRG in October 2011 as the American military presence was due to expire and he was still US Ambassador in Baghdad.

The 2013 oil report also observed: “Exxon CEO Rex Tillerson recently made a high-profile visit to Baghdad, engaging in direct talks with Maliki. Given that Exxon had been seeking potential buyers to take over its contract with Baghdad, for the super-giant West Qurna 1 field in Basra, Tillerson’s visit seemed to signal a shift toward re-engagement…U.S. officials said that Jeffrey is complying with American law and company policy, and will not discuss Iraq or Exxon with former colleagues still in the government.”7

This ‘compliance’ is shaky given Tillerson’s 2017 political appointment as Foreign Secretary in the Trump administration.

Background to Kurdish oil deals

An MoU dated July 1998, was specifically set down owing to the 1996 expedient alliance of Barzani with Saddam Hussein against the PUK during their civil war. Clinton favoured weakening the KDP over it.

As of 2002, even before the US-led invasion of Iraq in March 2003, oil contracts existed for several foreign companies: Exxon, Genel, Petoil, Prime Natural Resources Houston Texas, Western Oil Sands, Western Zagros and a later MoU was signed with Iraq in 2004, another with Norwegian oil company DNO (2004), along with a former, illegal DNO contract. Iyad Allawi chose to collude with Masoud Barzani instead of opposing the independent Kurdish oil scheme and together they set up a joint oil company which was registered in Jersey as of 28 June 2004.

As above, specifically, Exxon was present in Iraqi Kurdistan before the March 2003 US-led invasion of Iraq and had set up an offshore company named Exxon Mobil, Qara Hanjeer. They have another nine of these companies in operation. Before being elected US President, Barack Obama had opposed going to war.8 There was no Al Qaeda in Iraq when Bush went in. Once elected, Obama made it a priority to go to Turkey, aware of Turkey’s problematic role in Iraq.9

The Bush administration had supported billionaire backer, Ray Hunt, pursuing an oil deal in the KRG bypassing Baghdad and directly undermining ‘national unity.’ “The Bush administration publicly criticized a deal made between Hunt Oil of Dallas, Texas and the Kurdistan Regional Government in Iraq last September for supposedly undermining Iraqi “national unity,” while privately officials were facilitating the oil firm’s activities, documents released this week (2008) by the US House Committee on Oversight and Government Reform reveal… The criminal plundering of Iraq’s natural resources, in the interest of the American corporate oligarchy, does not lend itself to rational, long-term planning… In addition to his seat on the Foreign Intelligence Advisory Board, Hunt serves as chairman of the Federal Reserve Bank of Dallas and is a member of the National Petroleum Council, which advises the president on energy policy. As noted above, Hunt also served on the board of Halliburton , the firm once headed by Vice President **** Cheney.”10

Prior to 2004, all the oil contracts in the Kurdistan area had been signed by Jalal Talabani and Barham Salih under the KAA/KAZ area of northern Iraq. Such activity was legal as the contracts were based on MoUs, started by Bill Clinton.

The American surge of 2007 was intended to splinter Iraq and help the Kurds take more land as many witnesses are aware. At the present time, the KRG has been obtaining land for oil exploration and selling the rights without the consent of the Baghdad government or those the land belongs to in areas like Gwer that are outside the recognized boundaries of the KRG.

An older photo of Kurdistan president Massoud Barzani (L) shakes hands with former Iraqi PM Nuri al-Maliki in Erbil. Photo: AFP

In 2011, the agreement reached by Masoud Barzani with PM Al Maliki was unconstitutional and was primarily done to keep Jalal Talabani in Baghdad. Turkey was also playing an increasing role in Iraq’s affairs through Kurdistan.

The US had dispatched three senators to Baghdad and Erbil to attempt to forge an agreement.  (Joe Liberman, Lyndsey Graham, and John Mc Cain). The three tried to push Barzani to accept three senior roles in government:

1. The Oil Ministry was to go to Ashti Hawrami

2. The Speakership was to go to Talabani

3. The Foreign Ministry was to go to Barham Salih

The US Senators argued that the Presidential role was purely ceremonial and as Jalal Talabani role’s was defunct it would not help shape Iraq if he took a more active one.

The problems were that Hawrami would not accept the Oil Ministry; Barzani did not want Talabani as Parliamentary Speaker and opposed Barham Salih heading the Foreign Ministry. Instead, he wanted the Vice Presidency to go to Tariq al-Hashemi, with Hoshyar Zebari as Foreign Minister and the speakership to the Iraqia party.

Baghdad paid for 20 F16’s and Congress kept blocking them, as the KRG, Tariq al-Hashemi and the Nujaifi brothers kept saying they would be used against the Kurds.

According to one commentator who requested anonymity, Al Maliki took the position that most of the Ba’athists had gone to Syria but would return; large Sunni JRNT (Jaysh Rijal al-Tariqa al-Naqshbandia) cells11 still operated in the Mosul area in allegiance with the Nujaifi brothers and indeed with Barzani and regarded favourably by Turkey’s Erdogan and the AKP. Tariq Al Hashemi and the Nuajifi brothers are widely considered to be traitors to Iraq. Al Maliki also presented evidence to the US that Al Hashemi was acting against Iraq’s interests in collaboration with the KDP and Turkey.

Between 2011-2012, 70% of the Iraqi army in the Mosul area was Sunni. The KRG peshmerga, also Sunnis, worked with them and with EXOM (Exxon Mobile). Al Maliki found out and raised the alarm demanding his F16’s.

In 2011, Exxon had hired American-Iraqi, Ali Khedery, “who had served in Baghdad as a special assistant to five U.S. ambassadors and a senior adviser to three U.S. generals…12” Khedery emphasized the instability in Iraq and the desirability of oil exploitation in the Kurdish region. A year later, a deal was signed with the KRG directly bypassing Baghdad. Obama sought Khedery’s resignation because he had tried to work with the Sunnis and Kurds and thwart Obama’s directives in legal relations with the Baghdad government.

Reuters reported further that Khedery had “resigned from the U.S. administration the previous year to protest against U.S. policies in Iraq, which he thought were hurting Washington’s interests in the region… Exxon began to rethink its approach to Kurdistan when a small group of company officials met long-time CEO Rex Tillerson and his deputies a few times in the spring of 2011.”

“The first meeting took place at Exxon’s headquarters near Dallas. The small Exxon team briefed Tillerson in his huge conference room. The oil boss listened quietly to the presentations, most of which focused on technology and geology, with a brief talk on Iraqi politics. Afterwards, most of Tillerson’s questions were about politics.13”

Turkish President Recep Tayyip Erdogan. Photo: Reuters

In 2012, Maliki again pushed for the F16s and had support from the White House, but it was blocked by Congress and the KDP Kurdistan Business Council and Turkey’s lobbying. Prior to that blocking, there were concerns over secret matters on oil and hedge funds being run out of the States.  Citadel wash-trading of oil shares worldwide was picked up on, but more over, so were the Kurdistan-listed oil companies. The Obama administration was trying to stop Erdogan giving access to the Al Nusra Front14 via Kurdistan and Nineveh aware of the threat they posed. Obama and his officials stepped up the pace and went after Erdogan specifically on this point.

Now, Tillerson, the man who led Exxon’s deal with the KRG, unlawfully bypassing Baghdad and causing a diplomatic scandal, is one of the foremost players in Iraq with the full backing of Trump and his cronies: business and government have become one and the same.

“The six blocks Exxon won were scattered around the autonomous region. One block was near Turkey and another near the border with Iran. The three most controversial were along the line that divides Kurdistan and the rest of Iraq, straddling areas whose control is disputed between Arbil and Baghdad. The Kurds included the blocks in the deal and later managed to bring the governor of Nineveh, one of the provinces affected, on board…”15

Joost Hiltermann of the International Crisis Group argues that “from the Kurds’ perspective, the deal was also about land, and using oil companies to help them secure their claim to it. The danger, he said, was in the Kurds’ desire to work with Exxon to develop three of the six blocks in disputed territory. Other companies explicitly pledged they would not do business in those territories. “Now, Exxon didn’t care…”16

All blocks outside Kurdistan lie in the disputed territories, which included Jabal Khand, an old oil discovery, encompassed into a block named Al Qosh, for which Exxon purportedly paid Komet SA owned by the Ascom Group to drill for them in 2010. Large parts of land taken by Exxon were actually Assyrian, Yazidi and Sunni Arab – none were Kurdish lands to take over. This was an outright theft and sponsored by both the US and Turkey dating back to Erdogan’s early days in power. Exxon did not pull out of three blocks – they had the one listed as Qara Hanjeer drilled. It is part of the Kirkuk area, which the UN designated as belonging to Iraq, and was handed back to Barzani, as planned. Who will finish up with it? The Bashiqa block is an eye-opener but even more critical are the Arbat and Penjwin blocks. Exxon stationed their own security forces there to stop Iran from sending in troops to help the Shi’a militia combat IS.

Nineveh governorate and Sunni extremism

Sunni enclave

ISIL/ISIS, now Islamic State, was a Sunni creation activated by Al Qaeda in Iraq (AQI)17 along with key Sunni leaders that wanted to topple Shiite Nouri al-Maliki as Prime Minister. Its hand was strengthened by the short-sighted policy of the US and UK that favoured the removal of Bashar al-Assad in Syria. Erdogan allowed Sunni jihadist fighters to cross into Syria through its porous borders further stimulating Sunni extremism and international recruitment. Inside Iraq it has been said that Tariq Al Hashemi also played a key role along with the Nujaifi brothers in creating the ideal environment for ISIS. Al Maliki was in no manner culpable for the fall of Mosul in the summer of 2014. 18

Doubtless, the first person to celebrate the fall of Mosul was former Iraqi Vice President, Tariq Al Hashemi and then, suddenly, like the devil himself, Izzat Ibrahim al-Douri, Saddam’s former deputy, appeared in Mosul. The JRNT (Jaysh Rijal al-Tariqa al-Naqshbandia) or Naqshbandi Army, were up and running.19 With clear hindsight one can say the West’s policies towards IS backfired and an uncontainable monster emerged. IS grew stronger and more quickly than all the external players had foreseen or intended.

Obama had listed Sunni Jihadist Jabhat al-Nusra (Al Nusra Front), (effectively the seed of ISIS and Al Qaeda in Syria until it formally split with Al Qaeda), as a terrorist organization in 2011. Erdogan, KSA, UAE, QATAR all refused to designate them as terrorists and kept funding them.

Abu Bakr al-Baghdadi became leader of Al Qaeda in Iraq (AQI) and began to create an ‘Islamic state’. When the Al Nusra Front refused to merge with him, unlike ‘Renaissance’ Ba’athists and other Sunni groups that did so, he renamed his group, the Islamic State of Iraq and al Sham (Syria). ISIL/ISIS was declared the new Sunni jihadist vehicle, voicing itself independent of AQI in February 2014 after seizing the key Sunni stronghold of Fallujah the month before.20

Mosul governor Atheel al-Nujaifi. Photo: Reuters

The Sunni governor of Nineveh at the time was Atheel al-Nujaifi, who enjoyed close relations with Turkey under Erdogan and Barzani in the KRG. Turkish support had been essential for his taking the governorship in 2009. “21Atheel al-Nujaifi has most recently been based in Erbil, accused of betraying Iraq to a foreign country by allowing Turkish troops to establish a base in Bashiqa. Turkey had also backed his brother, speaker, Usama Nujaifi’s Mutahidun Alliance party in applying pressure against Shi’a Al Dawa. Mutahidun promoted Sunni decentralisation from Baghdad, hence its appeal for Turkey. Nujaifi then set his sights on the presidency and lost some Sunni support for appearing friendly to Iran.22

The two Nujaifi brothers, Usama and Atheel, also set up deals with Barzani and Ashti Hawrami for EXOM23 to occupy land outside Kurdistan in Nineveh governorate. Rex Tillerson (EXOM) paid in excess of $1 billion to them and others in Nineveh to secure the deals. Former US Ambassadors and Ryan Crocker, allied with the KDP, were also active in the group along with former Iraq VP, Tariq Al Hashemi. It greatly weakened the Iraq Government’s position in exercising leverage over Kurdish independent oil deals. The Nujaifi brothers were also reportedly paid over $1 billion for a small area of land in Nineveh belonging to the Assyrians and Hawrami has done the same in Sinjar.

A detailed report from June 2015 (referring to September 2014 by which time ISIS was fully in charge of Mosul), headed ‘The Enemy You Know and the Ally You Don’t’, observed: “Arming Iraq’s Sunni Militias to fight the Islamic State may seem like a quick fix… In September of last year (2014), Nujaifi paid $300,000 of his own money to a Washington consulting firm to help rally support among influential foreign-policy elites and policymakers in the United States for his plan to arm a state militia for Nineveh. That was instigated by Barzani who has spent over $30 million to lobbyists in DC. This May, Nujaifi and Issawi met with key players in Washington’s foreign policy circles…”24

Usama al-Nujaifi went on to become Vice President of Iraq. Discussions over the future of Nineveh in a post-ISIS setting were the theme of the day recently on a platform shared with Masoud Barzani. In a statement in February this year, “the Kurdistan Region presidency said that Nujaifi was received by Barzani in Erbil, where they praised the victories of the Iraqi army and Peshmerga forces in their war against ISIS.” 25

Iraqi Vice President, former speaker of parliament and prominent Sunni leader Osama al-Nujaifi, 2015. Photo: AFP

According to a highly pertinent report appearing in Rudaw at the beginning of this year (2017), Usama al-Nujaifi is still fiercely advocating independent Sunni enclaves after ISIS is defeated – with erstwhile ally, Masoud Barzani’s support: “Iraq’s prominent Sunni politician and Vice President Osama al-Nujaifi says that his community has a clear-cut plan for Iraq after ISIS and it is to establish regions in the country that would enable Sunnis and other minority groups to govern their areas and preserve their culture and economic interests, but all within a united Iraq… Al-Nujaifi is cynical about any reconciliation with the Shiites, saying many such agreements were violated and ignored in the past and that only strong international and regional guarantees could make the rulers of Baghdad stick to their deals…he says “that he has spoken with Kurdish leaders in Erbil, including President Masoud Barzani, about the creation of a region in Nineveh and that the latter has no objection to the issue…”26 He was asked about the Washington lobbying and the collaboration with Issawi is made clear although he seems to contradict himself: is not “a Sunni region” in Iraq the same thing as “regionalizing the provinces”? He sets his sights on Trump, at that date still incumbent president.

Question: “Two Sunni leaders, Rafe al-Esawi and Atheel al-Nujaifi visited the United States and later said that the US was supporting a Sunni region in Iraq. Is that a possibility?

“That issue was not raised and what has been discussed, including in a meeting of my own with the US president in 2012 and 2014 was regionalizing the provinces. They agreed at first as long as it did not conflict with the constitution and then they were concerned over the distribution of resources and wealth. To be honest the current administration made many errors with regards to Iraq and we hope the new administration has a better understanding and keep in mind the rights of all Iraqis.

The trade in oil between ISIS, the KRG, Erdogan’s family and foreign companies

After Turkish fighter jets downed a Russian bomber on 24 November 2015 near the Syrian border, Russia accused Erdoğan of running a “family business” after his son-in-law was accused of involvement in smuggling ISIS oil. 27 The Russian Defense Ministry released satellite imagery in December 2015 showing trucks “carrying ISIS oil entering Turkey” – the main destination for the smuggled petrol, implicating Erdoğan and his family directly in collaborating with ISIS.

Turkey’s main opposition Republican People’s Party (CHP) MP Eren Erdem also claimed that “there is a very high probability” that Berat Albayrak is linked to the supply of oil by ISIS. Journalist, Tolga Tanis, reported that Albayrak who manages Powertrans, trucks oil from the KRG. A December 2013 investigation into allegations of tender-rigging and bribery by Erdogan’s clique, including Albayrak, were officially thwarted.

Russia’s Deputy Defense Minister, Anatoly Antonov, remarked: “In the West, no one has asked questions about the fact that the Turkish president’s son heads one of the biggest energy companies, or that his son-in-law has been appointed energy minister. “What a marvelous family business!”28

Instead of striking ISIS in Syria, Erdogan carried out operations on the Kurds. “The Wall Street Journal reported on August 12 that a senior US military official accused Turkey of deceiving the American government by allowing its use of Incirlik airbase to attack ISIS, as a cover for President Erdogan’s war on Kurdish fighters (PKK) in northern Iraq… To conceal its deception and mislead the American public, within days of starting its war on the Kurds, Ankara hired Squire Patton Boggs for $32,000 a month, as a subcontractor to the powerful lobbying firm, the Gephardt Group

According to US Justice Department records, Turkey pays these lobbying/public relations firms around $5 million a year. Furthermore, several US non-profit organizations serve as fronts for the Turkish government to promote its interests in the United States and take Members of Congress and journalists on all-expense paid junkets to Turkey.

Among the US lobbyists for Turkey, perhaps the most questionable is Porter Goss, CIA Director from 2004 to 2006, who has agreed to sell his soul and possibly US national secrets for a fistful of Turkish Liras…29

The PUK’s Nokan Group conglomerate had also reportedly put its trucks to work in transporting oil from the Baiji refinery after it fell into the hands of ISIS. Given Turkey’s involvement it can be no coincidence that ISIS allowed 300 Turkish lorry drivers and 110 Turkish diplomats safe passage out of the area within a month. WZA is the oil arm of Nokan. 30The business in oil between ISIS, the KRG with Turkey, and the foreign companies was soon up and running.

The Kurdistan Tribune reported that Nokan was run from the general management office of the PUK in Sulaimaniya and “accounting for its 23 subsidiary companies, its net worth approaches roughly 4–5 billion US dollars, many multiples larger than its declared value.”31

According to a lengthy survey on the KRG’s involvement in transporting ISIS oil in 2015 and UK energy interests in Kurdistan, inter alia, “irrespective of parliamentary rules, the APPG’s brazen role in facilitating British oil and gas interests in the region is hardly a secret.”32

First Degree Grand Larceny culprit, Vitol, and Sir Alan Duncan.

Tory former Minister and oil trader, now ‘Sir’ Alan Duncan, was accused of serious conflict of interest after doing a $1 billion fuel deal for friend, Ian Taylor’s company, Vitol, with Libyan rebels helping topple Qaddafi.33 “The government has admitted that the international development minister, Alan Duncan, took part in meetings between officials operating a Whitehall cell to control the Libyan oil market and Vitol – a company for which Duncan has previously acted as a consultant.

The “Libyan oil cell” involved a group of officials working in the Foreign Office since May waging a quiet campaign against Muammar Gaddafi’s regime by controlling the flow of oil in the country…34

The same government insider tactics have long been at work in Iraq and created political instability for the country while the oil barons grew richer and more powerful. Vitol was at it with Saddam abusing the Oil for Food Programme. According to Manhattan District Attorney Robert Morgenthau, as widely reported on 20 November 2007, Vitol pleaded guilty to theft (first degree grand larceny) and will pay $17.5 million for paying kickbacks to Iraq for oil bought under the United Nations oil-for-food relief program…Vitol paid $13 million in kickbacks to Iraqi officials while UN officials running the oil-for-food program were led to believe no such payments were made… Morgenthau’s investigation of Vitol began as a result of a 2005 inquiry of the UN program led by former U.S. Federal Reserve Chairman Paul Volcker. More than 2,200 companies paid almost $1.8 billion in bribes to Hussein’s regime to win contracts, Volcker found…”

Morgenthau’s investigation of Vitol began as a result of a 2005 inquiry of the UN program led by former U.S. Federal Reserve Chairman Paul Volcker. More than 2,200 companies paid almost $1.8 billion in bribes to Hussein’s regime to win contracts, Volcker found.

Oil company Chevron Corp. agreed to pay $30 million to settle similar allegations connected with the oil-for-food program…Vitol and Chevron are not the only company to be fined for their role in the oil-for-food scandal. Three weeks ago, for example, Ingersoll-Rand Co. Ltd. agreed to pay $6.7 million to settle charges that its foreign subsidiaries made illegal payments to the Iraqi government…Under the initiative, Saddam Hussein’s regime was allowed to sell oil so long as the proceeds went primarily to humanitarian goods and war reparations. 

“But Hussein allegedly received almost $2 billion in illicit kickbacks and payoffs from government officials, journalists and others who received discounted Iraqi oil.”35

It seems it is business as usual for the foreign energy predators whether with Saddam, the KRG or wherever oil is to be found. Government is bypassed or officials bribed.

Vitol is the largest trader of oil and refined products in the world… It also turns over revenues of more than $140bn (£87bn) in a good year. It has a presence in every leading oil-producing country, including Iraq and Syria.

Ian Taylor and Alan Duncan were both once oil traders at Shell. 36 Shell has also been involved in back door deals with the KRG. The main Kurdish negotiators were KRG Minister, Ashti Hewrami, and KDP President, Masoud Barzani.

During the period leading up to the June 2014 fall of Mosul (and other strategic areas) to ISIS, Ali Khedery was working against the Obama Administration and against al-Maliki in collaboration with the Sunnis and KDP. Many consider him to be directly guilty for the bloodshed of thousands of Iraqis slaughtered by the so-called Islamic State.37

Missing oil revenues and non-transparent accounting for Kurdish energy payments

Kurdistan oil minister Ashti Hawrami. Photo: World economic forum/flickr

Sources estimate some $ 1.2 bn to have gone missing from Kurdistan’s declared oil revenues in November last year. “Up to 36,000,000 barrels of oil went missing over the first six months of this year, according to documents NRT has obtained, and the Iraq’s Kurdistan Regional Government’s (KRG) Ministry of Natural Resources (MNR) has not mentioned the loss, which amounts to $1.2 billion, in its monthly reports…”38

The profits of the barrels that vanish out of Kurdistan are destined for overseas bank accounts belonging to the top dogs of the KDP and PUK. For example, Western Zagros Resources paid $45 million in what is termed ‘local building bonuses’ which means they go to local contractors of the ruling families.

The Guardian newspaper apparently chose to omit details of the $45 billion from a report on KRG oil because the media organ is controlled by a Trust whose leading members are HSBC, and reputedly dictated to by Michael Howard39, a former Guardian journalist who is now the advisor on oil to Ashti Hawrami and Masoud Barzani. Barzani is also linked to privatized company, KAR Oil. He was reported to be enjoying a salary more than that of Obama with $400,000 per month. “This amount is equivalent to the salary and allowances of Barack Obama (sic as) President of the USA for a full year, because Obama’s salary is $ 33,333 dollars (a month) and only equal to $400,000 dollars a year. The Kurdistan region budget (does) not exceed 8 billion dollars a year” whereas “the annual budget for the United States is ($14,264) trillion dollars.” Barzani is, in fact, reported to earn an astonishing $4.8 million a year as President not including his other bonuses from oil and conglomerates.40

Other Barzani family members and KDP officials enjoy the same power-derived wealth. Sirwan Barzani, Masoud Barzani’s new-made millionaire nephew, is the managing director of Korek Telecom, “a company worth around $2 billion, with seven million subscribers and close to 3,500 towers across Iraq…”41

Sirwan Sami Abdul Rahman, son of the late KDP official, Sami Abdul Rahman, became close to Sir David Richmond, the FCO’s former Director General Defence and Intelligence and member of the Foreign Office Board. After leaving the FCO, Richmond worked as a senior adviser for notorious Bell Pottinger. Sirwan was also employed there and owns the Renwa Group 42, while his sister, Bayan Sami Abdulrahman, formerly headed the KRG representation in London and recently relocated to Washington replacing Jalal Talabani’s son, Qubad Talabani who was accorded the post back in Kurdistan of Deputy Prime Minister in June 2014 (contemporary with ISIS seizing huge swathes of territory in northern Iraq including Sinjar and Mosul). He was supported by Khosrat Rasul43.

Bayan Sami Abdul Rahman set up KRG Consulting Ltd. which is reported to have “handled” some of the money from oil sales in Kurdistan and Turkey under diplomatic immunity.44 She also has shares in Renwa. Success brings success.

Zalmay Khalilzad is a former U.S. ambassador to Afghanistan, Iraq and the United Nations, and the author of “The Envoy: From Kabul to the White House, My Journey Through a Turbulent World,” Photo: Courtesy of Gage Skidmore/flickr

Jalal Talabani, PUK leader, was reputedly receiving one million dollars per month when still in post as President of Iraq with additional income from private companies.45 “A medical source in Erbil revealed in 2014 that the cost of  treating him “amounted to $150 million USD from Iraq’s budget.  The source said, in a statement to Iraqi News, that “Talabani’s medical expenses during the first six months in Germany amounted to $120 million USD, indicating that he was transferred later to another place. The expenses spent on taking care of him were estimated at $30 million US dollars.”46

PUK official, former KRG PM, Barham Salih, linked with former US Ambassador to Iraq (and to Afghanistan and the UN), Zalmay Khalilzad, together with Nechirvan Barzani 47 enjoy numerous other links with oil companies.

‘A tiny minority of top officials in both the PUK and KDP and the Barzani and Talabani families controls the oil sector, with the Barzani family owning the biggest share.’48

Zalmay Khalilzad (Condi Rice and Khalilzad ran the former company now named Chevron). He was also close to US Neocons “like Richard Perle and former Deputy Secretary of Defense Paul Wolfowitz, and had argued for regime change in Iraq for more than a decade” according to the New Yorker.49 He heads Gryphon Partners as well as his own consultancy firm and employs another former US Ambassador, Peter Galbraith on oil.

Peter Galbraith, is another former ‘friend of the Kurds’ that has profited handsomely from the relationship making hundreds of millions in profit from oil revenues through acting as an advisor.50 Galbraith was linked with Norwegian oil giant, DNO.51 Norwegian newspaper, Dagens Naeringsliv, had uncovered documents showing that nearly a year before the Tawke oil field was officially opened, “DNO executives had quietly given Galbraith, along with Norwegian businessman, Rosjo, a combined cut of 10% of the field’s future revenue. The stake was Galbraith’s compensation for having helped the company secure its exploration-and-production contract, a contract far more favorable to the Norwegians than the type favored by the central government in Baghdad — and one made possible only if Kurdistan enjoyed the very autonomy Galbraith had been advocating.”

Peter W. Galbraith, an author, academic, commentator, politician, policy advisor, and former United States diplomat. Photo: AP

The deal was dissolved acrimoniously “after Kurdistan passed a new 2007 oil law disallowing certain third-party investors. DNO dropped both Galbraith and the Yemeni businessman who took over Rosjo’s share, saying the agreement was contingent on approval from the KRG; the men have taken DNO to court for breach of contract and, even now, stand to do quite well: They could walk away with as much as $144 million in damages. (DNO has offered $12 million to settle.) Today, Tveit still feels misled by Galbraith. “He called himself a consultant,” Tveit tells me. “He never said that he had a personal economic interest. It was clear he was hiding it.”52

Former marine commander, Colonel James L. Jones, who heads the US-Kurdistan Business Council, and sat on the board of Chevron also profits from his Kurdish contacts.

Former US Army Colonel, Richard Nabb whom I met when he was active in the Kurdish Autonomous Area (KAA) as it was called in the 1990s was the key link between the US army and the Kurdish leaders but is now “consultant for HKN Energy, an oil exploration company owned by Ross Perot, Jr.” 53

All payments made in relation to licenses in the Kurdistan Region of Iraq (‘KRI’) have been made to the Ministry of Natural Resources of the Kurdistan Regional Government (‘KRG’).  All other payments have been made to the national governments of the relevant country where the license is based. 54 The UK changed the law on all the payments IOC made under local contractors’ payments and local building bonuses.

Genel Energy (formerly in, Turkish, Genel Enerji) derives 55% of the payments made to the KRG by TTOPCO.55 “Genel Energy was formed from a $2.1 billion merger in 2011 between a UK firm, Vallares Plc, and a Turkish company, Genel Enerji. The firm is run by Tony Hayward, a former CEO of British Petroleum (BP) Vallares was set up by Nathaniel Rothschild56 with Ashti Hawrami’s assistance after his dream ticket of a merger between Heritage oil and Genel failed, during a period where insider trading was rife in the KRG and City of London. The relevance here is that it was a Turkish joint venture into the UK stock market again.”57 Heritage Erbil Oil Ltd., is named as one of its subsidiaries58 and the parent organization, a Turkish company, the Cukurova Media Group, originally headed by Mehmet Emin Karamehmet “ranked second wealthiest person in Turkey”, founder of Turkcell and a former partner in Turkish, Pamuk Bank.

On 12 May 2017, Karamehmet’s seven-year prison sentence was upheld, with the billionaire found guilty of the misuse of loans/embezzlement from Pamuk Bank, that was sold on to Halkbank in 2003.59 Halkbank was authorized by the KDP to process KRG oil money. 60

KRG officials engulfed in embezzlement while civil servants’ salaries went unpaid

The KRG previously tried to avoid paying money to Dana Gas, a UAE company, but lost the sovereign immunity plea in the UK court, from which the following record derives:

Barham Salih, leading PUK member, Iraqi Kurdistan. Photo: AUIS

“In 2007, the claimants and the Kurdistan Regional Government of Iraq (KRG) entered into a contract (Contract) under which the claimants would exclusively exploit two gas fields in KRG for at least 25 years. A dispute arose in 2009, with KRG contesting the extent of the claimants’ rights over the two gas fields and with the claimants alleging that KRG was underpaying for the hydrocarbons that they were producing.”61

“Oil and Gas Minister, Ashti Hawrami, actually tried to sell both Dana Gas blocks, Chemchemal and Kor Mor to other foreign IOC’s, which is also detailed in the claim, and both gas fields were to feed into the proposed Nabucco Pipeline that had RWE of Germany down to help construct it to run from Iraqi Kurdistan to Turkey and on into Europe to feed Austria, Hungary, and Germany among other European nations.”62

“In 2013, the claimants started an LCIA arbitration in England under the Contract. In response, KRG stopped paying the claimants altogether, although it still took hydrocarbons. KRG’s failure to pay apparently threatened the solvency of one of the claimants. The claimants therefore applied, successfully, to the LCIA tribunal for interim relief. The tribunal ordered KRG to make payments to the claimants, on a provisional basis, at the prices that KRG had been paying before the dispute arose. The tribunal considered this order necessary to maintain the status quo because there was an “appreciable risk that Dana [i.e., one of the three claimants] will become insolvent or at any rate suffer unnecessary loss through distressed sale of assets if payments are not resumed before the award.”

“KRG ignored the tribunal’s order, so the claimants applied for, and obtained, a “peremptory order” under s41 of the Arbitration Act 1996 (AA) ordering KRG to pay to the claimants the sum of USD 100 million within 30 days. A peremptory order is an order that a tribunal may make when a party fails to comply with any tribunal order without showing sufficient cause. KRG also failed to comply with the peremptory order…

“Burton J noted that it was common ground between the parties that there had been a dispute between FRI and KRG “as to who is entitled to control of Kurdistan’s oil and gas resources”. The judge appeared to have reasoned that, because FRI disputed KRG’s authority to control KRG’s oil and gas resources, KRG could not have acted in the exercise of FRI’s sovereign authority. On this basis, the Court concluded that KRG did not enjoy the immunity protection under s14(2) SIA…”63

Millionaire British-Kurdish MP Nadhim Zahawi. Photo: Courtesy/FE Week AAC/ Flickr

The role of the UK All-Party Parliamentary Group on Kurdistan (APPG)

Kurdish millionaire, Conservative MP, Nadhim Zahawi, is head of the all-party Parliamentary Group on Kurdistan (APPG) where his influence brings him further revenue in addition to his MP salary and other business dealings.64 As Tory MP for Stratford and Avon since 2010, Zahawi took up his position in the UK Parliament with former head of Talisman, John Manzoni, after the sale of PSC contracts to Gazprom and Repsol,. Manzoni is currently the Permanent Secretary for the Cabinet Office.65 Zahawi was previously the advisor to Talisman and to the now defunct Afren.66

The Times newspaper reported last September (2016) that “The Serious Fraud Office is considering launching an investigation into the collapse of an oil company that was advised for three years by the Tory MP Nadhim Zahawi” (i.e, Afren) “after the company went bust in July last year(2015 )after an executive pay scandal and the oil price dive sent it into a tailspin. It had debts of $1.7bn (£1.3bn) when it filed for administration…”67

Despite this fiasco, Zahawi had gone on to join Gulf Keystone Petroleum (GKP) as part-time” chief strategy officer” hired for his connections in the KRG. The House of Commons register of members’ interests shows he earns huge bonuses for each trip he makes to Kurdistan as well as lofty sums for staying in luxury hotels and other expenses. His company, Zahawi and Zahawi, co-owned with his wife, recently purchased several new properties in the UK and holds property worth £25 million.68

Zahawi recently successfully sued Iranian Press TV for libel when accused of involvement with ISIL oil and was awarded £338K in damages.69

“GKP faced serious financial difficulties when the KRG had not paid over $100 million it owed in exports. “Currently GKP faces the daunting prospect of having to refinance $575 million of debt maturing next year … unless KRG payments continue and oil prices rebound…The Kurdish government, which manages the sale of oil extracted in the region, has paid $101 million to Gulf Keystone since December 2014, said William Hares, an analyst for Bloomberg Intelligence in London, citing company statements.”70 A RNS regulatory report states that as of December 2015 they were in arrears of $298.4 million even before bondholders and debts came into play…”71

Zahawi’s father, Hareth Zahawi, once declared bankrupt, also enjoys huge contracts through heading the Iraq Project and Business Development (IPBD). 72 Interestingly, the company was set up before the invasion of Iraq and was in Iraq early on under the CPA after the 2003 US-led invasion, along with scores of US and Turkish companies, the largest of which was Kulak Construction that “supplied construction workers to US bases and employed 30, 301 civilians.”73

The UK Conservative Party oil lords have moved nearly all their operations to Qatar with the UAE and Turkey’s involvement according to sources that do not wish to be named.

The Bush dynasty, Cheney, Hunt, Trump, Tillerson, and partners

A now somewhat prophetic report (published in February 2007) headed, From Afghanistan to Iraq: Connecting the Dots with Oil” Richard W.Behan examines how all this came to pass, both in Iraq and in Afghanistan, stating how “a top-secret memo to the staff of the National Security Council dated 3 February 2001 observed that Cheney’s group was “melding” two apparently unrelated areas of policy: “the review of operational policies toward rogue states,” such as Iraq, and “actions regarding the capture of new and existing oil and gas fields.”

The memo directed the National Security Council staff to cooperate fully with the Energy Task Force as the “melding” continued. National security policy and international energy policy would be developed as a coordinated whole… During April of 2002, almost a full year before the invasion, the State Department launched a policy-development initiative called “The Future of Iraq Project” to accomplish this. The “Oil and Energy Working Group” provided the disguise for “capturing” Iraqi oil. Iraq, it said in its final report, “should be opened to international oil companies as quickly as possible after the war … the country should establish a conducive business environment to attract investment in oil and gas resources.”74 The entire report merits close reading.

Syrian-American multi-millionaire, Jamal Daniel, running the Crest Investment Firm set up a reconstruction company in Iraq called New Bridge Strategies and hired Neil Bush, the President’s brother on a $60,000 retainer. Its main business was “to help companies win contracts for the reconstruction of Iraq. What one brother destroys, another rebuilds.”75

“Dallas-based Hunt Oil Co., whose owner, Ray Hunt was a former advisor to George W. Bush, knowingly signed a production sharing contract (PSC) ”with the KRG outside the KRG ‘green line’ boundary near Ain Sifne, according to a USSD cable released by Wikileaks dating from 2007.”76

During the 1991 Kurdish uprising, I reported on the fighting between the KDP’s peshmerga and the Iraqi Army shelling Kurdish positions outside Dohuk from Ain Sifne77. Ain Sifne never fell to the Kurds. The uprising collapsed soon after leading to the eventual creations of the ‘safe havens’ and greater Kurdish autonomy. Ain Sifne was not inside the Kurdish Autonomous Zone (KAZ) that was created.

Trump alliances

After a fact-finding visit to Iraqi Kurdistan in May 2016, Dr. Andrea Hickerson had observed that several Kurdish villages had seen their land sold by the KRG government to energy companies including ExxonMobile and Dana Gas “without their knowledge or consent.”

Hickerson had observed prophetically that “Nominating for Secretary of State, Rex Tillerson, the CEO of ExxonMobile, a company which has abdicated social responsibility and exploited villages in Iraqi Kurdistan, not to mention that may have acted in conflict with both U.S. and Iraqi national interests, it really does not bode well for peace. Trump and his team do not consider this and other such appointments the conflict of interest they really are.78

Donald Trump, Rosneft (Russian state oil company), the UK, KDP, PUK, and Glencore, can currently all be linked. In March 2017, Ashti Hawrami “agreed new deals to borrow $3bn from trading houses and Russian state oil firm, Rosneft, that will be guaranteed by future oil sales to strengthen its fiscal position as the semi-autonomous region fights Islamic State.79”

The battle against IS has been good cover for the business deals and land grab underway by the KRG with its foreign oil partners.

Kurdish newspaper, Rudaw, observed, “During the election campaign, Trump said that the US should have kept Iraq’s oil as a “spoil of war,” a comment defended by Rudy Giuliani who was advising his campaign, saying that in war, “anything is legal.”80 By what legal yardstick can such a claim be made by a foreign power towards Iraq’s resources? This is the same as Baghdad saying it deserves to claim Texas oil because of George Bush’s personal involvement in the destruction of Iraq. Such a claim has unfortunately not been made, even in jest. But many hold him directly responsible for the current insecurity, huge loss of life and division of the spoils among foreign magnates.

The UK is equally responsible and continues to be culpable in misguided policy while its oil barons and MPS make private profits. In listing members’ interests, the House of Commons register filed notably, that GKP paid Gary Kent £13,501-15,000 between 1 January and 30 June 2015 “to act as the APPG’secretariat”!

The PUK-owned, Qaiwan Group81, Turkish owned Petoil, in Chia Surkh also feature there for exceedingly high payments under the heading of ‘benefits in kind’. In a single month Petoil is shown receiving £57,001-58,500 in the name of the Secretariat. Transport to and within Kurdistan, along with accommodation, also reveals considerable sums made in payment between 9,000 – 19,500 in just under one month at the end of 2015.82 And the KRG claims to have no money! The PUK media lists all the companies involved in Kurdistan on its own website. Of Qaiwan it states: “Qaiwan Group –A diversified conglomerate based in Sulaymaniyah with activities in construction (Qaiwan Towers, Qaiwan City, Sulaymaniyah Heights), energy (Baziyan Refinery, Petrol Stations, Oil Trading), retail and hospitality (Rotana Hotel Sulaymaniyah, Qaiwan Hotel).” 83

The UK always back Turkey, even when they invaded Iraq and set up a base in Bashiqa, which violates the UN. (Saddam went into Kuwait and how did the UK react?) This invasion guaranteed that ISIS oil would exit via the KRG to Turkey and the West.

“The relationship between British and Kurdish energy companies, and senior British politicians, raises questions about conflicts of interest – especially in the context of a “war on terror” that is supposed to be targeting, not financing, the Islamic State…” observed Nafeez Ahmed in Middle East Eye in November 2015. He emphasised: “One British oil company in particular, Genel Energy, is contracted by the KRG to supply oil for a major Kurdish firm accused of facilitating IS oil sales to Turkey. The Kurdish firm has close ties to the Iraqi Kurdish government…Genel operates in the KRG with the backing of the British government, and is also linked to a British parliamentary group with longstanding connections to both the British and KRG oil industries.”84

The APPG again!

Plunder, slaughter, corruption and division in Iraq

As one US commentator, Arthur MacEwan, has succinctly summed up: “The best estimate of the financial cost to the United States of the war in Iraq is $3 trillion. Between the 2003 invasion and early 2017, U.S. military forces suffered 4,505 fatalities in the war, and allied forces another 321. And, of course, most of all Iraqi deaths: estimates of the number of Iraqis killed range between 200,000 and 500,000.”85

A pertinent comment was posted in response: “It may be a lot more than $3 trillion I’m afraid. The latest paper from September 2016 suggest that the costs are $4.79 trillion and could exceed $7.9 trillion once interest payments are factored in.”86

And the fatalities? A cynical war spurred by the drive for oil that the West should never have protracted may yet see the break-up of Iraq after the deaths of more than half a million people, four million Iraqis displaced internally (IDPs) and some 237,000 Syrian refugees (listed by the UNHCR as being) of concern.87

That is not to mention the huge losses and suffering wrought by IS upon the Yezidis as the peshmerga forces withdrew, Yezidi women made to serve IS murderers as sex slaves or be slaughtered, many still held in captivity; or the ongoing carnage and significant refugee exodus from west Mosul. At the same date, IS still retains control of Hawija, 55 km west of Kirkuk city88, as well as having sleeper cells in and around Baghdad, inter alia.

IS spokesman, Abi al-Hassan al-Muhajer commented of the new US administration on messaging service, Telegram: “There is…more evidence than (that) you being run by an idiot who does not know what Syria or Iraq or Islam is.”89

You can’t argue with that.

The ideological – and real – war is far from won but that won’t stop big business or Donald Trump’s administration from continuing to interfere in Iraq. Son-in-law, Jared Kushner’s April visit and largely unreported discussions are likely a case in point.

And all this is just the tip of the iceberg…

Ordinary Kurds are paying the price for the oil predators their leaders have gotten into bed with. The late, great, founder of the Kurdish Library in Brooklyn, Vera Beaudin-Saeedpour,90 would be turning in her grave. When the KDP and PUK were engaged in the civil war of 1994-1998 she would curse for hours on end. She had a dream of a united Kurdistan but did not wear rose-tinted glasses. Vera would say: “You watch! They’ll get that little tiny bit of Kurdistan in Iraq and the poor Kurds everywhere else will keep suffering. It’s the poor Kurd with his donkey I care about…” Small wonder it was a heart attack in 2010 that took her from us – her passions and frustrations over the Kurdish leaders were too burdensome.

Sinjar now confronts violence owing to the KDP’s close relations with Turkey, the PKK-YPG presence and the oil deposits in the region. Erdogan recently strafed the area (along with Hasseke in Syria) and ‘inadvertently’ killed some KDP peshmerga in the process of targeting YPG Kurds (as frequently happens).91

The Turkish ‘Sultan’ continues to caption the broad-based Kurdish movement in Turkey and Syria as “terrorists” while allowing tens of thousands of foreign jihadists to benefit from safe passage via two Turkish border crossings straight into Al Nusra’s Islamic state in Idlib.

A recent documentary with secret filming inside Idlib exposes Al Nusra’s dominance of the checkpoints and crossing points to and from Turkey.92

The war against the PKK (and legal Kurdish parties) inside Turkey and its bases in Iraq has passed its thirtieth anniversary reverting to the sinister special war mechanisms of the 1990s. Erdogan’s chumminess with Barzani is expedient. Were Barzani to stand up for the rights of Turkish and Syrian Kurds – and a referendum wider than that of the small state of Kurdistan in Iraq, the Turkish military base in Bashiqa would soon turn its guns upon their ‘friends.’

Increasingly, private interests are being protected by special militia like the PUK’s black forces.93 The concept of the peshmerga has altered beyond recognition. The oil business in Kurdistan usurps any pretence of ensuring a just and lawful government in service of and for the benefit of the people.

http://ekurd.net/iraqi-kurdistan-sold-2017-05-23

[10 YEARS LATER]

INCREDIBLE  !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!   Geeez, right now ( and this doesn't happen often ), this has left me speechless and shaking my head. 

[King Bean]

Thanks SD. What a great read. What a mess.