Former US diplomat could make 'hundreds of millions' off Iraqi oil fields

Oil company's involvement casts shadow on legitimacy of Iraqi constitution

A former US ambassador who played an instrumental role in the drafting of Iraq's constitution stands to make "hundreds of millions" of dollars from an oil deal he struck that was only possible because of a constitutional provision he helped push through, news reports say.

A story first broken by the Norwegian newspaper Dagens Naeringsliv earlier this month and moved forward by the Times states that Peter Galbraith, a former US ambassador to Croatia and staffer at the Senate Foreign Relations Committee, was receiving compensation from Norwegian oil firm DNO when he helped negotiate the Iraqi constitution.

According to the Times, Galbraith was instrumental in helping Kurdistan gain semi-autonomy under Iraq's constitution, which gave the Kurdish regional government control over future oil development. At the time, by Galbraith's own admission, he was being paid by DNO to help negotiate oil contracts with the Kurdish government.

Records obtained by the Times show Galbraith received a five-percent stake in Kurdistan's Tawke oil field, which was developed by DNO and struck oil in late 2005. The Times has no estimate of the value of Galbraith's stake in that oil field, but notes that a lawsuit involving it seeks damages in the hundreds of millions. A report in the Times of London puts Galbraith's share at "reportedly $100 million."

The news could raise already-prominent fears among Iraqis and anti-war activists that oil was the primary reason for the Iraq war. But it could also cast a shadow on the legitimacy of Iraq's constitution.

“The idea that a foreign oil company was in the room drafting the Iraqi Constitution has me reeling,” Feisal al-Istrabadi, a former Iraqi ambassador to the UN, told the Times of London. “It casts a tremendous pall on the legitimacy of the process. We do not let Shell draft the constitution of Nigeria.”

Reidar Visser, a researcher at the Norwegian Institute of International Affairs, told NPR that the fact Galbraith was being paid by DNO at the time he helped negotiate the constitution is "scandalous." She noted that many Iraqi politicians were excluded from the process even as Galbraith got front-row seats.

James Paul, executive director of the Global Policy Forum, noted that Galbraith has been a strong advocate of the idea that Iraq should be broken up into smaller countries to prevent ongoing violence. That plan would see Kurdistan gain independence as a nation.

"Galbraith, a former US diplomat and congressional staffer, was working from 2003 to 2004 to prevent a strong central government from emerging in Iraq, the kind of government that might prevent big foreign oil companies from returning to control the country’s resources," Paul said in a statement. "Now we know that under the guise of sympathy for the Kurds, he had another very personal goal -- millions in personal profit from an oil deal that a Norwegian company struck with the Kurdish regional government."

In a letter to the New York Times, Galbraith stressed that he had stopped working for the US government in any capacity in 2003, and was operating as an independent consultant when he worked on the Iraqi constitution and the DNO oil deal.

Mr. Galbraith says he held no official position in the United States or Iraq during this entire period and acted purely as a private citizen. He maintains that his largely undeclared dual role was entirely proper. He says that he was simply advocating positions that the Kurds had documented before his relationship with DNO even began.

“What is true is that I undertook business activities that were entirely consistent with my long-held policy views,” Mr. Galbraith said in his response. “I believe my work with DNO (and other companies) helped create the Kurdistan oil industry which helps provide Kurdistan an economic base for the autonomy its people almost unanimously desire.”

“So, while I may have had interests, I see no conflict,” Mr. Galbraith said.

Galbraith is the son of famed economist John Kenneth Galbraith. Early on in his career, the younger Galbraith was reportedly instrumental in uncovering Saddam Hussein's gassing of Iraq's Kurdish population.

In September, he was fired from his job as the number-two person in the UN's mission in Afghanistan, after he criticized the UN for legitimizing the re-election of Afghan President Hamid Karzai, in an election that Galbraith and many others view as corrupt and illegitimate.