The Cable

Galbraith admits financial stake in Kurdish oil

Amb. Peter Galbraith, who was recently fired from his job as the second-highest ranking U.N. official in Afghanistan, admitted Thursday that he had financial interests in Kurdish oil dealings at the time he was helping to craft the Iraqi constitution.

Galbraith has been under pressure to talk about his dealings regarding the Norwegian oil company DNO, which had been part of an agreement to develop Kurdistan oil fields beginning in 2004. The Kurdistan Regional Government's own dealings with DNO are controversial in and of themselves.

Last month the KRG temporarily suspended DNO's operations in the Kurdish areas to allow time to settle a dispute between DNO and the Oslo Stock Exchange. The exchange suspended trading on DNO stock after it was revealed that the KRG aided in the selling of DNO stock to the Turkish company Genel, in what some see as an example of insider trading.

But Galbraith's involvement with DNO dates back to 2004, when he was actively involved in helping the new Iraqi government sort out its structure in the aftermath of the U.S. invasion. Galbraith pushed hard for the Kurds to seek maximum autonomy at the time, but now denies there was any conflict of interest.

"The business interest, including my investment into Kurdistan, was consistent with my political views,'' he told the Boston Globe, "These were all things that I was promoting, and in fact, have brought considerable benefit to the people of Kurdistan, the Kurdistan oil industry, and also to shareholders.''

The Globe also has details of how Galbraith was playing both the political and financial sides of the Kurdish issue:

In speeches, meetings with US officials, and articles in the New York Review of Books, Galbraith said Kurds should be given maximum autonomy and should have the right to develop their own oil fields, free of control by Iraq's central government.

But the same time, Galbraith was quietly entering into business deals that gave him a financial stake in the positions he was advocating. In late 2003 and early 2004, he worked as a paid consultant to Kurdish politicians, advising them on legal language they should seek to insert into Iraqi laws to keep future oil development under their control. Later, in 2005, he advised them again on an unpaid basis.

On June 23, 2004, Galbraith and his son, Andrew, registered a Delaware partnership called Porcupine, which entered into a business arrangement with DNO, a Norwegian oil company, according to company documents and a statement recently circulated by Porcupine.

Two days after Porcupine was established, the Kurdistan Regional Government signed a contract to develop Kurdistan's first oil field with DNO, ushering in a potential economic windfall for the semiautonomous region. DNO eventually struck oil, and currently owns a 55 percent stake in the Tawke field.

Many also see the revelations of Galbraith's involvement in DNO, which were detailed in a harsh manner on the Norwegian Web site, as part of a retribution campaign following Galbraith's public and scathing criticism of his former U.N. boss Kai Eide, the Norwegian diplomat who stands accused of helping to ignore massive election fraud in Afghanistan.

AFP/Getty Images

The Cable

CNAS signs up Schmitt and Shanker

The Center for a New American Security, the newest and most aggressive defense think tank on the block, announced today it will host two top New York Times reporters, Eric Schmitt and Thom Shanker, beginning in November.

The new "writers in residence" will use their time to work on a joint book project entitled, Counterstrike, which CNAS describes as "an examination of the evolution of American counterterrorism strategy since the attacks of Sept. 11, 2001."

Shanker will take a three-month leave from the Times starting in November, and Schmitt will follow with a three-month stint in February.

"Thom and I believe there's a rich story to tell about the significant evolution of American counterterrorism strategy and policy since the Sept. 11 attacks that reflects both a more detailed understanding of terrorist networks and a healthier appreciation of their deadly resiliency," Schmitt said in an e-mail.

CNAS, which has been a feeder for national security and foreign-policy positions in the Obama administration, has been expanding its ranks steadily. Recent acquisitions include Richard Fontaine, former national security advisor to John McCain, the National Defense University's Patrick Cronin, and former writer in residence and fellow FP blogger Tom Ricks.

Other past CNAS writers include the Times' David Sanger, former Times and Politico correspondent David Cloud, and Ricks' replacement at the Washington Post, former Wall Street Journal defense writer Greg Jaffe.

In other CNAS news this week, former president Michèle Flournoy and current CEO Nate Fick made GQ's list of the 50 most powerful people in DC, coming in at number 20 and 42, respectively.