Commentary
Peter Galbraith's $100M Oil Patch Ruth Wedgwood <http://search.forbes.com/search/colArchiveSearch?author=ruth+and+wedgwood&aname=Ruth+Wedgwood> , 11.19.09, 12:01 AM EST A glimpse at globe-trotting diplomats and conflicting interests. Peter Galbraith is a person that I have admired for years – not least for his work as a Senate aide in the late-1980s when he went to northern <http://topics.forbes.com/iraq> Iraq and smuggled out the documents that proved <http://topics.forbes.com/Saddam%20Hussein> Saddam Hussein's culpability in the gassing of Kurdish civilians. As ambassador to Croatia during the war in the Balkans in the early-1990s, Peter bucked up the beleaguered Bosnians and Croats by allowing planes carrying weapons to land unimpeded -- reporting that he had "no instructions" to stop the delivery of the urgently needed military kit. This strategy helped to defeat the Serb forces of Slobodan Milosevic in the summer of 1995. And not least, in 1999-2000, he took charge of the economic issues in the reconstruction of <http://topics.forbes.com/East%20Timor> East Timor, after that small country was half destroyed by the wanton looting and violence of the Indonesian-backed militia, following its vote for independence. Timor is a country lacking any obvious advantages of geography or endowment, except for a soil good for coffee and sandalwood. Yet Peter negotiated an enormously favorable deal for East Timor in that new state's dispute with Australia over the division of the gas and oil found in the "Timor Gap" – a pocket of wealth on the seabed floor between the two states. One might have supposed that Timor would not do much better than 50-50 or 60-40 in the split. But Peter served East Timor by winning the lion's share of 90% of the revenues for this struggling small state, though later a portion of the funds was reportedly lost through unwise financial investments. Lately, in his recent service with the United Nations in Afghanistan, alongside Richard Holbrooke and Norwegian diplomat Kai Eide, he has shown courage in criticizing the irregularities of the national vote for a new president, even if the electoral shenanigans were to be expected. But this makes it all the more painful to think about the ethical swamp waters that too often lap at the heels of international actors in countries that are in chaos. It has presented Peter with a choice in which it is hard to do the right thing, but where there are enormous consequences for the future of Iraq, and frankly, for the future of international post-conflict reconstruction. In particular, it has been reported in the press that Ambassador Galbraith, as he is formally known, has had a fee arrangement with a Norwegian oil company to obtain 5% of the oil revenues generated in a particular large oil field in the Kurdish territories of Iraq. The amount of money at issue may be as high as $100 million, and perhaps even more. >From one perspective, this surprising amount of money could be dismissed as a >private affair, as a simple contractual commission from a lucky Norwegian >company that is grateful for his assistance in cajoling the Kurdish >authorities to grant an oil lease. Certainly, Peter has banked a lot of good >will in Kurdistan over the years. But the press has also been chewing over the fact that since 2004, Peter has had a key role in pushing for autonomy for the Kurds over the disposition of their region's natural resources. His backing for giving final authority to the Kurds in developing the oil fields was reportedly a key variable in Baghdad's constitutional deliberations on the matter, and in building American support for the idea. There is unlikely to be any American statute or conflict rule that covers this situation, since it has been years since he was employed as a U.S. diplomat. He may become a wealthy man unlikely to slow down in his adventures abroad. Yet there is a gnawing sense that by choosing to stake a private financial claim of this magnitude -- in a triple play where he was publicly working for the Kurds, and yet privately working for the DNO oil company and himself -- this savvy former diplomat could prejudice America's role as a credible broker in diplomacy and reconstruction. Since 2003, foreign critics have uttered the canard that the United States sought to topple Saddam Hussein simply to control Iraqi oil. Seeing an American mediator take home a pay check of this size will give comfort to the cynics, and may excite resentment in a tormented country where the annual per capita income is less than $2,000. To be effective, international conflict resolution depends on the disinterested conduct of international mediators, including retired American diplomats who act in post-conflict areas. It is also like the proverbial "clock that struck thirteen" -- calling into question all the chimes that went before. It would not be surprising to see critics looking back even at the Timorese negotiation with a new skepticism. Alas, this phenomenon is not a new problem. In countries where the law has broken down, there is often a sense that only a fool would leave gold on the ground. But diplomats are not supposed to be gold-diggers. The same problem has arisen -- on a smaller scale but also with crucial stakes -- in the newly-declared independent state of Kosovo. After the 1999 NATO military campaign that defeated Slobodan Milosevic, the United Nations set up an international administration in Kosovo to assist in building a modern state, with huge sums from the <http://topics.forbes.com/European%20Union> European Union and other international donors. The U.N. transitional mission has continued -- even after independence -- because of political disagreements over recognition of the new state. But international officials in the U.N. mission have begun to switch hats with an ease and nonchalance that would curdle the blood of any ordinary conflict-of-interest lawyer. Two examples should suffice. The chief legal advisor to the U.N. mission -- who acted as de facto law-maker in Kosovo during almost eight years of international governance -- has now changed horses, representing Kosovo's prime minister, without any cooling-off period, in negotiations against the ongoing U.N. mission. So, too, the former deputy special representative of the U.N. Secretary General -- who supervised the privatization of the energy and transportation sectors in Kosovo-- has gone to work for the main political rival of the prime minister, a former military leader of the Kosovo Liberation Army named Ramush Haradinaj, as an "advisor." Haradinaj is believed to have a major stake in the privatized companies. An investigation by a U.N. watchdog office -- called the Office of Internal Oversight Services -- recently concluded that ordinary fiscal and auditing controls for UN-funded privatization projects were wanting. The energy sector aid package has a budget estimated at 500 million Euros, and with a local ''facilitation fee" of 1%, a maiden aunt could begin to worry. Inconceivably, the United Nations appears to lack any conflict-of-interest rule that forbids such a revolving door of self-interest. U.N. Secretary-General Ban Ki-Moon has made ethics the touchstone for his tenure in office. Certainly, he should promulgate a ban on such seamless acts of commercial reincarnation. Former U.S. Secretary of State James Baker was a no-nonsense man who took a hard-nosed attitude when people tried to combine their public duties with private profit. He forbade U.S. ambassadors from engaging in any commercial activities in the countries that were the subject of their reporting. That was the right attitude. Conflict areas may lie beyond the reach of effective law enforcement. But they do not reside beyond the demanding claims of honor and ethics. Ruth Wedgwood is a professor of international law at Johns Hopkins University's School of Advanced International Studies and a member of the Hoover Institution task force on law and national security. 2009 Forbes.com LLC™ All Rights Reserved http://www.forbes.com/2009/11/18/peter-galbraith-diplomats-politics-world-opinions-contributors-ruth-wedgwood.html
