U.S State Dept. role in Iraq oil deal questioned

[StarsFan4Life]

http://www.iht.com/articles/20...africa/03kurdistan.php

Bush administration officials knew that a Texas oil company with close ties to President George W. Bush was planning to sign an oil deal with the regional Kurdistan government that runs counter to American policy and undercut Iraq's central government, a congressional committee has concluded.

The conclusions were based on e-mail messages and other documents that the committee released Wednesday.

United States policy is to warn companies that they incur risks in signing contracts until Iraq passes an oil law and to strengthen Iraq's central government. The Kurdistan deal, by ceding responsibility for writing contracts directly to a regional government, infuriated Iraqi officials. But State Department officials did nothing to discourage the deal and in some cases appeared to welcome it, the documents show.

The company, Hunt Oil of Dallas, signed the deal with the Kurdistan's semiautonomous government last September. Its chief executive officer, Ray Hunt, a close political ally of Bush, briefed an advisory board to Bush on his contacts with Kurdish officials before the deal was signed.

In an e-mail message released by the congressional committee, a State Department official in Washington, briefed about the impending deal with the Kurdistan Regional Government, wrote: "Many thanks for the heads up; getting an American company to sign a deal with the KRG will make big news back here. Please keep us posted."

The document release comes as the administration is defending help that United States officials provided in drawing up a separate set of no-bid contracts, still pending, between Iraq's Oil Ministry in Baghdad and five Western oil companies to provide services at other Iraqi oil fields.

In the no-bid contracts, the administration ultimately conceded that it had provided what it called purely technical help writing the contracts. The United States played no role in choosing the companies, the administration has said.

Disclosure of those contracts has provided fuel to critics of the Iraq war who contend that the enormous Iraqi oil reserves were a motivation for the invasion, an assertion the administration has repeatedly denied.

Iraq's oil minister, Hussain al-Shahristani, has condemned the Kurdistan deal as illegal because it was not approved by Iraq's central government and was struck without an oil law.

After the deal was signed last year, a senior State Department official in Baghdad criticized it, saying, "We believe these contracts have needlessly elevated tensions between the KRG and the national government of Iraq."

The State Department said Wednesday that it had discouraged the deal. Hunt officials declined to comment, and Kurdish government officials said there was no impropriety.

In a letter to the Committee on House Oversight and Government Reform, whose chairman is Henry Waxman, Democrat of California, a State Department official wrote that the department had strongly discouraged Hunt from signing the deal until an oil law had been passed. The State Department told Hunt that "we continue to advise all companies that they incur significant political and legal risk by signing contracts" before Iraq passes the law, wrote Jeffrey Bergner, an assistant secretary for legislative affairs at the department, in one of the documents made public on Wednesday.

But in a letter to Secretary of State Condoleezza Rice, Waxman wrote that the documents his committee collected "tell a different story about the role of administration officials." In letters obtained by the committee, Hunt informed the President's Foreign Intelligence Advisory Board, of which he was a member, last July and August that he was pursuing serious business interests in Kurdistan.

"We were approached a month ago by representatives of a private group in Kurdistan as to the possibility of our becoming interested in that region," Hunt wrote to the board last July 12. "We had one team of geoscientists travel to Kurdistan several weeks ago and we were encouraged by what we saw."

In August 2007, Hunt informed State Department officials directly of his intentions in Kurdistan, and on Sept. 5, three days before the deal was signed, a flurry of e-mail messages among Hunt and State Department officials make it clear that the department was aware of what was in the works.

In an e-mail message with the subject line "Hunt Oil to Sign Contract with KRG," one State Department official gives a highly detailed summary of the deal and writes, "Hunt would be the first U.S. company to sign such a deal."

Despite those exchanges, a State Department official said the company was in fact discouraged from completing its deal. "All companies, including Hunt Oil, which have spoken with the United States government about investing in Iraq's oil sector, have and will continue to be given the same advice," John Fleming, an Iraq press officer in the State Department's Bureau of Near Eastern Affairs, wrote Wednesday in an e-mailed response. "We advise companies that they incur significant political and legal risk by signing any contracts with any party before a national law is passed by the Iraqi Parliament."

Another State Department official, who asked to remain anonymous, expressed frustration, saying that a local State Department official in Erbil, the Kurdish provincial capital, tried to dissuade Hunt officials from making the deal. But no notes were taken at that meeting, the official said, and Hunt representatives later gave a conflicting account of what had been said.

"He sticks by his story and they stick by theirs," the State Department official said.

Jeanne Phillips, a senior vice president for corporate affairs and international relations at Hunt whose correspondence appears in the documents released Wednesday, said that because Waxman's letter was not addressed directly to the company, she could not comment on it.

The documents released by Waxman also lay bare what has become a serious dispute between the company and the State Department over what was said between them before the deal last year.

For example, a senior Hunt official said he was told by State Department officials during meeting last June 15 that the United States government did not object to deals with the Kurdish regional government.

"I specifically asked if the USG had a policy toward companies entering contracts with the KRG," the Hunt official, David McDonald, wrote in an e-mail message to a colleague last Sept. 28. The State Department officials, McDonald wrote, replied that there was no policy, neither for nor against.

The encouragement by State Department officials did not end with the signing of the contract on Sept. 8, the documents suggest. Five days later, a State Department official in the southern city of Basra wrote to Phillips, "I read and heard about with interest your deal with the regional Kurdish government."

"I don't know if you are aware of another opportunity," the official wrote, mentioning an enormous port project and a natural gas project in the south. After a few more lines, the official concluded: "This seems like it would be a good opportunity for Hunt."

James Glanz reported from New York, and Richard A. Oppel Jr. from Baghdad. Andrew E. Kramer contributed reporting from Moscow, Mudhafer al-Husaini from Baghdad and an Iraqi employee of The New York Times from Kurdistan.

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