Liberalscum Buster

September 15, 2007

Bush-linked Texas company signs oil deal with Iraqi Kurds

Filed under: Bush, life, mideast, news, politics — gasdocpol @ 12:46 pm

Bush-linked Texas company signs oil deal with Iraqi Kurds
By Joe Kay
15 September 2007

Earlier this month, the Kurdish Regional Government (KRG) in Iraq announced that it had signed a production-sharing deal with Texas-based Hunt Oil. The move is an indication that Western oil companies, frustrated over the delay in the passage of a national oil law by the Iraqi government, are moving to make deals with regional bodies to get access to Iraq’s vast oil reserves.

As significant as the deal itself is the identity of the company involved. Ray Hunt, the CEO and president of privately held Hunt Oil, is a close confidant of President Bush and a prominent figure in the US political and intelligence establishment.

To what extent the policy of the Bush administration is motivating the deal—and to what extent it is motivated by purely profit interests—cannot be determined with precision. However, the announcement comes at a time of growing strains between the Iraqi national government, led by Prime Minister Nouri al-Maliki, and the Bush administration. Many commentators have noted that the moves by Kurdish authorities to establish autonomy in the control of the region’s oil resources could contribute to a fracturing of the Iraqi state along sectarian lines.

Hussain al-Shahristani, the Iraqi oil minister in the Maliki cabinet, denounced the agreement, saying, “Any oil deal has no standing as far as the government of Iraq is concerned. All these contracts have to be approved by the Federal Authority before they are legal. This [contract] was not presented for approval. It has no standing.”

The Wall Street Journal, in an article published on September 10, noted that the move by Hunt represents “a new willingness by some large Western companies to bypass the fractious government in Baghdad and deal directly with regional authorities in the war-torn country.”

The Journal went on to note that the contract with Hunt “is a watershed in the on-again, off-again scramble by Western companies to set up shop in Iraq…. Since the overthrow of Saddam Hussein … there has been no legal framework for signing deals and ensuring they last beyond the current government.”

The passage of an oil law that would open up Iraq to US and other foreign oil companies has been one of the key aims of the US occupation and a principal “benchmark” set by the Bush administration and the US Congress for the Maliki government. All sections of the US political establishment are united in the demand that this law be passed.

Earlier this year, representatives of the different factions of the Iraqi elite—Shiite, Sunni, and Kurd—reached a temporary compromise. In July, Maliki’s cabinet agreed to a draft law that was sent to the Iraqi parliament.

While the bill is universally portrayed in the American media as a means of reconciling the different Iraqi factions, the main purpose of the legislation is to end the state monopoly on the development of oilfields and abrogate preexisting contracts with Chinese, Russian and French oil companies. The draft was drawn up under the close supervision of American advisors.

The compromise was hailed with much fanfare when it was reached, but it has not been passed in parliament, foundering on conflicts over the division of the spoils. The Kurds, in particular, have favored more regional control over oil, while the Sunni elite and sections of the Shiites want more centralized control. Most of Iraq’s oil is concentrated in the largely Kurdish north and the largely Shiite south.

In his televised speech on Thursday, Bush issued another warning to the Maliki government that it must pass the oil law. “The government has not met its own legislative benchmarks,” Bush said, “and in my meetings with Iraqi leaders, I have made it clear that they must.”

In August, the KRG moved ahead by passing its own oil law that accords with the interests of the Kurdish elite. It then signed the deal with Hunt Oil in early September. An article published in the New York Times on Thursday reported that the draft oil law had “collapsed,” in part due to the Hunt deal.

Prior to Hunt, the KRG had signed contracts with other companies, including DNO of Norway, Genel Ernerji of Turkey, Dana Gas of the UAE, and Western Oil Sands of Canada.

The large energy conglomerates have thus far remained on the sidelines, waiting for the passage of a national law that will secure their investments and provide a legal cover for their operations. While Hunt is not the equivalent of oil giants such as Exxon or British Petroleum, the deal is a qualitative development over the earlier, smaller agreements. It is the first of the sort since the KRG passed its own oil law.

The move clearly strengthens the hand of the Kurdish authorities in their ongoing dispute with the central government. In addition to the oil law, conflicts are escalating over a referendum that is supposed to be held later this year to determine whether the oil-rich city of Kirkuk will be incorporated into the KRG. The national government has so far stalled on preparing for the referendum.

In the eyes of Kurdish elite, control over Kirkuk, combined with access to a larger share of oil revenues, will provide the foundation for a future Kurdish state. The US has been hesitant to back these aspirations. While the Kurdish nationalist parties and militias have been important collaborators in the US occupation, a separate Kurdish state could well provoke a military intervention by US ally Turkey, which fears Kurdish separatist tendencies within its own borders.

Given Hunt’s connections, however, there is reason to believe that the deal was encouraged by the Bush administration—either as a means of pressuring the Maliki government or as a step toward supporting regionalism over the national government.

In an op-ed piece published Friday, New York Times columnist Paul Krugman reported that Ray Hunt “is a close political ally of Mr. Bush.” He continued, “More than that, Mr. Hunt is a member of the president’s Foreign Intelligence Advisory Board, a key oversight body.”

Krugman went on to note, “By putting his money into a deal with the Kurds, despite Baghdad’s disapproval, he’s essentially betting that the Iraqi government—which hasn’t met a single one of the major benchmarks Mr. Bush laid out in January—won’t get its act together.”

Hunt is also on the board of directors of Halliburton, the company formerly run by Vice President Dick Cheney. In 2000, Hunt was one of 241 Bush “pioneers”—meaning he raised more than $100,000 for the Bush presidential campaign. He was finance chairman for the Republican National Committee’s Victory 2000 Committee.

A report on the web site from August 2004 notes that Hunt “serves as chairman of the board for the Federal Reserve Bank of Dallas and is a member of the National Petroleum Council, an industry trade group that advises the president on energy policy. Vice President Cheney also served as a member of the Council during his tenure as CEO for Halliburton.”

Hunt’s position on the Foreign Intelligence Advisory Board places him in close contact with the intelligence establishment in the US. In 2005, along with Hunt, Bush appointed 11 other members, including Lee Hamilton, vice chairman of the 9/11 Commission and former Democratic congressman; William DeWitt, a close Bush supporter who helped Bush make his millions in his dealings with Harken Energy and the Texas Rangers; Donald Evans, long-time Texas oil man, Bush supporter and former secretary of commerce; and Martin Faga, former director of the National Reconnaissance Office, which operates US spy satellites.

Another factor behind the Hunt deal is concern within the administration over the growing interest in Kurdish oil expressed by other foreign powers—including China and Iran. A January 2007 report by the BBC noted “an increasing foreign interest in the future of Kurdistan’s oil.” The article cited Jerry Kisler, a US oil expert who was advising the KRG, who said Iran’s activity had been particularly notable.

According to Kisler, “They [the Iranians] have their eyes on lots of cross-border fields. It’s a reality that’s hard for Americans to swallow.”





    The Hunt Oil/Halliburton Connection
    And if a sparrow cannot fall to the ground without His notice, is it probable that an empire can rise without His aid
    — Dick and Lynne Cheney’s Christmas card inscription, 2003 (both claim membership in the UMC)

    Long-time SMU trustee (since 1976) Ray L. Hunt is head of the Dallas-based Hunt Oil Company, one of the largest independent oil corporations in the world. He is a Bush friend and a central figure in bringing the Bush think tank proposal to SMU (Personal communication, 2007). Hunt is the son of flamboyant Texas oil tycoon, H.L. Hunt, who was a staunch supporter of Joseph McCarthy and the John Birch Society. In 1948, Fortune magazine labeled H.L. Hunt “the richest man in the United States” (Texas State Historical Association, 2007). Ray L. Hunt, an under-the-radar power player, inherited much of the Hunt Oil fortune in 1974 when his father died. Forbes recently identified billiire Ray Hunt as one of the richest men on the planet (Dallas Business Journal, 2007).

    Ray Hunt is a longtime financial backer of the Bush family. He raised money for the elder Bush and served as the finance chairman of the Republican National Committee for George W. Bush in 2000 (Bryce, 2005). According to the Center for Responsive Politics, Hunt and his spouse have donated more than $460,000 to Republican state campaigns, while his company and its employees contributed more than $1 million to Republican causes between 1995 and 2002 (Grimaldi, 2002). He gave $100,000 toward the 2001 Bush inaugural festivities and one of his corporations, Hunt Consolidated, gave another $250,000 toward the Bush 2005 presidential inaugural gala (Public Citizen’s Congress Watch, 2007). In addition, Hunt donated a whopping $35 million toward the Bush library/think tank to secure additional property for the project (Schutze, 2006).

    One month after 9/11, Bush honored his friend Ray Hunt with a seat on the President’s Foreign Intelligence Advisory Board (PFIAB), and he was re-appointed in January 2006 (Bryce, 2005). According to the White House, this board operates to offer the president “objective, expert advice” on the conduct of foreign intelligence (Wolffe and Bailey, 2005b). Hunt, with international business interests, has access through PFIAB to intelligence that is unavailable to most members of Congress. This group is privy to the most current and sensitive information gathered by the Central Intelligence Agency, the National Security Agency, the military intelligence organizations, and several others sources (Bryce, 2005). PFIAB operates in complete secrecy. According to Salon magazine, members of this oversight board “are not subject to the Freedom of Information Act and unlike other public servants who work for the president, there is no public disclosure of the PFIAB members’ financial interests” (Bryce, 2005).

    Several experts are persuaded that Hunt’s position at PFIAB could easily benefit both Hunt Oil’s worldwide energy interests and Halliburton, which has been awarded billions of dollars worth of no-bid, cost-plus contracts in Iraq by the U.S. government (Bryce, 2005; Wolffe and Bailey, 2005). Hunt has been on Halliburton’s board of directors since 1998, when Dick Cheney was running the company and serving as an SMU trustee (1997- 2000). Interestingly, soon after Hunt joined the Halliburton board, he was placed on its compensation committee, where he helped determine Cheney’s pay package (Bryce, 2005). In fact, in 1998 Hunt’s committee decided that Cheney deserved a $3.78 million bonus (Bryce, 2005), and in 2000 he got $33.7 million award when he joined the Bush campaign (Bryce, 2000).

    Halliburton has outdone even Enron in using offshore tax shelters to avoid paying taxes. By 2005, Halliburton had 58 offshore subsidiaries in Caribbean tax havens (Turnipseed, 2005). In 1998, the year Hunt joined Cheney at Halliburton, the company paid $302 million in taxes. In 1999, with the use of offshore tax havens, Halliburton paid no taxes and even received $85 million in refunds from the IRS (Turnipseed, 2005). Halliburton also utilized its offshore companies to contract services and sell banned equipment to Iran, Iraq, and Libya — something that would have violated federal law if Halliburton had not used offshore subsidiaries (Turnipseed, 2005). New York City Controller William Thompson said that profits made by Halliburton from states that sponsor terrorism, such as Iran and Libya, is nothing short of “blood money” (Halliburtonwatch, 2007).

    Despite using tax havens and earning millions in profits from rogue states like Iran, Halliburton experienced financial distress. In late 2001, according to Fortune magazine, after a series of financial debacles and billions in asbestos-related liability claims, Halliburton stock plummeted to $8.50 a share, and Wall Street worried about the corporation’s survival (Elkind, 2005). Halliburton’s fortunes changed dramatically with the onset of the “war of choice” in Iraq. Before the war, Halliburton was 19th on the U.S. Army’s list of utilized contractors; by 2003 it was number one. The company has been awarded at least $11 billion in government contracts since Bush took office (Mayer, 2004).

    And Ray Hunt has become an even richer billionaire. In March of 2003 Halliburton stock was valued at $20.50 per share and by March of 2007 it was worth $64.12 per share (Rich, 2007). According to the Forbes list of the World’s Richest People in 2003, at the beginning of the Iraq war Ray Hunt was worth $2.3 billion (Forbes, 2003) and by 2007 his fortune had grown to $3.5 billion (Dallas Business Journal, 2007). Both Hunt and Halliburton have been winners in the Iraq war. To provide perspective, the $1.2 billion increase in riches in four years by Hunt is greater than SMU’s total endowment garnered since 1911 (SMU, 2006).

    In 2005 audits by the Pentagon, the Government Accountability Office, and other agencies found that $1.8 billion of the $11 billion in contracts to Halliburton (16.4 percent) to be either “unjustified” or “undocumented” charges to the government (Elkind, 2005). In addition, the auditors reported widespread problems with record keeping and a refusal to provide required information, as well as misleading the auditors about its efforts to seek competitive prices. According to Fortune magazine, Halliburton’s “war profiteering” also involved outrageous price-gouging for fuel and services to the troops, such as charging $100 to wash a 15-pound bag of clothes and serving out-of-date food to the troops (Elkind, 2005).

    As long-ago as September of 2004, the U.S. military called for “the immediate termination of Halliburton’s most lucrative contract with Army because of poor performance” (Halliburtonwatch, 2005). Secretary of Defense Donald Rumsfeld and President Bush ignored the request. When Fortune magazine tried to speak to Hunt about the company’s questionable practices, its phone calls were not returned (Elkind, 2005). None of these jaw-dropping scandals kept Halliburton from obtaining a new federal contract to build a maximum-security prison at Guantanamo Bay, Cuba (Ivanovich, 2005; Buncombe, 2006).

    In a separate business dealing, Hunt Oil has a major role in the development of the Camisea Natural Gas Project in an unspoiled rain forest in Peru. This project has encountered fierce opposition because of concerns that the pipeline will destroy the rainforest and the lives of the indigenous peoples in the region (Grimaldi, 2002). Amazon Watch, an environmental and human rights group, calls the Camisea Gas Project “the most damaging project in the Amazon Basin” (Amazon Watch, 2007). The (London) Independent newspaper reported that the project “will enrich some of [President Bush’s] closest corporate campaign contributors” but that it “risks the destruction of one of the world’s remaining pristine stretches of rain forest and threatens the lives of indigenous peoples” (Halliburtonwatch, 2004). Does Hunt’s position on PFIAB and the government intelligence to which he is privy give him a business advantage in dealing with this and numerous other projects? There is no way to be certain. What is clear, as journalist Robert Bryce has observed, is that “Hunt’s business operations are so vast that every bit of foreign intelligence he sees at PFIAB could potentially be of value to him and his associates” (Bryce, 2005).

    Comment by Andrew Weaver — September 15, 2007 @ 3:43 pm

  2. And the Bible smackers who love GW Bush stll think that morality has been restored to the White House! lol

    Comment by gasdocpol — September 15, 2007 @ 5:29 pm

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