Billionaires in the pipeline
Danny Forston
sundaytimes.co.uk
April 14, 2012

 
FILE - In this June 1, 2009 file photo, Kurdish president Massud Barzani, right, and Iraqi President Jalal Talabani open a ceremonial valve during an event to celebrate the start of oil exports from the autonomous region of Kurdistan, in the northern Kurdish city of Irbil, Iraq. A Kurdish official says the Kurdish government has signed a deal with ExxonMobil to explore oil fields in northern Iraq, a move that puts them in sharp conflict with Iraq`s national government. AP PHOTO

Black gold has transformed the Kurds` fortunes. Everyone, including the BP boss embroiled in the Deepwater Horizon scandal, wants a piece of it.

The village of Shela, a collection of mud and stone huts, sprouts from the denuded landscape of Kurdistan like a clump of dun-coloured mushrooms. It is an eerily quiet place, its sole dirt track deserted, as if everyone has scurried inside and barred the doors before a Wild West shoot-out. There are cowboys about, but not the kind you are thinking of. Just over the hill, a pair of bright-orange gas flares bleed trails of acrid black smoke into a brilliant blue sky.

Oil — lots of it — has been found in this corner of northern Iraq, an enclave of 5m people that is part of a shaky power-sharing coalition with Sunni and Shia Muslims. The discoveries may seem unremarkable. It is Iraq, after all. But Kurdistan, wedged uncomfortably between Turkey to the north, Iran and Syria to either side, and the rest of Iraq to the south, is different. For decades under Saddam Hussein, and before, the Kurds — ethnically and culturally different from their Arab countrymen — were brutalised, bombed and persecuted. The most notorious instance came in 1988, when Saddam gassed thousands of civilians in the village of Halabja, a massacre recognised by the Iraq High Court as an act of genocide. All of Iraq`s oil came from giant fields in the south and east. Kurdistan had to get by on herding goats, subsistence farming, and aid handouts from abroad.

The downfall in 2003 of Saddam`s regime after the US-led invasion changed everything. The Kurdish authorities, endowed with new powers thanks to the new constitution, saw their chance. They flung open the doors to foreign explorers. The results have been astounding. The first 10 wells drilled hit paydirt. The United States Geological Survey estimates that the region holds up to 45 billion barrels — nearly as much as has been produced by Britain since North Sea oil first started pumping out in the 1960s. News travelled fast.

Today, Kurdistan is in the grip of an old-fashioned oil boom. Planes flying into a gleaming new airport in Erbil, the capital, are full of foreign chatter: Texan drawl, Chinese staccato, the flat vowels of Yorkshire. They swap stories of gushers found and fortunes made.

Five-star hotels are rising from building-site lots that only recently were little more than disused scrubland. Electricity runs virtually 24 hours a day, when five years ago the city was lucky to squeeze out a few hours from its dilapidated network. Baghdad still only gets by on four hours of power a day. And it`s peaceful. No coalition troops were killed in Kurdistan in the eight-year occupation. The last suicide bombing occurred in a remote village in 2009.

Five years ago, Kurdistan produced 2,000 barrels a day from a single well. Today it churns out 250,000 barrels a day

“It feels like Dubai 25 years ago,” says Tony Hayward, the former BP chief executive who left the company over the Gulf of Mexico oil spill. He resurrected his career as the boss of Genel Energy. One of Kurdistan`s new oil pioneers, he floated the firm in London last year after merging it with a shell company he set up with Nat Rothschild, the billionaire scion of the banking dynasty. They have already awarded themselves shares worth more than £100m — and it`s just getting started.

Five years ago, Kurdistan produced 2,000 barrels a day from a single well. Today it churns out 250,000 barrels a day. With oil selling for over $120 a barrel, that equates to $900m a month in a country where average annual income barely tops $5,500. Hundreds of millionaires, and even a couple of billionaires, have already been made.

Most are foreigners who, like Hayward, have swooped in to feast on the spoils. Locals are waiting, hoping that the wealth will trickle down.

Awara, a 25-year-old with a chin-strap beard and a gummy smile, is one of nine children. He has lived in Shela his entire life.

“Nothing changes for the poor,” he says. “They have electricity all the time in the city, but here, we only have six or seven hours [a day]. The water is bad, but we have no choice but to drink it. I have kidney problems.”

He does have a job. He makes £15 a day as a driver for a Chinese company that maps underground geological structures for oil companies using 3-D imagery. The hours are long, he says, and his bosses unforgiving.

Aziz, a 42-year-old with a luxurious salt-and-pepper moustache, says he is fortunate to work two days a week mixing cement: he is paid slightly more than the local average. “Life here is very hard,” he says, thumbing a chain of prayer beads. “We see the companies coming here. We are hoping things change soon.”

Kurdistan has a long way to go, but it has already come far. “Context is important,” says Barham Salih, who stepped down as prime minister in January after two years in office. “This was a devastated wasteland.” Devastated, as we know, by Saddam.

It is hard to believe now. Rows of new electricity pylons crisscross the countryside. Shiny satellite dishes dance across corrugated tin roofs. New cars jam newly paved roads. Yet Kurdistan`s rise is far from assured. As it gains greater autonomy, the balance of power, not just in Iraq but in the combustible Middle East, will shift, and not to everyone`s liking.

The dangers are something Awara knows only too well. He was born in the midst of Saddam`s ethnic cleansing. His village was razed to the ground. In Kurdish, his name means “Homeless”. His parents gave him the name when their house was destroyed.

Mehmet Sepil pushed his seat back from the baize-covered table and slumped off, empty-handed, back into the din of the casino. He had come so close.

It was 2010 and the cigar-chomping tycoon made it to the final table at a high-stakes poker tournament in Las Vegas before he lost his final hand. For his first go at high-stakes gambling, it was not a bad performance. And missing out on the jackpot was no great loss. The 58-year-old Turk, unmistakable in his bright-red glasses and flowing mane, is worth $1 billion according to Forbes magazine, thanks to another gamble he took a decade ago.

In 2002, America was making its case for invading Iraq. War was imminent. Jalal Talabani, a founder of the Kurdish regional government who spent years in the mountains evading Saddam`s forces, seized the chance.

Kurdistan had been slowly pulling itself back together after the horrors of the late 1980s and early `90s, thanks to the no-fly zone over Iraqi Kurdish territory enforced by America and Britain. If Saddam was about to fall, Kurdistan needed to move quickly to secure its future, regardless of what the new Iraq would look like.

Jalal Talabani and the rest of the Kurdish leadership made a critical choice. They agreed to be part of a federal post-war Iraq, governing alongside Sunni and Shia Muslims. They would not, they pledged, use the opportunity to break away from Iraq. The desire for independence, however, festered.

Today there are 40m Kurds without a country; 5m of them are in Iraq. The American invasion was a golden opportunity. But going it alone had its own risks, and America was against the idea because of the ripple effects it would have through the rest of the region. The Kurds would give the new Iraq a try, but on their terms. No longer would they be beholden to Baghdad, which controlled the oil ministry and thus 95% of the country`s GDP. They wanted control over their own oil. Just in case. Talabani knew Sepil fancied himself a gambler. So before the first shot was even fired, Talabani laid his offer on the table: Did he fancy getting into the oil business?

Sepil was used to working in hostile environments. He made his first fortune building embassies in Eastern Europe after the fall of the Soviet Union. “I didn`t know anything about oil. Neither did anyone on my team. My background was in construction,” he says. “But we knew there was oil there.” He signed the first deal for exploration rights in Kurdistan over a piece of land that included the Taq Taq field, about 50 miles from Erbil (and just over the hill from Shela), on January 20, 2004, eight months after President Bush gave his infamous “Mission Accomplished” speech aboard the USS Abraham Lincoln.

The floodgates opened the next year when the new constitution that laid the framework for a federal Iraq granted semi-autonomy to the Kurds, which, the Kurds argue, included the authority to sign exploration deals directly with companies, rather than doing it through the federal ministry in Baghdad. More than 40 companies signed up, but they were not an inspiring bunch. Baghdad disagreed with Kurdistan`s generous interpretation of the new constitution. All deals, it said, had to be done via the federal oil ministry. Any agreements struck with Erbil, it said, were “illegal”. And companies deigning to deal with the Kurds? They would be frozen out of contracts for the truly giant fields in the rest of Iraq.

So Kurdistan was left to misfits, chancers and peripheral players. People like Tony Buckingham, a former mercenary and associate of Simon Mann, an ex Scots Guard who was jailed for an ill-fated coup attempt in Equatorial Guinea. His firm, Heritage Oil, was an early mover thanks, largely, to Ian Hannam, an investment banker at JP Morgan Cazenove in London. Hannam, one of Buckingham`s closest advisers, has a taste for frontier capitalism. Recently, he worked with the Pentagon to open mining in Afghanistan. Back then Hannam was convinced of Kurdistan`s potential, and forged close ties with authorities in Erbil as they sought to open up the industry to Western investors.

So when Heritage found a huge gas field in 2009, Hannam engineered a blockbuster merger with Sepil`s company, Genel Energy, to create a new Kurdish giant. The deal fell apart months later when the Financial Services Authority, the British watchdog, fined Sepil £1m for trading in Heritage shares based on inside information gleaned in negotiations. Sepil said he did not know he was breaking the rules and accepted the fine.

Hannam, however, has since been caught out by his own actions at the height of the talks. This month he resigned from JP Morgan after the FSA, following a three-year investigation, fined him £450,000 for allegedly passing on inside information about Heritage. He disputes the charges.

The questionable dealings in London have done little to slow Kurdistan down. Today Buckingham`s one-third stake in the company is worth £130m. And Sepil? His London-listed Genel Energy is now the largest producer in the region, thanks mainly to Taq Taq, which churns out more than 100,000 barrels a day.

Sepil is still a builder at heart, but after his failed marriage with Heritage, he has found someone else, who knows the oil world inside out. The former BP man Hayward took over as chief executive after he merged it with the company he set up with Rothschild. Hayward said: “We`ll be the biggest company in Kurdistan. It`s the last easy oil in the world.”

Farah Qais, 20, took a deep breath and fixed her dark, doe eyes on the crowd. “My female and male citizens,” she intoned. “This is the first time in the history of the United States when a woman can be president, president of the United States. You only live once. The time is right. This is your chance to achieve the life you always wanted.”

She went on for a minute in near-perfect English before her classmates erupted into applause. The speech, a mock campaign address, was a trial run before the final exam in her English speech and composition the following week. She will be among the first to graduate from the American University of Iraq, Sulaymaniyah. The university is, quite literally, a shining school on a hill, overlooking Sulaymaniyah, Kurdistan`s second city, about 30 miles west of the Iranian border.

A strikingly modern combination of sandstone and glass, it would not be out of place on an Ivy League campus. It was built with $120m of donations, mainly from oil companies; an unmissable example of what petro-dollars can do.

It would be a hole in the ground if not for Azzam Alwash. The 53-year-old is a whirlwind of cigarette smoke, maniacal cackles and expletives, a networking machine with a knack for getting firms to dip into their pockets.

A Shia Muslim from Nasiriyah, a city in eastern Iraq on the banks of the Tigris, he spent more than 30 years in southern California.

Iraq has deteriorated rapidly since December, when America pulled out the last of its troops

He returned to Iraq in 2003. Alwash did well in America. He started an engineering firm. He got married and had two daughters. They lived in a big house in Long Beach. The American dream.

Yet when Saddam fell, he could no longer resist the tug of the country he left when he was teenager. “I felt guilty about not doing more after the first Gulf war,” he says. “I felt like I had to come back.”

Having picked up a very Californian penchant for environmentalism — “I`m a tree-hugger, man!” — he started Nature Iraq, the country`s largest ecological NGO, to rehabilitate the Mesopotamian marshes, a 3,000-square kilometre area of wetlands between the Tigris and Euphrates rivers.

Saddam drained it, in part, to take away potential refuge for rebels. It was hard work. When five of his workers were kidnapped in 2006, Alwash almost packed up and left. He despaired of the violence and corruption in Baghdad. His long periods away from home were also creating strains in his marriage.

But then Salih, who at that time was deputy prime minister of Iraq, told him he wanted to start a university. “I said I`d set up the first meeting. That was six years ago,” Alwash said, breaking into another hair-raising cackle.

“I did a lot of research, a lot of reading. I became more and more convinced that the future generation is the solution, not the current one. I began to believe in the project.”

He raised the cash for the university and oversaw its construction. The “American” in its name has nothing to do with its benefactors. It`s about the curriculum. Classes are structured so that they are directly transferable to top US schools so the best and brightest can get educated in America and, hopefully, come back.

“There have been kids from really poor villages who are being considered for Fulbright scholarships [the prestigious international exchange programme]. A lot of them didn`t speak English a few years ago,” says Peter Friedrich, a shaggy-haired American drama teacher who left Hollywood four years ago to teach at the university. “You try to put them in as many situations as possible to show them how much they have in common.”

Amid the chaos of Iraq, that is no easy task.

Iraq has deteriorated rapidly since December, when America pulled out the last of its troops, ending more than eight years of occupation. A wave of sectarian bombings, mostly targeting the majority Shi`ite population, killed 170 people in the first month alone.

In parliament, a political crisis broke out after the prime minister Nuri al-Maliki`s government sought to arrest Tariq al Hashimi, the Sunni vice-president, for allegedly running assassination squads. He went into hiding in Kurdistan, further raising tensions with Baghdad. Fears are growing that the country, bereft of the American military buffer, will disintegrate into civil war.

Salih watches it all with a weary eye. When we meet on a crisp morning at the plush palace on the outskirts of Erbil, it is his last day as Kurdistan`s prime minister. Under a power-sharing deal, he handed over the post to Nechervan Barzani, head of the Kurdistan Democratic Party (PDK), a coalition partner in the regional government with his party, the Patriotic Union of Kurdistan (PUK).

Salih, a professorial 52-year-old who studied at Cardiff University and earned a statistics doctorate from Liverpool University, may have stepped aside, but he is not stepping out of politics. There is too much at stake.

“When the Americans redeployed, this was the moment of truth. I was hoping that we would all rise to the challenge and that there would be a national dialogue among the senior Iraqi leaders, saying, `Guys, the Americans are leaving. We need to stick together.`

“Exactly the opposite happened,” he says. “Iraq deserves better.”

Indeed, the power-sharing setup under which Sunni and Shia Muslims and Kurds rule together is hanging by a thread. The worry is, if Iraq tears itself apart, Kurdistan will be taken down with it. There is a plan B, and as with so much in the Middle East, it has to do with oil.

This spring, workers will start digging a 160-mile trench through the Kurdish mountains. The work is the first part of a two-year, $400m plan for a 24in pipeline to take oil from Taq Taq, and other nearby fields, to Fishkabur, a pumping station about 15 miles from the Turkish border.

The station is the last stop in Iraqi territory before crude coursing through the giant Kirkuk-Ceyhan pipeline, a key export artery, crosses into Turkey on its way to the Mediterranean port of Ceyhan, where it is loaded onto tankers and sent off to the highest bidder.

It is hard to overstate the importance of Erbil`s new pipeline. Today all Kurdish oil destined for the export market is trucked out over winding mountain passes to Fishkabur.

The project, which Hayward and Sepil`s Genel Energy have agreed to fund, will, for the first time, provide an export highway for Kurdish crude oil. As the Kurdish boom gathers pace, its political leaders say all the right things about their commitment to a “federal, multi-ethnic, democratic Iraq”, even as their relationship with Baghdad deteriorates. Erbil this month stopped exports to southern Iraq altogether, over what it claims is $1.5 billion in unpaid oil bills.

Alwash, however, is one of many who remains committed to the cause. His American wife, fed up with his trips to a place that could not be further, geographically or stylistically, from the beaches of southern California, divorced him. His two daughters also remain behind. He is married to Kurdistan now.

Before we leave him in front of a roadside lean-to selling gum and cigarettes, there was one last question. Was it worth it? There were no cackles this time, just a pensive gaze at his shoes.

“Is anything worth losing my family for? If I had to do it again I would work a lot harder on preserving my family rather than my passion for work and the environment and all of that. But it is what it is. Unfortunately, life has no rewind button,” he says. “I hope my children will some day come to the marshes or to the university, and say, `Okay, I get it.`”

© 2012 Times Newspapers Ltd. All rights reserved

Turkey: Column Calls for Referendum Among Kurds To Decide How To Solve Problem
Kurdistan-Post
Friday, April 13, 2012

Article by Dr Ismet Turanli: “If Beshar Al-Asad Grants Autonomy to the Kurds in Syria...”

Following the Lausanne triumph, Turkey relinquished Cyprus to the British, the Dodecanese to the Greeks, the lands occupied by the Arabs to them and they left Kurdistan divided into four parts.

1. Ever since that date the Kurdish nation, being in four separate parts, has been unable to unite. Now the knife has cut through to the bone. The Kurds do not want to live as a quartet any more. They want to be rid of the artificial status created at Lausanne.

2. The Kurdish region in Iraq has gained autonomy. It might soon declare independence and apply to the United Nations as a new state. Turkey is going to apply its full diplomatic weight in order to prevent this. Furthermore, it will not want to be trapped by Shiite Syria, Iraq and Iran. Nor will it tolerate any civil war in Iraq. Barzani is going to make overtures to the Sunni Turkish state in order to be free of the pressure from his Shiite neighbors.

3. If Al-Asad grants the Kurds in Syria their autonomy they can be expected to want to unite with Barzani.

4. It will be inevitable that Turkey will make a federation with Kurdistan.

5. In doing so Iraqi Kurdistan will find itself protected.

6. Turkey for its part will give its own Kurds the same rights that are enjoyed by the Kurds in Iraqi Kurdistan.

7. The PKK`s (People`s Congress of Kurdistan, KGK) armed struggle will lose all legitimacy.

8. Furthermore, Turkey will procure its energy needs, which are its soft underbelly (it spends $54 billion a year on oil and natural gas) from the Kurdistan region. It will be free of pressure from Iran and Russia to import their energy. With just one stone Turkey will have killed three birds:

1. The Kurd problem will be no more. Turkey will not fragment. On the contrary, it will grow. There will be a return to the original borders of the National Pact.

2. The armed struggle against the PKK will come to an end.

3. Turkey will get its energy needs from Kurdistan. Its deficit will be closed. With all these savings it will be able to invest in Kurdistan. It will gain economic might.

If it is taken into the EU it will be the second most populous and powerful state after Germany. If the EU states become even more capricious it is possible that the United States, Obama, will support such a federation (if Israel does not apply the brakes) because the United States will support Turkey, the country it can rely on the most in the Middle East.

Will Erdogan be able to pull off this smart move? Here, I am not so hopeful. Those academicians and columnists who had been supporting him up until now have begun to level harsh criticism at him because of the erroneous strategy that has been whispered into his ears. In the past he used to shy from the Deep State, but today he shies from the (Garden State) Devlet Bahceli (a pun on the word “devlet” or “state”). He is worried about a rise in Turkish nationalism the closer he moves to Kurdistan. Yet, he will stop the bloodshed, and as the economy becomes stronger so his name will be written in Turkish history in golden letters. All he has to do is take this risk for a brief period of time.

Another important mistake made by Erdogan is the way he hobbles himself when trying to fix problems:

1. Making Karabakh a precondition for peace with Armenia.

2. Making a dual-state the precondition for Cyprus.

3. Making PKK disarmament the precondition for the Kurd problem.

4. Making Al-Asad`s climb down in Syria a precondition.

5. Asking for acceptance of the Shield Missiles in the Iran issue.

If he were to stop imposing preconditions and to opt for diplomatic elasticity he would be able to fix the problems more easily. Erdogan`s diplomatic side is weak. He has not been able to give the people any satisfactory explanation as to why he is backtracking on EU membership or the democratic overture.

Yet, in a manner we have not seen in the West, every evening on TV or every day in their respective columns the clever masses, who think they can talk about anything and everything, make comments that leave a bitter taste in the mouth (I call them TV`s roses). They are quick to offer much-needed advice on topics they know nothing about. There are such prominent personalities in the West too, but they are people who have spent many years becoming experts in their respective fields. Sometimes they do not refuse to deliver a superficial argument despite saying, “I am no expert on this.”

Funniest of all is when the women who are moderating say at the end of the program: “Tell us your idea for a solution.” They are given two minutes to voice their proposals to solve a problem that has cost the lives of tens of thousands of young persons, that has seen thousands imprisoned and bullied, that has seen hundreds of thousands of citizens flee their homeland, and been the cause of so many funeral prayers. What is this? Ignorance? Nonchalance? I do not know.

Any fool knows there is no point in perpetuating a military conflict that has failed to cope with the PKK in 30 years. The reason why they have not been able to wipe out the PKK is that this issue is a vicious circle. Every young PKK member that is killed has up to five siblings, and cousins. They are angry with this slaughter. We all know what motivates those youngsters that throw rocks.

These children`s fathers have been killed, or their siblings are in the mountains, or in prison. They are not mercenaries or duped children. Even if you throw hundreds into prison their numbers will just increase. Meaning, the military, the chauvinist Turks, and the ultra-nationalist politicians do not realize they are part of this vicious circle. There may be some who see the warnings voiced by some moderate Kurdish intellectuals and politicians as threats. You must take seriously the fact that failure to take these warnings seriously - warnings that the next generation, the rock-throwing kids are going to be even more aggressive, Turk-hostile and angry - will not prevent a civil war between the Kurds and the Turks.

Erdogan calls on Kurdish mothers and advises them to stop their children going to the mountains. He does not notice that these tearful Kurdish mothers are now aware of their Kurdish identity and that they want mother-tongue education. What I noticed when I visited Diyrabakir was that beyond the Euphrates the reality is that they are already separated in their hearts. The people there are disconnected from the western provinces in their everyday lives. In the past, judges, prosecutors, writers and journalists were afraid to admit to being Kurds. They now talk about what the previous governments did to the Kurds without fear of reprisals.

Thousands of KCK (Assembly of Communities of Kurdistan) members have been imprisoned but this has only created tens of thousands more. In Gandhi`s time, just as the British soldiers who killed 700 Indians were exhausted so when you imprison thousands of Kurds you are going to have to build more prisons or even order more handcuffs from the United States to slap on them.

There is a rule in medicine. If you try to treat a patient while making the wrong diagnosis for many years you will eventually have to give that patient to a surgeon. Surgeons treat by cutting. If Turkey really does want to fix the Kurd problem it needs to use smart political operations not military operations. The formula by which you will save the Kurds and Kurdistan from being separated into four parts is to go for the heart of the matter - and the most practical way to do this is with a referendum.

The leaders of this or that party cannot make that decision. The nation itself must decide. There must be three questions asked:

1. Do you want to coexist with the Turks given the way things are today?

2. Do you want: Self-determination, federation or democratic autonomy ?

3. Do you want to merge with Barzani?

A similarly worded three questions should also be put to the Turkish Cypriots: Coexistence with the Greek Cypriots? Merging with Turkey? Continue on as KKTC (Turkish Republic of Northern Cyprus)? The peoples must decide for themselves. The politicians have failed to fix the Kurd problem; failed to fix the Cyprus problem despite the passing of 30 to 40 years. In which case, the people do not need you to speak for them. They can speak for themselves. This is done in a referendum. The Swiss people decide by referendum whether or not to spend five Francs. Switzerland was founded in 1300, and has never fought with anyone. It is the world`s wealthiest and most democratic country.

(Description of Source: Moscow Kurdistan-Post in Turkish -- Online newspaper supportive of the Kurdish cause; URL: http://www.kurdistan-post.eu/)

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