MESOP : THE HUGE TALABANI ROBBERY – Rescued Then Robbed: The Tragedy of Kirkuk / KURDISTAN CORRUPT

Pasewan: 14 Feb 2016 – Last week the protests spread to Kirkuk, the prized city secured by the Peshmerga in 2014 after the Iraqi army collapsed in the face of a Daesh onslaught. However, despite Kirkuk province’s natural riches, it has become mired in the economic and political crisis gripping the Kurdistan Region of Iraq. How can this be? Kirkuk’s copious oil is now (mostly) flowing north along a Kurdistan Regional Government (KRG) pipeline to Turkey, doubling the KRG’s officially declared oil exports. Hasn’t this helped to substantially offset the impact of falling world oil prices, for the people’s benefit? A Kirkuk protester gave an answer on local TV. “They won’t let us protest because they say we haven’t obtained permission”, he said of a crackdown by the authorities, “but those who export our oil and pocket the revenues never obtained permission from us”.

Kirkuk’s latest misfortune is that, having been saved by the Peshmarga, it swapped Iraqi for Kurdish corruption as control of its oil was shared between the Kurdistan Region’s ruling clans – the Kurdistan Democratic Party (KDP) Barzanis and Patriotic Union of Kurdistan (PUK) Talabanis – with the help of Najmaldin Karim the provincial governor.

The Curse

Kirkuk is a multicultural city afloat on a sea of oil and surrounded by fertile farmland. Its colourful history is deeply rooted in Kurdish culture. Despite relentless 20th century attempts, by first the British and then successive Iraqi governments, to change its demography and dissolve its Kurdish identity – including by changing its name to Altameem and an Arabization campaign that gave Sunni Arabs incentives to move there in large numbers – Kirkuk has retained its essentially Kurdish character.

The indigenous people of Kirkuk (including Arab and Turkoman minorities) have paid a heavy price since the discovery of oil in 1927 and its first production from the Babagurgur field by the Iraq Petroleum Company, whose shares were divided between the dominant world oil companies, while 5% went to the Armenian banker (known later as Mr 5%). Iraq then got four shillings for every ton of Kirkuk’s oil. The locals, however, have sufered from the manipulations of predatory Iraqi governments, frequent terrorist attacks, a heavily-polluted environment and insidious corruption; their vast natural resources have been as much a curse for them as a blessing for the rest of Iraq.

During the 1970s, Kirkuk contributed substantially to Iraq’s estimated 2.5 million bpd (barrels per day) oil output. Even today, despite their damaged infrastructure, Kirkuk’s cluster fields retain a huge capacity. Furthermore, production costs of their high quality crude are estimated to be just 20% of the average for Iraq’s fields.

Kirkuk’s oil production used to be controlled by the Iraqi central government through the state-owned North Oil Company (NOC). This changed in June 2014 when Daesh seized Mosul, Iraq’s second largest city, while Iraqi troops, led by their generals, fled without firing a shot. The Iraqi army also collapsed in Kirkuk, but Kurdish Peshmerga forces under the control of the PUK stepped in and have successfully repelled several Daesh attacks (doing a far better job than the KDP-controlled forces which retreated when Daesh attacked Sinjar and massacred Yazidis in August 2014).

As the PUK Peshmerga forces took control of the Babagurrgurr, Khabazya and Jambur oil fields, Peshmerga minister Jafer Mustafa sent a message to then president and Peshmerga commander-in-chief, Masud Barzani, asking whether he should also take the Avana and Bay-Hassan fields, which lie between Kirkuk city and Erbil. Barzani didn’t bother to reply but dispatched his own troops to capture these two fields. While the Iraqi NOC continues to operate Kirkuk’s PUK-controlled fields, Barzani placed Avana and Bay-Hassan in the hands of the KAR Group, which is owned by a KDP supporter. Interestingly, despite his PUK background, Jafer Mustafa has since gone to work for Barzani.

To a degree, Kirkuk today reflects the Kurdistan Region’s division between two dominant clans and their parties athough it’s the PUK that dominates in Kirkuk. In the middle of this, Kirkuk’s governor has a good background for dealing with both sides.

The Governor

Who is Najmaldin Karim? He was born in 1949 in the district of Shoreja in Kirkuk near Saed-Noradin Mosque. His father Omer Karim was a mullah and his mother a housewife. He graduated from Mosul Medical School and was working at Kirkuk’s Jimhuri hospital as a junior doctor in 1972 when a peace ageeement between Saddam and the Kurdish Peshmerga broke down. Fearing for his life, because he’d put on display a portrait of Mustafa Barzani (the KDP’s founder and father of Masud Barzani), Karim left the hospital and joined the Peshmerga. Following the collapse of the Kurdish revolution, Mustafa Barzani travelled to the United States in 1975, taking Najmadin Karim with him. Karim lived in Maryland for 34 years, where he worked as a surgeon, occasionally accommodating Kurdish officials visiting the US and so he got to know many leaders from the KDP’s rival party, the PUK.

In 2009 Karim was brought back to Iraq by Jalal Talabani, the PUK’s founder and the former Iraqi President, to run for parliament in his home town. With the help of Talabani, who personally spent a month in Kirkuk helping his campaign, Karim secured a parliamentary seat. With no history in the PUK, and to the chagrin of many seasoned party officials, Karim was appointed by Talabani to the politburo and in 2011 he succeeded Abdulrahman Mustafa as the governor of Kirkuk.

Karim is described by some as ‘unprincipled’. His right-hand man is his brother-in-law Azad, who looks after all his interests through multiple companies. The second most trusted man to Karim is said to be Yashar, a Turkoman who owns several companies that have secured lucrative contracts from the governor’s office. The father-in-law of Karim’s brother, Kaka-Mand, is a PUK military commander who offers him protection. His younger brother, Sardar, mainly looks after oil business, including oil transportation and fuel imports.

Soon after becoming governor, Karim locked horns with Kurdistan Regional president Masud Barzani, challenging the KDP’s interests in Kirkuk and even allying himself with former Iraqi Prime Minister Maliki against Barzani. Karim threatened to declare Kirkuk an autonomous region with the backing of Iran. However, in 2013 Karim played a key role in securing PUK backing for a two-year extension of Barzani’s presidency and since 2014, with the Talabanis’ backing, he has been a intermediary between the clans over Kirkuk. This is said to have worked to his advantage: Karim is known in some circles as “Dr 20%”, reflecting the share he is alleged to seek for himself and his brothers in any deals.

Pasewan has previously reported on the governor’s dealings and lunch dates with Barzani at the presidential palace. We also understand that, before he cancelled due to a bereavement, Karim had planned to holiday in Barbados over the new year with the KRG prime minister Nechirvan Barzani (KDP) and deputy prime minister Qubad Talabani (PUK).

The Oil

Oil is at the heart of the clans’ frictions and secret agreements over Kirkuk but the people of Kirkuk and Kurdistan have failed to benefit. There is a saying that “figures don’t lie but liars can figure” and it’s very difficult to get to the real truth about volumes of oil production, exports and revenue in the Kurdistan Region. In 2013, for example, the KRG Ministry of Natural Resources declared only $55 million revenue but $525 million expenditure!

However, it is recorded that in December 2014 the KRG agreed with Baghdad that the revenues of 300,000 bpd exports from Kirkuk should go towards the 17% of Iraq’s national budget meant to go to the KRG. Our sources estimate that total exports from the Kirkuk fields operated by the NOC and KAR, via the KRG pipeline running to Turkey, average around 380,000 bpd — produced at much lower cost than the rest of the KRG’s exports. Kirkuk oil has more than doubled the KRG’s exports, which overall have trebled (from around 200,000 bpd) in two years.

While world oil prices have plummeted (from over $100 pb to around $30 pb) the additional 450,000 bpd exports, mainly from Kirkuk, fetches approximately $13.5million per day ($5billion per year). Iraq’s prime minister Abadi therefore had grounds last week to state: “I’m surprised that the KRG cannot pay its civil servants or asked us to pay Peshmerga wages. The KRG sells 650k bpd independently, it should be able to pay its Peshmerga forces.”

KRG oil revenues are deposited by Turkish authorities in a Halk Bank account whose signatories are the KRG prime minister, oil minister and finance minister – all three are now KDP members, since the Gorran finance minister was replaced in October after the KDP stopped Kurdistan’s parliament from functioning. There is no transparency as to what happens to the money; some of it has recently paid debts to various oil companies and possibly the PUK gets a percentage for ‘its’ Kirkuk fields.

The Unpaid Petrodollars

Kirkuk has just received its first payment of petrodollars in three years. The $10 million, said to be for the month of January, amounts to less than $1 per barrel. This is a fraction of the $5 per barrel promised in the agreements between Baghdad and Erbil. Even if the per barrel payment is adjusted to $2, to allow for the fall in prices, Kirkuk is owed hundreds of millions of dollars, possibly more than a billion, by both the Iraqi central government and the KRG.

The Smuggling

On top of the ‘official export’, there is also the ‘unofficlal export’ smuggled by truck to Iran (by the PUK) and Turkey (by the KDP). Pasewan has previously quoted a Kirkuk city council official claiming that “an additional 140,000 bpd is being smuggled by the ruling faction of the governor’s party, the PUK, without returning the revenues to the city”.

In 2015 three senior officials of the NOC, which operates the PUK-controlled fields, were assassinated in Kirkuk. Acompany official told Reuters that they were all conducting corruption probes. “When you have an official running a corruption investigation getting killed, then it’s a bloody message from parties that could get exposed to stop chasing them,” he said. “Until now we have lost three officials and more to come. North Oil Company is becoming more of a mafia courtyard rather than a state-run firm.”

Governor Karim doesn’t deny the smuggling but claims it’s out of his control. “I can’t accuse KDP or PUK, but definitely it gets stolen, whether it is by individual or a party”, he told a Rudaw interviewer last year. “Will you form an investigative committee?” he was asked. “We did”, he replied. “In some places it was smuggled. Some members of parliament came to Kirkuk and identified some names. But all of a sudden the issue was no longer on the agenda”. We are told Karim had a different response for a senior PUK politician. When asked, “Why are you allowing Kirkuk oil to be smuggled?”, Karim allegedly replied (referring to the KRG deputy prime minister Qubad Talabani): “I’m only implementing the order of Talabani the junior”. But perhaps the biggest beneficiary of this whole murky business is Masud Barzani. By acting as a fixer between the clans, Karim has helped to boost the KDP’s coffers and to prolong Barzani’s expired presidency.