This Magazine

Progressive politics, ideas & culture

September-October 2009

Hostile takeover: Canada’s outsourced war for Iraq’s oil riches

Anthony FentonWebsite

Think we never went to Iraq? Think again.

Think we never went to Iraq? Think again.

In March 2008, when the invasion of Iraq by George W. Bush’s “coalition of the willing” marked its fifth anniversary, Canadian media outlets were in a self-congratulatory mood: “Canada isn’t involved” there, one reporter wrote. “The further we get away from the actual date, the better Canada’s decision to not get involved with the U.S. invasion of Iraq looks,” wrote another. Another referenced the anti-war demonstrations that “stopped the Canadian government’s support for the invasion of Iraq.” It was a fact to be proud of: “We didn’t go to Iraq.”

Didn’t we? In fact, Canada has been involved with the Iraq conflict in many ways—political, economic, military—some subtle, some overt. But the notion that Canada “didn’t go to Iraq” is, at best, wishful thinking. And though the war has slipped off the front page of the newspaper, Canada’s involvement in Iraq hasn’t decreased—in fact, today we’re in it deeper than ever.

Since the beginning of the Iraq invasion, a handful of Canadian military personnel have served with the U.S. and U.K. military as part of ongoing troop exchanges. When it originally emerged in November 2003 that Canadian General Walt Natynczyk was going to be serving in Iraq (along the fast track to becoming Chief of Defence Staff), NDP leader Jack Layton expressed his outrage in the House of Commons.

“When it comes to having someone in charge of thousands and thousands of troops in a war which is illegal and should never have happened … this makes us complicit in the unilateral philosophy of George Bush and his administration,” he told the House.

The denunciations stopped, but the arrangement carried on. This owed as much to the media’s indifference toward the issue as it did to the Liberal government’s playing it down: such troop exchanges were defended in the House of Commons as being “routine.” But it later emerged that keeping Canadian soldiers on exchange in Iraq was actually part of a political commitment that Ottawa made to Washington immediately following the formal announcement that Canada would not join the coalition forces going to Iraq.

Today, Liberal Party foreign affairs critic Bob Rae says that commitment made sense, and still does: “Because of certain agreements between Canada and the U.S., there were some Canadian officers who served in Iraq, in the U.S. Army,” he says. “This is different from Canadian troops serving in the country. To have ended all military co-operation between Canada and the U.S. would have been a mistake. To have sent troops to Iraq would also have been a mistake.” In an emailed statement, the NDP’s foreign affairs critic, Paul Dewar, disagrees: “Since the beginning of the war our party has spoken [out] against the hypocrisy of stating that we’re not in this war on the one hand, and then sending some of our troops and generals to the war on the other.”

Even the Liberal defence minister at the time of the invasion, John McCallum, later admitted to authors Janice Gross-Stein and Eugene Lang, when interviewed for their bestseller, The Unexpected War: Canada in Kandahar, “It was pretty untenable not to be a part of the Iraq war but to have soldiers in Iraq.”

In a rare but extensive article about the topic in 2006, Maclean’s referred to what was becoming Canada’s “dedicated presence” in Iraq: “From the very first days of the U.S.-led Iraq war, Canadians have been deeply involved: setting up crime-fighting units, working as engineers with coalition forces, serving with the UN, flying planes that help guide missile attacks, even fighting. There are anywhere from 100 to 200 working in the country. Iraq may be an unpopular, troubled conflict, but it is a place everyone, from soldiers to high-ranking officials, acknowledges Canada cannot, and has not, ignored.”

Canada’s military involvement in Iraq, however, is dwarfed by the presence of Canadian private industry. Dozens of Canadian companies have benefited from the war and occupation with at least the tacit support of successive Canadian governments. Many of these companies, especially in the military-industrial sector, do so indirectly, through sales to the U.S. military or other militaries that are occupying Iraq.

Canada’s miniature Iraqi military-industrial complex has two prongs: oil companies and the private security firms that protect them. At least 15 Canadian-based companies have signed some form of exploration, production, or production-sharing contract with Iraqi or Kurdish-Iraqi officials since 2004.

Those companies require logistics, security, transportation, and equipment to operate, and Canadian companies are deeply involved on that side of the business too. In various, significant ways, Canadian companies have been providing private, for-profit “mission critical” support to the U.S.-led occupation since the very beginning of the invasion.

As many commentators have noted, thanks to the Iraq war and the accompanying spike in oil prices, the Canadian tar sands became economically viable. In turn, the U.S. officially recognized the tar sands as oil reserves, culminating in Prime Minister Harper’s proclamation that Canada is now an “energy superpower.” Among other benefits, the political capital that these circumstances have generated for Canada has at least indirectly assisted Canadian oil and gas companies in gaining a foothold in securing access to Iraq’s vast, untapped oil fields, especially in the relatively stable Northern Kurdistan Region, which is governed by the semi-autonomous Kurdistan Regional Government (KRG).

There is also reason to believe that, with its own strategic interests in mind, the U.S. has given its northern ally a green light to sign contested oil contracts. Writing in Report on Business, Paul Christopher Webster suggests that for obvious reasons of perception, the U.S. has taken a back seat on commercial development, instead allowing non-U.S. companies to do the work for them. “America needs oil,” Webster writes, “but the optics of American oil companies invading Iraq wholesale are not good. Far better, Iraqi and American officials seem to be signalling, that companies from elsewhere predominate in the first wave.”

Eight Canadian oil companies, either alone or with partners, have signed production-sharing deals with the KRG. One of the first to do so, Heritage Oil, recently discovered upwards of 4 billion barrels of oil ready for pumping and export. Other Canadian companies have made discoveries, have begun active exploration, or, like Addax Petroleum, are ready to begin exporting oil and expanding existing production. (Addax may not be Canadian much longer, however, since a Chinese oil company offered an $8.3 billion takeover of the company in June 2009.)

Greg Muttitt, from the U.K.-based oil industry watchdog Platform, summed up the complex political manoeuvrings that these Canadian firms are caught up in, with the Kurdish authorities fighting to maintain oil contracts that the central Baghdad government wants to scrap: “It’s a very serious concern that there’s absolutely no transparency on these contracts, that there’s not even a bidding process; these are just done through closed negotiations and the KRG consistently refused to … disclose any of the terms. There’s no way of checking out that everything is above board.” (KRG officials did not respond to an interview request to discuss their contracts with Canadian oil companies.)

Official U.S. policy under President George W. Bush favoured the establishment of a mutually acceptable hydrocarbon law, and the White House publicly sided with Baghdad in opposing the KRG’s unilateral signing of production-sharing contracts with foreign oil companies. The Canadian government, and Canadian oil executives, remain silent on the details of their operations in such a politically sensitive environment. “Canada maintains full diplomatic relations with Iraq, and respects Iraqi sovereignty. We recognize the Kurdistan Regional Government (KRG) as a sub-national component of the Iraqi federal system,” a Department of Foreign Affairs and International Trade spokesperson told me. “We encourage Canadian firms to participate in the economic development of Iraq, while fully respecting Iraqi sovereignty and the jurdisdiction of central Iraqi authorities.”

And participate they have: the public record, along with private interviews and leaked documents obtained by This, shows a pattern of steadily escalating Canadian involvement throughout Iraq since the invasion.

Fewer than six weeks after the invasion commenced in March 2003, DFAIT sent then-Minister of International Trade Pierre Pettigrew a memo (obtained through a Freedom of Information request) saying that when the dust settled in Iraq, DFAIT “anticipate[d] important opportunities for Canadian companies, particularly in the oil and gas sector.” This memo, dated April 28, detailed an internal meeting earlier that week “to plan coordinated actions and ensure synergy between key departments and agencies that can provide assistance” to companies interested in Iraq. Canada’s embassy in Damascus, Syria, was to “be actively supporting Canadian companies interested in doing business in Iraq,” while exhibiting “a firm commitment … to assist businesses in any way possible to penetrate the market.”

Shortly after, on May 5, 2003, Pettigrew himself sent a letter to Canadian CEOs regarding “emerging export opportunities for Canadian companies in Iraq.” The thrust of Pettigrew’s letter was that while the war made the situation in Iraq “complex,” there was, nevertheless, good reason for optimism, to the extent that “the longer-term prospects for Canadian successes in that market are very good.” Canada’s support of the “reconstructing” efforts in Iraq, said Pettigrew, “is recognized with appreciation by the United States administration.” He wrote that “additional opportunities … will emerge for our exporters in Iraq … especially in such sectors as oil and gas.”

Pierre Pettigrew says he has "a pretty impressive network around the world. I have a Rolodex like few Canadians have."

That prediction has come true: today there are more than 12 Canadian companies operating in Iraq’s oil and gas fields. Neatly coinciding with President Bush’s infamous “mission accomplished” speech in May 2003, several large Canadian oil and gas companies let it be known that they had “sent scout teams into Iraq to look for potential projects,” including Nexen, Talisman, and Ivanhoe. Nexen (whose board of directors now includes former Deputy Prime Minister Anne McClellan) has patiently waited for the situation to stabilize while maintaining good relations with Baghdad as one of 30 foreign oil companies short-listed to bid on future contracts. Ivanhoe has signed a number of contracts with the Ministry of Oil in Baghdad. Talisman, on the other hand, has taken the riskier route of forsaking Baghdad in lieu of signing a contested contract with the KRG.

It has been difficult to determine the extent of Canadian government support for oil companies that are seeking contracts in Iraq. Most companies whose spokespeople were reached said that they have neither sought nor received support from Canadian officials. Only one company, Calgary-based OGI Group, confirmed any beneficial interaction with Canadian officials. DFAIT’s O’Shaughnessy said, “The Government of Canada does not participate in commercial negotiations between business firms and foreign governments.”

OGI, a private company that does not disclose its board of directors, has won several contracts from Baghdad going back to 2004. A spokesperson with OGI, speaking on condition of anonymity, says they are “doing the full operations … right from exploration, development, right through to construction.” The spokesperson also con-firms “we have pipelines in there that we’ve designed and [are in the] process of building.” Just how the deals get done is not clear, but government help is, apparently, forthcoming: the source inside OGI says the Canadian officials “provide us with an opportunity, if we need to meet with some dignitaries.”

There are no smoking guns here, no conspiracy theories. Oil and politics have always gone hand in hand, and such deals always hinge on tangled networks of privilege and inside knowledge; it’s the nature of the business. As such, it is not unusual to find former political figures working for oil and gas companies as consultants and advisers. Nexen and Talisman, for example, have hired the services of former Prime Minister Jean Chrétien whose “international standing opens doors” and who is able “to pick up the phone and speak to a series of ambassadors, presidents, prime ministers, ministers.” While Chrétien’s oil diplomacy has been publicized in the case of conflict-ridden Nigeria and authoritarian Turkmenistan, it is not known if he has “opened any doors” for his clients in Iraq. The same cannot be said for one of his (and Paul Martin’s) former top cabinet ministers, Pierre Pettigrew.

Up to the defeat of Paul Martin’s Liberals in the January 2006 elections, Pettigrew ran the foreign affairs portfolio. As Pettigrew himself boasted to me during an interview, he is the only MP in Canadian history to have had all three foreign affairs portfolios— international cooperation, international trade, and foreign affairs. Few people in Canadian government would be as familiar with Canadian interests in Iraq as Pettigrew.

Upon losing his seat in January 2006, Pettigrew re-entered the private sector. Before the year was out, he joined a little-known merchant bank, Forbes and Manhattan, as an advisor. F&M manages a network of more than 20 junior resource companies that span the globe and employs numerous retired politicians, diplomats, military officers, and intelligence professionals as advisors and board members.

In late 2008, Pettigrew joined the board of directors of Vast Exploration, an F&M-connected firm that has an oil production deal with the Kurdish authority, and he speaks proudly of how his connections, built up during his time as cabinet minister, have now proved useful to Vast. Pettigrew refused to discuss the Iraq-related memos from 2003 or Liberal government policy toward Iraq while he was a Minister. But, he says in an interview, he has “a pretty impressive network around the world. I have a rolodex like few Canadians have.”

“We’re perceived differently because we’re Canadian,” said Stephan Cretier, president of Garda World Security Corporation, in 2007. “It’s a good flag to work under.” Among Garda World’s many clients in Iraq, their 2009 Annual Report notes that the company “provides security services for one of the…Canadian companies exploring for oil in the region.”

As one of the world’s largest private security firms active in Iraq and many other hotspots around the globe, Garda World was, at the time of Cretier’s comments, on a public relations campaign, setting about to distinguish itself from “the stereotypic image … of big black SUVs with guys hanging off them with guns,” an image notoriously exemplified by the U.S. mercenary firm Blackwater. The company’s decision to undertake a public branding campaign—with its Canadianness at the core of the message—“came about because of the controversy that had broken out around Blackwater and the sort of popular notion that they represented the way all of these firms operated—which is not at all true,” company spokesperson Joe Gavaghan says.

Cretier’s comments about Garda World’s Canadian advantage, according to Gavaghan, served two purposes. First, to “distinguish us and the approach that we take from Blackwater—which just happens to be an American firm.” Second, “there was also acknowledgement that Canada did not participate in the Iraq war.” But isn’t Garda World simply profiting from an illegal war and occupation? Gavaghan says his company sees Iraq as being “post-conflict.”

“The Iraqi government and international aid organizations are all trying to rebuild that society, rebuild industries, rebuild infrastructure and, you know, we are assisting companies who are engaged in those activities,” Gavaghan says. “So we don’t regard that as being part of a conflict or a war.”

Of Canadian companies active in Iraq that rationalize themselves as benevolent-but-armed aid workers supporting “reconstruction and democratization,” Garda World is merely one among many.

Armoured cars are one of the key pieces of equipment being employed by the Iraqi counterinsurgency and the private security firms that support it. Armoured car sales thrive not on the shock-and-awe phase of conquering a country, but in the dirty, protracted street-level conflict that follows, and in that sense, Iraq has now furnished the ideal sales climate for half a decade. I contacted four Canadian armoured-car companies, all of whom offered similar takes: their products are defensive-only and save lives.

Jeremy Scahill: "Any company that facilitates the U.S. occupation of Iraq is pro war. Companies that provide armed men, weapons, and other equipment are the worst of the lot."

The Streit Group of Companies, based in Innisfil, Ont., has shipped at least 700 armoured cars to Iraq, and while a company spokesperson, Don MacMillan, refused to name Streit’s customers, he acknowledged that the U.S. military is top of the list. “Troops that are over there and private security firms,” MacMillan says. “We are doing all that’s possible to help protect them.” Toronto-based INKAS Armored Vehicle Manufacturing, Toronto-based International Armored Group, King City, Ont.–based Armet Armored Vehicles— all three gave variations on this response.

“Should our customers not use armoured vehicles and be exposed to high risk or not to provide services in [Iraq]?” asks INKAS spokesman David Khazanski. “Our product is designed strictly to protect passengers and shipments from ballistic and blast threats. No features on our vehicle make it a product for offence.”

Jeremy Scahill, author of Blackwater: The Rise of the World’s Most Powerful Mercenary Army, dismisses the explanations. “Any company that facilitates the U.S. occupation of Iraq is by default ‘pro-war,’ because they are part of a system that continues to trample on the self-determination of the Iraqi people and support a foreign occupation,” Scahill says. “Companies that provide armed men for hire, or weapons and other equipment to these mercenaries, are the worst of the lot.”

The Canadian company that appears to be most deeply involved in Iraq—although given the nature of the business, such measurements are difficult to make—is Toronto-based SkyLink Aviation, and it is also the most tight-lipped about its operations there. A 2006 newsletter from SkyLink Arabia, the company’s wholly owned and operated Iraq-based subsidiary, describes some of its activities, including transporting armoured vehicles and parts into Iraq, and performing final assembly on armoured cars at its Baghdad warehouse. (Armet Armored Vehicles spokesman Bill Whyte confirmed that his company used to employ SkyLink for these services, but now only uses them to transport vehicles in and out of Iraq.) The newsletter had originally been posted on a SkyLink affiliate’s website, but was taken offline after I called seeking comment.

SkyLink’s Canadian location is no coincidence. The firm’s owners located their headquarters in Toronto because Canada is, according to company co-founder Walter Arbib, “an ideal location” because “it’s a sort of neutral country, like Switzerland, and Canada is known for its peacekeeping.”

The company promotes itself as a “humanitarian aid delivery firm” and “one of the world’s leading providers of aviation and ground logistics in unsecured and hostile environments.” The company’s slogan is “Doing difficult jobs in difficult places.” SkyLink’s co-founders, Walter Arbib and Surjit Babra, were awarded B’nai Brith’s Award of Merit in 2006 for their company’s “strong ethical code” and their “caring, philanthropic efforts.” The keynote speech at the awards ceremony was delivered that evening by Prime Minister Stephen Harper, who began by thanking Arbib and Babra “for all you’ve done and all that I know you will do to help our great country in the future.”

With the addition of former Liberal minister of defence turned senator Art Eggleton to their company’s advisory board, SkyLink has not only airplanes, but powerful political allies, in high places. (Both Arbib and Babra were among the guests at Eggleton’s wedding in 2008. A spokesperson for Senator Eggleton says “he has nothing to comment on” regarding the company and that, in his capacity as a member of the SkyLink Group of Companies advisory board, “he’s not involved” with any of their Iraq operations.) Immediately following the invasion of Iraq in March 2003, SkyLink signed a lucrative USAID contract to manage Iraq’s airports. This contract, which would fetch them more than $17 million, would in turn translate to multiple other “mission critical” contracts in the war-torn country over the next six years. All my queries to SkyLink were directed to the company’s public relations firm, which provided a single-paragraph response by email: “For the past five years, Skylink has been operating commercial flights, managing airports and providing ground handling in Iraq. More recently, it opened an office in Erbil, providing airport services to help oil companies expand. ‘Skylink is committed to helping Iraq rebuild,’ said Jan Ottens, CEO of Skylink Aviation Inc. ‘We are familiar with Iraq and can make a real contribution in the reconstruction and rebuilding of its economy.’” (Ottens himself, reached on his mobile phone, refused to be interviewed for this article.)

For several years, SkyLink’s Canadian headquarters tried to distance itself from its affiliate companies’ operations in Iraq. As the Center for Public Integrity reported in 2004, the U.S. subsidiary active in Iraq, SkyLink Air and Logistic Support (USA), “turn[ed] to a public relations firm to help deal with the media and distance itself from the Canadian sister company.” A public relations spokesperson told the center, that “the two companies are financially and operationally independent.”

A recent lawsuit has offered a possible glimpse into the company’s operations. A former consultant to the company and part-owner of the Iraq-based arm, SkyLink Arabia, Richard Galustian, is suing Arbib and Babra in a Toronto court for several million dollars, alleging fraud and other mistreatment. Galustian’s affidavit alleges that Arbib and Babra defrauded him of a promised stake in the company and that they conspired to create a fake Iraqi arrest warrant to force him out of the country.

Galustian’s affidavit goes on to say that SkyLink is under two separate investigations, by USAID and the U.S. Army, related to its activities in Iraq. (Reached for comment, both USAID and the office of the U.S. Army’s Special Inspector General for Iraq Reconstruction could not confirm or deny any such investigations.) The suit is ongoing and none of the parties will comment. But it is clear that Galustian believes SkyLink is finding Iraq a lucrative place to do business: from January 2007 to March 2008, Galustian’s affadavit alleges that SkyLink Arabia’s total revenues were approximately US$100 million.

With little or no scrutiny of their operations either by an indifferent media or a public that believes it won a considerable victory in 2003 by forcing the Liberal government to “stay out” of Iraq, it is unclear what will be the implications, if any, of Canada’s miniature “mercenary-oil-industrial complex” in Iraq. The war itself has cost upwards of one million Iraqi lives, the country is considered among the most corrupt in the world, and the war, and occupation, are far from over.

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