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Kurdistan's Covert Back-Channels

How an ex-Mossad chief, a German uberspy, and a gaggle of top-dollar GOP lobbyists helped Kurdistan snag 15 tons of $100 bills.

| Wed Apr. 11, 2007 12:00 AM PDT

Whatever the reasoning, the execution of the “Camp Z” project was problematic. In 2004, according to Israeli media reports, Michaels’ team brought in dozens of Israeli combat veterans through the Turkish-Iraqi Kurdish border, traveling on Israeli passports whose details were duly noted by Ankara. Soon the Turkish government grew alarmed that Israeli military types were moving into northern Iraq, claiming to be agriculture advisers and the like. The story made it to Israel, whose nationals are prohibited from doing business in Iraq without explicit government permission. “There is a legal state of war between Israel and Iraq,” Israeli Foreign Ministry spokesman Mark Regev told me. “It is therefore illegal for Israeli nationals to visit Iraq. Hopefully that will change one day.” But since it has not yet, the news about Michaels’ operation caused a stir; making matters worse were Michaels’ alleged feuds with his business partners over money. One disgruntled former Israeli employee went to the Israeli press in the fall of 2005, revealing with documents and photographs the extent of Michaels’ involvement in Kurdistan.

The story kicked up controversy—Israeli operations are a source of paranoid fascination in the region—and led to two separate Israeli government investigations. Exposure has also led to the necessary departure of almost all of the Israelis working for Michaels from northern Iraq. (Speculation was further fanned by Seymour Hersh’s 2004 New Yorker report that Israel is forging a “plan B” for Iraq that includes training Kurdish commandos and use them to infiltrate Iran and Syria.) One of those probes—by the Israeli ministry of defense, which wanted to know why it had never been approached for export licenses for the Israeli defense and secure communications equipment sold in northern Iraq—has since been referred to the Israeli police and “will continue as long as necessary,” police spokesman Micky Rosenfeld told me in an email last fall.

Skeptics dismiss the probe as a PR gesture aimed at the Turks, whose goodwill is critical to Israel and who resent any moves to arm the Kurds on their border In fact, notes one former senior U.S. diplomat, “Michaels said to me… he had the explicit approval of the Israeli government” for his private business activities in Kurdish Iraq. “What they were trying to do is develop influence in the Kurdish area.”

None of this activity has geopolitical implications, insists the Kurdish government’s polished young representative in Washington, Qubad Talabani, who happens to be the son of Iraq’s president, and whose family has been the historic rival of Michaels’ partners in the Barzani clan. In an interview in his offices on I Street, Talabani told me any Israeli business development activities in Kurdistan were “purely private sector activities,” and that “Kurdistan is open for business.”

As Talabani walked me out after my interview, we passed a poster advertising a new bi-weekly direct Austrian Airlines route from Vienna to Irbil, site of Michaels’ airport project—a town of 990,000 people until recently served only by regional air carriers and charter flights. “We will become the gateway to Iraq,” Talabani told me.

Plenty of non-Kurds would like to help—and make a little profit along the way. According to lobbying records, the high powered, White House-connected lobbying firm, Barbour Griffith & Rogers, LLC has earned $800,000 promoting the Kurdistan Regional Government’s interests since 2004; before hiring the firm, two U.S. sources say, Michaels had approached Jack Abramoff about representing the Kurds, but the discussions never went beyond the initial stages.

Russell Wilson, a former senior professional staffer for the House international relations committee who helped advise the Kurds on Washington representation and who was formerly listed as a non equity officer in Interop, notes that Kurdistan has many of the things the rest of Iraq lacks: “It’s safe, secure, it’s geographically rich”—features include plenty of unexplored potential oil and natural gas reserves—”and the people are extremely nice.” Wilson says it was he who recommended in the spring of 2004 that the Kurds hire Ed Rogers, a former political director in the Bush I White House, of Barbour Griffith & Rogers as their Washington lobbyist.

In the end, Yatom and Michaels’ business activities may well be evidence, as much as any covert U.S. interests, of the Kurds’ superb gamesmanship, pragmatism, and sense of opportunity—instincts honed to a fine art by a people that, lacking durable proximate allies, has learned how to cultivate the enemies of its enemies. The Mossad’s former Irbil station chief, Eliezer Geizi Tsafrir, told me that like the Israelis, the Kurds regard themselves as an historically stateless people surrounded by hostile nations. Back when Tsafrir served in Irbil, he even helped set up a Kurdish intelligence service, in cooperation with the Barzani patriarch, Mustafa Barzani. “They [the Kurds] approached us, saying they had nobody to help them in the world, and our people had suffered too,” he said. “We supplied them with cannons, guns, anti-air equipment, all sorts of equipment, and even lobbying. The contacts between us, and the sympathy, will last for generations to come.”

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