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From Kurdistan to K Street

Inside Washington's covert foreign policy apparatus, middlemen like Shlomi Michaels are key.

| Tue Nov. 18, 2008 3:00 AM EST
The routine of Washington foreign policymaking is straightforward and, well, a little boring. Presidents and secretaries of state issue pronouncements in speeches. Diplomats have discussions in ornate ceremonial rooms. That's the official version, anyhow, and even if we're well aware that reality departs from the C-Span, Foreign Affairs version of things, the rhythm, pomp, and ceremony shape our understanding of how countries relate to each other.

This is a story of the other world, the one whose real power players never show up in the CNN headline crawl. It's the story of a man with a habit of popping up, Zelig-like, at the nexus of foreign policy and the kinds of businesses that thrive in times of war—security contracting, infrastructure development and postwar reconstruction, influence and intelligence brokering.

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It's also the story of how this entrepreneur and middleman, in the shadowy environment created by the 9/11 attacks and Washington's advance on Iraq, seized the opportunity to propel himself from small-time businessman into global player. The trajectory of Shlomi Michaels is testament not only to one man's driven intensity, but also to the opportunities the war on terror has presented to those with the information, connections, and ambition to seize them.


I. The Dossier: In Which an Ex-Israeli Commando Tries to Save George W. Bush

On a spring afternoon in 2004, up the street from the White House, former CIA officer Whitley Bruner was on his way to meet a new contact. An old-school, Harvard-trained Arabist, Bruner had been to a lot of meetings like this—some mundane, some of greater consequence, like the time, back in 1991, when he got instructions to contact an Iraqi named Ahmad Chalabi. ("I told him, 'My name is Whitley Bruner, we have mutual friends, and I'd like to talk to you about Iraq.'") Low-key and efficient, Bruner had retired from the Agency in late 1997 and in 2004 landed a job with the private intelligence outfit Diligence LLC. The assignment, which had him shuttling between Washington and the Middle East for clients seeking opportunities in the Wild West of post-Saddam Iraq, didn't look all that different from his old job, and it brought him into contact with a continuing array of intriguing characters.

That spring day, Bruner was headed for the office of one of the most powerful Republican lobbyists in Washington—Ed Rogers, a former White House aide in the Reagan and first Bush administrations. Rogers had a soft Alabama drawl and an unsurpassed GOP resume; he was also known to like spooks, so much so that his company, Barbour Griffith & Rogers, had acquired a controlling stake in Diligence. Bruner had only to go upstairs.

As Bruner took a seat in Rogers' office, he noticed a man who "radiated clandestinity," he recalls, with close-cropped hair and military bearing. They shook hands, and "He broke every bone in my hand. When I heard his Israeli accent, it was not hard to guess his background."

The intense stranger introduced himself as Shlomi Michaels. He was a former commando with Israel's elite internal counterterrorism force, the Yamam; he had since become one of the middlemen who work the seams between the worlds of security, intelligence, and international business, along with a few more colorful sidelines including a private investigations/security business in Beverly Hills. Even as ex-Israeli commandos turned security experts go, Bruner thought, this one seemed unusually well connected—his business partner was former Mossad head Danny Yatom. Before arriving in Washington, Michaels, a dual Israel-US citizen, ran a string of businesses in Beverly Hills: a coffee/chocolate shop franchise, a martial arts training outfit, real estate investments, and a high-tech security business aimed at "high worth" Hollywood clients. After 9/11 he left Los Angeles, alighting first in New York (where he taught counterterrorism for a semester at Columbia University) and then in DC, where he would soon launch a lucrative venture to cash in on the Iraq War and its aftermath.

But on this day, Michaels had a different proposition for the former CIA officer—one, he suggested, that could make the assembled men a handsome commission and even help President George W. Bush get reelected. He had a well-placed Iraqi source—a former officer in an Iraqi military psychological operations unit, he said—who had gathered hundreds of pages of contracts, maps, and photographs documenting meetings between Iraqi and Ukrainian officials. The information, Michaels said, would prove that Iraq had pursued a covert chemical weapons program. Michaels wanted Bruner to set up a meeting for him and the Iraqi source with the CIA. To turn over the whole dossier, he wanted $1 million.

Was this guy a spook, a political operative, or just an aggressive businessman? Bruner wasn't exactly sure—no one who has met Michaels ever seems to be. "It is what it is" is a favorite Michaels expression, one associate told me. "He says that a lot." (Rogers did not return calls about the attempted dossier sale and his role in it.)

What is known is that Michaels has appeared in Washington at key times over the past few years to engineer complicated international partnerships and shop politically useful information. By 2002, he was meeting with various Washington foreign policy hands in the lobby of the Mayflower Hotel to discuss a joint venture to do business with the Iraqi Kurds; after the invasion, those talks left him well positioned to win lucrative reconstruction contracts handed out by the Kurdish government. He helped introduce information in Washington that the United Nations' Iraq oil-for-food scheme was riddled with corruption—a matter that became a key GOP talking point for promoting the war. Later Michaels helped the Kurds find Washington lobbyists (Rogers' BGR) who would make the case that Kurdistan was owed some $4 billion in oil-for-food back payments. In June 2004, during his last days in Iraq, US Iraq proconsul Paul Bremer sent three US military helicopters loaded with $1.4 billion in 100-dollar bills to Kurdistan, according to the Los Angeles Times. The money helped finance Kurdish infrastructure and development contracts that Michaels and his business partners then contracted with the Kurdish government to build and secure. What was Michaels' motivation in shopping the WMD dossier? No one claims to know. But, as Bruner puts it, "Everyone was aware that the Americans were sufficiently desperate and might pay big money for something not true."

Bruner asked to see some of Michaels' documents before agreeing to fly to Jordan to meet the Iraqi source. He says he was given Arabic-language contracts and "pictures of various Iraqis who were supposed to have been involved with weapons of mass destruction. There were photos of meetings, everybody sitting around a table at trade missions." The photos and documents looked authentic, Bruner thought, but he wasn't sure they proved anything. There had been lots of meetings between Iraqi and former Soviet bloc officials. Who knew what they'd led to?

Still, he and Rogers decided it was worth checking out. A few days later Bruner was in the cigar bar of the Le Royal Hotel, a cement wedding cake of a building in bustling downtown Amman, meeting Michaels' mysterious Iraqi. Though still skeptical, he eventually decided to call up a former Langley colleague who was then serving as the CIA's Amman station chief. Soon after, Michaels and the Iraqi got their meeting with the Agency.

It didn't go very well. The CIA wasn't interested in the dossier, not then and not during a second pass associates said Michaels attempted. Michaels, according to Bruner and others, was furious.

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