July 28, 2008 09:21 PM UTC

Loose Ends Watch: Schaffer's Iraq Oil Contract

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• by: Colorado Pols

We got so busy last week that we missed a significant update on a story we’ve been following for some time.

When we last visited the topic of Senate candidate Bob Schaffer’s brokering of a contract between his former oil company Aspect Energy and the Kurdish Regional Government in northern Iraq, Grand Junction Sentinel reporter Mike Saccone was following up on an exchange between the State Department and the office of Sen. Wayne Allard over the deal–Allard’s office had requested “more information,” and the State Department had replied unequivocally that these kinds of deals with local Iraq governments were not recommended. As you know, the contracts in question have emerged as a problem for the Iraqi government as they try to craft a national oil revenue distribution law, considered a key hurdle in stabilizing the country.

It’s critical to note that Schaffer personally, in response to repeated press inquiries about his work for Aspect Energy in northern Iraq, has claimed that he “didn’t experience any discouragement.”

But that’s not what Allard told the State Department in his letter asking for “more information,” which Saccone disclosed on his blog last week:

As one example, Aspect Energy International LLC, (headquartered in Denver, COlorado), despite having been licensed to operate by both the KRG and the Baghdad government for over one year, has yet to secure a KRG concession agreement due to the U.S. State Department’s policies.

The State Department answered Allard in its letter:

…the President has been quite clear in stressing the importance of Iraq enacting a hydrocarbon law which creates a single investment regime for the country. The President has also clearly stated the strategic importance that the United States places in ensuring that Iraq passes a hydrocarbon law which reinforces Iraq’s unity and territorial integrity. In that regard, we have conveyed our view to all parties…that signing deals before such a law is passed will complicate efforts of the parties to pass a good law. We strongly believe that having competing oil and gas investment laws will be bad both for companies and for Iraq…

This is very simple when you get right down to it: either Schaffer lied when he said he “didn’t experience any discouragement,” or the rest of the documented record is lying. Each addition to the record, like this letter from Allard, makes it harder for Schaffer to continue to claim the latter.

A third possibility is that Schaffer really didn’t know about the State Department’s explicit policy against when he was doing in Iraq, and that Allard for whatever reason never shared the results of this communication with the State Department–obviously undertaken on Schaffer’s behalf. But to believe that you’d have to be, well, stupid.

We haven’t seen a single counterpoint to suggest this story is anything other than a looming disaster for Schaffer, linking the worst allegations about the Iraq war with Schaffer’s “Big Oil” record in a way the voters will find repellent, not ingratiating–especially when the 527s set it to spin after Labor Day.