Broadcast: 23/7/2002Iraq to halve Australian wheat exports
Iraqi diplomats have delivered a blunt message on behalf of Saddam Hussein's regime. The Iraqi Trade Minister has announced that Australian wheat exports to Iraq will be halved.TV PROGRAM TRANSCRIPT
Compere: Tony Jones
Reporter: Jonathan Harley
It is not often we hear anything from Iraqi diplomats in Canberra, but today they had a blunt message to deliver on behalf of Saddam Hussein's regime. It seems the Government's tough talk about Iraq has finally ruffled feathers in Baghdad.
So the reclusive diplomats were out and about explaining a statement the Iraqi Trade Minister had made overnight to the regime's official news agency. The minister announced that Australian wheat exports to Iraq will be halved.
If carried through, the decision will cancel 500,000 tonnes in grain orders.
Foreign Minister Alexander Downer says we'll find other markets, but farmers are not so relaxed.
JONATHAN HARLEY, REPORTER: All smiles with Washington may come at a high cost down on the farm. Last year, $800 million worth of wheat went to Iraq, but now that may be slashed.
SAAD ALSAMARAI, IRAQI CHARGE D'AFFAIRES: Australian troops will participate in attacking Iraq. So we are asking again, why?
ALEXANDER DOWNER, FOREIGN MINISTER: At the end of the day, international security can't be held hostage to trade threats where there is a very serious international security issue at stake.
JONATHAN HARLEY: What's at stake, says the Opposition, is an unnecessary risk to at least $200 million in wheat exports.
KEVIN RUDD, SHADOW FOREIGN MINISTER: Over-the-top, Rambo rhetoric by a foreign minister who seems to be on steroids.
JONATHAN HARLEY: But if anything, Alexander Downer appears very relaxed about the threatened loss of an important market.
ALEXANDER DOWNER: All of the time we're looking to diversify our markets and have recently opened up the Libyan market to Australian wheat exports. So there are always opportunities for our wheat exporters.
JONATHAN HARLEY: But farmers, especially those in Western Australia, reliant on export markets, are worried.
COLIN NICHOLL, WA FARMERS' FEDERATION: There are not many markets in the world that would be available to take up any additional grain that wasn't sold to Iraq for Australian grain.
JONATHAN HARLEY: Meanwhile, advocates of applying greater diplomatic pressure on Iraq rather than the use of force, accuse the Howard Government of trying to have it both ways.
BILL HARTLEY, AUSTRALIA-IRAQI FRIENDSHIP ASSOCIATION: It's saying we like the colour of your money, but not your politics and it's deeply offensive to the whole of the Arab world.
JONATHAN HARLEY: But trade and politics get entangled even among the best of friends. The United States has accused the Government of inflating the impact of its $135 billion hike in farm subsidies.
MICHAEL DELANEY, US EMBASSY: There's no obvious relationship between US farm income support and Australian farm income.
JONATHAN HARLEY: The Government is less than impressed.
JOHN ANDERSON, DEPUTY PRIME MINISTER: It is absolutely the wrong way to go and it will impact. There's no doubt about that.
JONATHAN HARLEY: All that does seem to be left in doubt is when, rather than if, US troops, backed by Australia, will lead an attack on Baghdad. Perhaps the Howard Government is bargaining on it being before serious harm is done to Australian wheat exports.The AWB was an Australian government body known as the Australian Wheat Board until 1 July 1999, when the AWB was transformed into a private company, owned by wheat growers & the Australian Government. On 22 August 2001, AWB was floated on the Australian Stock Exchange.
AWB has been the subject of controversy recently, amid revelations that the company paid kickbacks to former Iraqi leader Saddam Hussein. These revelations and the subsequent Cole Inquiry called by the Australian Government may result in criminal charges being brought against 12 current and former executives of AWB.
AWB exports "into more than 50 countries, with Australian wheat exports worth up to $5 billion per year" (AWB 2006). AWB had veto power over any other prospective exporters of wheat, which effectively eliminated competition on the export market for Australian wheat, thereby capturing freight differentials. Exports are typically managed through commodity pools, which are managed investment schemes. The beneficial interest in the export grain is distributed to participants in the commodity pool.
AWB has three core divisions - Rural Services, Financial Services and Commodity Management (which includes the National Pool). Rural Services and Financial Services offer products and services through the Landmark network, a 430 store retail distribution business serving rural Australia. Commodity management provides grain products to global customers with offices in Australia, Singapore, Tokyo, China, India, Geneva and Brazil.Australian Wheat Board implicated in “oil-for-food scandal”http://www.wsws.org/articles/2005/nov2005/awb-n14.shtmlScandal costs AWB its monopolyhttp://www.smh.com.au/news/national/scandal-costs-awb-its-monopoly/2006/02/10/1139542402621.htmlWin-win for AWB as US lawsuit thrown out of court
THE fortunes of beleaguered wheat exporter AWB took two turns for the better yesterday, with a US lawsuit dismissed and outstanding issues with Iraq resolved.
The former means AWB faces just one legal battle in the US, which may itself be dismissed in the new year. The latter means trade may soon resume with Iraq.
Prior to the oil-for-food scandal that engulfed AWB in 2006, the wheat exporter had sold about $800 million a year of wheat to Iraq. It was the largest single supplier, and Iraq was among its biggest customers.
The trade collapsed in the wake of revelations that AWB had been paying kickbacks to the regime of Saddam Hussein.
Iraq was at first reluctant to resume trade with Australia, buying most of its wheat from the US and other sources, and then AWB became reluctant to deal with Iraq because of continuing disputes over the cost of transport, storage and demurrage.
But in a statement yesterday, AWB said outstanding issues between it, Iraq's Ministry of Trade and the Grain Board of Iraq had been resolved, "paving the way for trade to resume".
AWB said it had a self-imposed ban on doing business with Iraq until the arguments about costs were resolved.
Now they are, it is in theory free to do business with Iraq. The disputes related to the 2005-06 grain pool. AWB managing director Gordon Davis said the resolution "opens the way for AWB to export wheat to Iraq in the future".
AWB shares rose slightly to $1.25 on the announcement before falling back to $1.24, but the stock is still down 40 per cent this year, and well down on the $6.50 peak reached before the scandal.
Also yesterday, the company announced that the US Court of Appeal dismissed a class action appeal by three Iraqi provinces, which had accused AWB of financing the Saddam regime, and denying them humanitarian aid that might otherwise have been forthcoming.
AWB said it had been advised that the US Court of Appeals dismissed the appeal. The plaintiffs had appealed against the original verdict of the US District Court for the southern district of New York. The court had found in favour of AWB Ltd, AWB (USA) Ltd, BNP Paribas and Commodity Specialists.
The plaintiffs filed their appeal soon after the original case was dismissed in October last year.
An Australian class action, brought on behalf of shareholders, is still pending, and due to begin next month.
The Rudd government stripped AWB of its wheat marketing monopoly in 2006 for paying $300m in bribes to Saddam's regime.