Letter from Bruce Haigh on the AWB affair and Australias’s role in the war in Iraq, published in the Australian Financial Review on 19 July 2006

Bruce Haigh’s letter (below) explores important, previously unexamined, policy linkages between the government’s (well documented – see media URLs below) pressure on the AWB to maintain the Iraq wheat market at all costs in the months before the coalition invasion of Iraq, and the Government’s concern not to give ammunition to the arguments of the anti-war movement in Australia that joining this illegal war was not in Australia’s national interest.

So the AWB was told by Howard and Downer (or their minders) in August 2002 to patch things up with Saddam’s officials, to eat humble pie in Baghdad, in order to hold the Iraq wheat market until the invasion balloon went up on 18 March 2003. The AWB did that job successfully. Their reward now is sustained public shaming and carrying the can for the Howard government’s manipulations.

No doubt if AWB senior executives take their public punishment quietly – and there is presumably more to come soon when the Cole inquiry releases its findings - there might be a few egg and chook board positions waiting at the end of the road for those who held their tongues. But this will be no minor compensation exercise – there must be a lot of pain and resentment that will need assuaging in AWB executive ranks by now.

TK, Canberra 25 July 2006

BRUCE HAIGH’S LETTER, AUSTRALIAN FINSNCIAL REVIEW, 19 July 2006

Those baying so loudly for the investigation into the AWB over kickbacks to Iraq have ignored some significant factors. Selling wheat to Iraq always involved politics as much as it did economics.

Howard got himself into lockstep with Bush ten months before his formal announcement that Australia was going to war with the US against Iraq. Under these circumstances selling wheat from Australia to Iraq became a fraught exercise. All the more so when a sizable anti-war movement developed in Australia. Howard did not want that group to use the loss of the Iraqi wheat market to beat him around the head particularly when loss of that market might have broadened opposition to the war.

Political pressure was applied on the AWB. In the face of this pressure they did what they felt was necessary to meet the dictates of Howard and the market. When it unraveled Howard left them high and dry.

Faced with US pressure Howard buckled and set up the Cole Commission of inquiry. More politics; pragmatism without principle.

Of course the US will apply pressure. Why would they not? They need to make sales in order to get back some of the money they spend subsidizing US wheat farmers.

People should ask why is the wheat market distorted? Markets do not embrace certain practices unless there is a reason. Quite simply other wheat exporting countries wanted the markets Australia was selling into. The buyers are often in a position to conduct a dutch auction between the sellers.

Examining the alleged corrupt practices of the AWB whilst not addressing the corrupt practices of those purchasing the wheat is, in my opinion, a fruitless exercise. It amounts to one hand clapping.

US wheat farmers are now threatening to sue the AWB over alleged corrupt trading practices which they claim have caused them to lose sales. What a farce. For US interest groups to take the moral high ground when their own government is holding David Hicks in legal limbo, whose government has condoned torture of people in the name of the “war on terror”, and whose soldiers have murdered and raped civilians in Iraq, is a bit rich.

Pressure should be applied on John Howard to help him find the courage to tell the US where to jump off.

It was Howard and his politics of all the way with the USA, wrapped as he is in a star spangled political straight jacket of his own making that has caused the AWB and Australia the problems we have at the moment. Our troubles with the US are just about to begin. Australia will come to rue the nature of the relationship Howard has forged with the US. ENDS.

Bruce Haigh is a retired Australian diplomat. He worked in the Middle East, Pakistan, Afghanistan and South East Asia. He is an author and comments on domestic and international relations. He is also farming at Mudgee.

REFERENCES

In support of Haigh’s article, note these newspaper and radio URL link . ( I drew the attention of the Cole inquiry to these, early in the history of the inquiry):

http://www.abc.net.au/lateline/stories/s606064.htm

ABC TV Lateline, 13 July 2002, "Downer gives support for US-led Iraq attack". Foreign Minister Alexander Downer has given the strongest indication yet that the Howard Government is ready to back United States military action against Iraq. He says Australia shares US concerns about Iraq's development of biological, chemical and even nuclear weapons. He says "Only a fool would support a policy of appeasement and just hope that by saying nothing more or doing nothing about Iraq and Saddam Hussein, the whole problem will go away".

http://www.abc.net.au/lateline/stories/s607869.htm

ABC TV Lateline, 15 July 2002, "Downer gives support for attack on Iraq". If America does go ahead with an attack on Iraq, Australia has made its position pretty clear. Foreign Minister Alexander Downer, after briefings in Washington, said that "only a fool would support a policy of appeasement" against Iraq.

http://www.dfat.gov.au/media/transcripts/2002/020716_fa_iraq.html - 16 July 2002, Media conference, "Iraq Trade Issues" . This Downer media transcript follows a few days after the 11 July Downer statement in Washington, and essentially repeats the same argument..

http://www.dfat.gov.au/media/transcripts/2002/020723.html - "Iraq Trade Issues', media conference, 23 July 2002. Downer again defends his Washington statements, after the Iraqi Trade Minister has just announced a curtailment of imports of Australian wheat in response to those statements.

http://www.abc.net.au/rural/sa/stories/s614187.htm , ABC SA Country Hour 23 July 2002:

"Trade minister hoses down Iraq wheat threat", by Julie Doyle. The Federal Government has played down threats by Iraq to slash its purchases of Australian wheat. Trade Minister Mark Vaile woke to the news this morning that the Iraqi trade minister is considering cutting $830 million worth of wheat imports, because of the Prime Minister's in principle support of US military action against his country. Minister Vaile is adamant the Federal Government will stand by its anti-terrorism policy, and continue to support for UN sanctions on Iraq. He says if Iraq follows through with its threats, Australia will find new markets for its wheat. "It's important that we sell wheat on behalf of Australian wheat farmers, and the AWB is committed to that. We’ve had a number of discussions with them [AWB] on that. Our position and our commitment to the UN resolutions as far as Iraq is concerned, and weapons of mass destruction is a separate issue. We believe that we must rid the world of terrorists, terrorism and weapons of mass destruction...we will continue to on both fronts through the respective channels."

The head of the NFF trade committee, Keith Perrett says the grain industry is hopeful it can retain its long-standing relationship with Iraq - despite the threats. Mr Perrett, who's also president of the Grains Council of Australia, says there's been similar problems with major markets before, and the solution is to keep politics and trade separate. "We'll be talking to the Australian government to make sure they support us on any trade efforts, but we’ll certainly be keeping the political ramifications of whatever’s being said separate to trade issues. We’ve always done that and that’s how we’ve maintained trade with Iraq. Keeping the politics and the business of selling wheat completely separate.”

AWB International board member Ian Donges has called on the Federal Government to consider the consequences of its support for US air strikes on Iraq. Mr Donges says grain growers are already facing a tough international environment as well as drought conditions at home. He says the situation will only get worse if Iraq takes action. "If there are significant financial consequences for an Australian industry, in this case the wheat industry, as a result of international issues then I think the government needs to be mindful of that and recognise that they do have some responsibilities in those areas."
Mark Vaile: Trade Minister
Keith Perrett: Grains Council
Ian Donges: AWB International Board Member

http://www.abc.net.au/rural/sa/stories/s615225.htm , ABC SA Country Hour, 24 July 2002, "AWB chairman hopes to shore up share falls", by Alison Buchanan. The Chairman of AWB Limited is confident the strong relationship with the Iraq Grains board will ensure Australia will still have access to the lucrative Middle Eastern wheat market. The call comes as Iraq threatens to boycott Australian wheat if Australia continues to support the US in talk of pre-emptive strikes against the regime of Saddam Hussein. Brendan Stewart, Chairman of AWB Limited, says while the Iraqi government has halted a shipment of 500 thousand tonnes of wheat, 1.8 million tonnes has already been shipped in to the country. He says the threat is being taken seriously but maintains the AWB has a number of contingency plans in place in order to forge ahead with business. Shares in AWB Limited lost 10 cents on the stock exchange yesterday, and another three when trade opened this morning. Mr Stewart says AWB is leaving it to the Federal Government to negotiate with Iraq over the issue, and he's more concerned with shoring up investor confidence. "In terms of our share price this should have very minimal impact on us. The reality of the situation at the moment is in terms of share price there are a lot of other factors at play including drought, and of course a declining market everywhere around the world. We need to be careful that we don’t try and associate a particular incident with any impact on share price."
Brendan Stewart: Chairman of AWB Limited

http://www.abc.net.au/rural/news/stories/s642287.htm , "Iraq stops Australian wheat shipments", ABC Rural News, 7 August 2002. "Three ships containing Australian wheat have been stopped from unloading in the port of Umm Qasr in Iraq, because authorities are alleging the grain is contaminated with iron powder. Alison Buchanan reports, the news is another blow for the body which has the monopoly on exporting Australian wheat, AWB Limited. “Two weeks ago, Iraq threatened to halt imports of Australian wheat, in retaliation for Australia's support for US military action against it. Half a million tonnes of wheat from Victoria, South Australia and Western Australia was then on the water headed for Iraq, and the country put on hold an order for another half million tonnes ..." .

http://www.abc.net.au/rural/sa/stories/s642175.htm

"Iraq stops Australian wheat shipments", by Alison Buchanan , ABC Rural News , SA Country Hour, 7 August 2002 . The Federal government's hardline stance against Iraq is putting further pressure on Australia's wheat trade with the Middle east. The country's key wheat exporter, AWB Limited, has confirmed Iraq has stopped three loads of Australian wheat from being unloaded alleging contamination. Last month, the Iraqi government put on hold an order for half a million tonnes of Australian wheat, in retaliation for the Federal Government's support for US military action against Iraq. AWB's Michael Long says the company is sending an inspector to the port to hopefully resolve the situation. Mr Long says it's unlikely that there would be iron powder in the shipments. And while he stops short of drawing a link between the hold-up and previous political threats, Mr Long is publicly urging the Federal Government to carefully consider the impact of any support for strikes against Iraq.

But if the reason behind the hold-up is political, Grains Council president Keith Perrett says the Federal Government must act responsibly, if it chooses to support military action against Iraq. "There's obviously concern about growers when anything could impact on one of our markets whether it be the stance of the government or anything else. There's obviously a level of concern there but when you have a delicate issue such as that you must realise that governments are there to make decisions on behalf of the general population. We hope they make those decisions and statements in a responsible manner."
Michael Long: General Manager, International Sales & Marketing with AWB Ltd
Keith Perret: President of the Grains Council of Australia

http://bulletin.ninemsn.com.au/bulletin/site/articleIDs/
501C7B4603E46A74CA256C0B007E2A21?open&ui=dom&template=domBulletin

"Hard grain", Anthony Hoy, Bulletin, 7 August 2002. "The first casualty of the next war with Iraq has been a hard-fought, multi-million dollar grain business". A background piece on the difficulties created for Australian wheat exports to Iraq by Downer's 11 July statement in Washington that only a fool would support a policy of appeasement towards Iraq.

http://www.abc.net.au/rural/sa/stories/s643196.htm, ABC SA Country Hour 8 August 2002

"Wheat wars predicted if Iraq strike pursued", by Alison Buchanan. An Australian grain exporter says it's possible Australia's wheat trade with Iraq will come to a halt if the US makes good it's threat to take military action against Iraq. Mark Emons from Lanson.

Australia’s comments follow the rejection this week of three vessels containing Australian wheat by Iraqi authorities, who allege the grain is contaminated. Mr Emons' company has interests in Jordan and regular contact with Iraq, and he says the Iraqis don't usually overreact to quality issues. He says if the political situation escalates into war, it'll bring the wheat trade to a grinding halt. "I think there would be no question at all that wheat shipments would have to cease, if only for the fact that the war premiums that would be charged on vessels going into the area would be far too expensive for anybody to undertake. There's a war risk premium charged by insurance companies on every tonne of grain that's moved around the world, normally that's only sort of in the cents per tonne bracket, but once you start having war, premiums get into many, many dollars a tonne."
Mark Emons: Lanson Australia

http://www.abc.net.au/rural/sa/stories/s650539.htm

"AWB pursues diplomatic end to Iraq stand-off", by Alison Buchanan, ABC SA Country Hour 16 August 2002 . Members of Australia's wheat exporter AWB Limited are in Baghdad today, attempting to plaster over the cracks in trade with Iraq. AWB is keen to make peace with Iraq, which is furious at the Federal Government's support for American military strikes against it. And it seems Iraq wants to keep the wheat trade going too as long as its conditions are met. Iraq's Trade Minister, Mohammed Medhi Saleh, "Iraq is willing to promote a relationship with the Australian Wheat Board and the farmers of Australia once the Prime Minister and Foreign Minister of Australia change their position by declaring opposition to any military action towards Iraq."

Australia's sole wheat exporter, AWB Limited, will meet the Prime Minister, the Minister for Trade and the Minister for Foreign Affairs in Canberra next week, to pressure them to find a diplomatic solution to the tense stand-off with Iraq. AWB chairman, Brendan Stewart, says the Government needs to change its position, if Australia is to maintain its $800-million trade with Iraq. A delegation of AWB officials including chief executive, Andrew Lindberg, met Iraq's trade minister in Baghdad overnight. He told them Iraq was quite willing to continue trading, if the Prime Minister changed his mind about supporting American military action against Iraq. Mr Stewart says the Federal Government appears to be taking a harder line, publicly on Iraq, than it has in private discussions with AWB, but he just wants the issue resolved. "Certainly the public line has been quite different. When we meet with them, they say to us what they are seeking is for the Iraqi's to abide by the Security Council resolutions. Now we want to do business, we need to get in the best interests of Australian wheat growers, and we'll do all we have to do to ensure that we can continue that trade goes on and is executed over the next 12 months."

Four vessels of Australian wheat are still anchored in the Port of Umm Qasr, waiting for confirmation as to whether their load is contaminated with iron powder, as alleged by Iraqi authorities.
Mohamed Medhi Saleh: Iraq's Trade Minister
Brendan Stewart: Chairman, AWB Limited

http://www.trademinister.gov.au/releases/2002/mvt099_02.html - 18 August
2002. Vaile announces success in the AWB negotiations in Iraq

http://www.pm.gov.au/news/interviews/2002/interview1795.htm -Howard interview, 18 August 2002 after the announced resolution of the AWB-Iraqi dispute - his general theme was that trade and politics must be kept separate. Howard fulsomely praises the AWB successful negotiation in Iraq and notes that the "quality" issue appears to have been resolved.

http://www.abc.net.au/rural/sa/stories/s653700.htm

"Grains Council wants PM to take a softer line on Iraq" - 20 August 2002, by Michael Condon, ABC South Australia Country Hour:

Australia's wheat farmers have had a win, with the Prime Minister hosing down the government's statements on the likelihood of war with Iraq. This, and undertakings by the Prime Minister to keep the Grains Council informed of any trade sensitive policy, has been welcomed by the industry. The body representing wheat growers claims it's won a number of concessions from the Prime Minister, to avoid a repeat of Iraq threatening to cut its imports from Australia. The Grains Council of Australia met the Prime Minister yesterday, to ask him to take a softer line in supporting the United States in military action against Iraq. And prior to the meeting, the Prime Minister appeared to be taking a more reasoned approach to the likelihood of war with Iraq. "This is a difficult situation – nobody wants military conflict, nobody in this house wants to see Australian forces ever sent abroad again – certainly unnecessarily if that can be avoided. Nobody wants war, we all hate it."

Grains Council president Keith Perrett made it clear that his members may consider a claim for compensation, if the Federal Government jeopardised markets. Mr Perrett says the Prime Minister agreed to take the industry's position into account, before making public comments that may have an impact on key markets. "The government would consult with the industry...the government would be very understanding of industry concerns in relationship to any sensitive markets."
John Howard: Prime Minister
Keith Perrett: President, Grains Council

http://www.infarmation.com.au/news/cropsgrains/02/08/article7745.asp - 21 August 2002 , and there are five informative earlier August 2002 linked reports on this Infarmation website listed alongside this article. Similar news coverage to ABC reports noted above .

http://www.abc.net.au/rural/sa/stories/s654704.htm

"Quarantined shipments were contaminated - AWB" - 21 August 2002, by Alison Buchanan, ABC South Australia Country Hour:
The cracks which began to appear in Australia's $800-million wheat trade with Iraq seem to have been patched up well for the moment, anyway. Three weeks ago, wheat farmers across the country were rocked by the news Iraq was threatening to cut its imports of Australian grain. Hot on the heels of that, was the news four vessels laden with Australian grain were forbidden from unloading at the port of Umm Qsar, with port officials alleging the wheat was contaminated. In a bid to salvage the trade, a four-man delegation from the country's bulk wheat exporter, AWB Limited hotfooted it to Baghdad to resolve the standoff. The delegation is now back in the country, and Managing Director, Andrew Lindberg held a press conference yesterday. He says while the contamination was minor, the Iraqis are fastidious about the quality of the grain they buy. "The issue was metal powder and while we're very fussy about our vessels they do carry iron ore and things like that. It was really trace elements, I mean less than point one per cent, so we we're really talking about fairly minor quality issues in the scheme of things. But nonetheless significant in their eyes and we moved to rectify the issues. We didn't have to drop the price of the wheat so I think that's been a very good outcome under the circumstances."
Mr Lindberg may take heart from a response in AWB's share price, which rose five cents in the first hour of trading this morning, to $3.60.
Andrew Lindberg: Managing Director, AWB Limited

http://www.dfat.gov.au/qwon/2002/qon_021015a.html - some useful trade statistics here indicating the importance and rapid growth of Australia's Iraq wheat trade in the years preceding the invasion of March 2003. {Qn No 537 of 15 Aug 2002 and Reply on 15 Oct 2002). . Iraq had become a major and growing Australian wheat export market in the three years 1999-2002 preceding the invasion, which is why the AWB and wheat grower organisations were so perturbed that the government's pro-invasion statements were endangering that valuable trade in July 2002. .

http://bulletin.ninemsn.com.au/bulletin/EdDesk.nsf/
All/CDE15CB2BB5A5297CA256C31000A1404

"Trade: Desert scorn", by Anthony Hoy, Bulletin, 18 September 2002: "Should Australia join in any military action against Iraq, the whole Arab League might round on it and blow a gaping $7bn hole in our national exports". [Editorial comment: Hoy’s warning here of potential wider adverse knock-on effects on Australia's Middle Eastern trade were well-founded, and are starting to come home to roost now, with the reported loss of the Iraqi wheat market – another casualty of the invasion and Australia’s participation in the occupation coalition in Iraq since the invasion].

http://www.abc.net.au/am/stories/s790536.htm

"Iraq resumes wheat trade with Australia", ABC AM 22 February 2003. "Hamish Robertson: Well, the Iraqi Government has expressed its thanks to Australian farmers and protestors by deciding to resume its 800-million dollar wheat trade. The long-standing and lucrative trade relationship was crippled in November [Ed: actually, August] last year, when Iraq decided to cancel half its orders in protest at the Howard Government's position on a possible war. But now, as Tanya Nolan reports, it seems that Australian anti-war protestors have been the reason for the turnaround.".... [Editorial comment: This desperate Iraqi diplomatic attempt to keep Australia out of the invasion was too late - Australia troops were already in Jordan readying for invasion, and they initiated combat in Iraq on 18 March 2003].