“Iraq's people ultimate victims of corrupt wheat deals” – Opinion essay by Tony Kevin, The Age, 3 February 2006

This text is accessible at The Age website,

http://www.theage.com.au/news/opinion/feeding-them-chaff/2006/02/02/1138836366588.html

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The real victim of the AWB wheat scams between 1999 and 2003 was not the United Nations. The real victims were the people of Iraq, deprived of $300 million worth of desperately needed food and basic medicines because of the inflated prices paid for Australian grain.

In corrupt deals worthy of Milo Minderbinder's memorable everybody-gets-a-share schemes in Joseph Heller's Catch 22, Saddam Hussein's officials quietly pocketed that $300 million. AWB thereby maintained Australia's biggest wheat market, and Prime Minister John Howard and Foreign Minister Alexander Downer were free to continue their inflammatory rhetoric and covert preparations for war on Iraq.

In the 1999-2003 period, AWB was expanding Australia's wheat sales to Iraq under funds allowed by the UN food-for-oil program. This was established by the UN Security Council in the mid-1990s in response to international concerns about how many Iraqi children were dying from malnutrition and lack of basic medicines under UN-imposed economic sanctions.

The UN Secretariat managed the program. The Iraqi government was allowed to earn a predetermined amount from oil sales, in order to purchase essential humanitarian goods. Iraq used the funds to buy Australian wheat, under its legal obligation to buy from the lowest-cost quality supplier.

During those years, the Howard Government was ramping up hostile rhetoric towards Saddam's government. The Iraqis complained but were ignored. In July 2002, after particularly provocative statements in Washington by Downer, Iraq announced it would halve the purchasing contract (AWB ships were already on the way) and buy no more wheat unless Australia stopped warmongering.

The Howard Government publicly blustered, but privately consulted urgently with a deeply worried AWB. They encouraged AWB to smooth things over with the Iraqis. Ministers were careful, apparently, not to inquire too closely how this was to be done.

AWB solved the problem, we now know from the Cole inquiry, by inflated payments to the Iraqi government disguised as various kinds of extra charges on Australian wheat. Such practices were already in place, but in 2002 the side-payments grew to ridiculously high levels. This greatly inflated the real cost paid through the oil-for-food program for Australian wheat.

Questions are now being asked about how much Department of Foreign Affairs and Trade ambassadors and other officials may have known. As usual, Howard and Downer are hiding behind officials. If necessary, the careers of one or two will be sacrificed.

But this misses the real point. Of course ministers would have known about any serious problems with Australia's biggest wheat buyer. They would have known as much as they wanted to know, in order to know that they should not be asking too many questions of AWB about how it dealt with the problems their sabre-rattling against Iraq had caused. DFAT is now well versed in the bureaucratic art of avoiding an incriminatory paper trail leading to ministers.

But this scandal also shows gross systemic failure in DFAT and in its ministers. As far as we know, nobody ever sat down with ministers to make a proper national risk assessment, weighing Australia's national interest in preserving its largest Middle Eastern wheat market against the advantages of threatening Saddam. AWB was left to pick up the pieces of this reckless policy.

No wonder that as the truth becomes known, Australia's trading reputation in the Middle East is tarnished. It cannot all be blamed on AWB. Howard and Downer must be held to account for the way they risked our biggest wheat market and our reputation in the Arab world as a decent trader.

This story is not just about a necessary commercial practice in a corrupt Third World country, of Australian export agencies having to pay a bit of hush money to secure a market in imperfect conditions. This is far worse. If the evidence coming out in the Cole inquiry is to be believed, this was a corrupt system whose real costs were paid by the suffering people of Iraq. That $300 million would have bought a lot of food and medicine for people who desperately needed it.

Tony Kevin, a former senior diplomat and Australian ambassador to Cambodia, is a visiting fellow at the Research School of Pacific and Asian Studies, Australian National University.

But this misses the real point. Of course ministers would have known about any serious problems with Australia's biggest wheat buyer. They would have known as much as they wanted to know, in order to know that they should not be asking too many questions of AWB about how it dealt with the problems their sabre-rattling against Iraq had caused. DFAT is now well versed in the bureaucratic art of avoiding an incriminatory paper trail leading to ministers.

But this scandal also shows gross systemic failure in DFAT and in its ministers. As far as we know, nobody ever sat down with ministers to make a proper national risk assessment, weighing Australia's national interest in preserving its largest Middle Eastern wheat market against the advantages of threatening Saddam. AWB was left to pick up the pieces of this reckless policy.

No wonder that as the truth becomes known, Australia's trading reputation in the Middle East is tarnished. It cannot all be blamed on AWB. Howard and Downer must be held to account for the way they risked our biggest wheat market and our reputation in the Arab world as a decent trader.

This story is not just about a necessary commercial practice in a corrupt Third World country, of Australian export agencies having to pay a bit of hush money to secure a market in imperfect conditions. This is far worse. If the evidence coming out in the Cole inquiry is to be believed, this was a corrupt system whose real costs were paid by the suffering people of Iraq. That $300 million would have bought a lot of food and medicine for people who desperately needed it.