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Australian PM urges Iraq to overturn decision on wheat ban

15 February, 2006

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Australian Prime Minister John Howard urged his Iraqi counterpart on Tuesday to overturn a decision to suspend business dealings with Australia`s monopoly wheat exporter AWB Ltd.
The Iraqi Grain Board on Monday suspended business ties with the AWB pending the outcome of an Australian judicial inquiry into allegations the company paid kickbacks to Saddam Hussein`s regime under the U.N. oil-for-food scheme.

In a letter to Iraqi Prime Minister Ibrahim al-Jaafari, obtained by Reuters, Howard said the decision by the Iraq Grains Board was "particularly worrying" to Australia and would be felt by individual wheat farmers.

He urged Iraq to consider Australia`s close ties with Iraq, and Australia`s contribution to the war to oust Saddam and its military commitment to post-war Iraq, when considering the ban.

"I ask that you pay particular regard to the close and supportive nature of Australia`s relationship with Iraq, the long-standing trade relationship in wheat, and the repeated willingness of Australia to assist the people of Iraq in their courageous but difficult embrace of democracy," Howard wrote.

The suspension came as Iraq considers bids for a tender for 1 million tons of wheat, which the AWB is hoping to win against sharp competition with U.S. wheat, to begin to restore its fortunes on world markets.

Australia, alongside the United States and Britain, was one of the first countries to commit forces to the war to oust Saddam and Australia currently has about 1,300 military personnel deployed in and around Iraq.

Howard said he would report to Iraq on the outcome of a judicial inquiry, which is examining whether the AWB broke any Australian laws in its dealings with oil-for-food deals. The inquiry is due to report by March 31.

A 2005 U.N. report accused the AWB, the main exporter of food to Iraq in the 1990s, of paying up to US$222 million to Saddam`s government under the program.

Australia has sold up to 2.5 million tons of wheat to Iraq in past years under the U.N. oil-for-food program, which allowed Iraq to export limited amounts of oil, as an exception to trade sanctions, to pay for imports of food.

This formed up to 15 percent of Australia`s total annual wheat exports of around 16 million tons. A bumper new harvest of 25 million tons is now in silos, waiting for export.

The Australian government is also reviewing the AWB`s wheat marketing monopoly and Howard has called a meeting for Wednesday with AWB executive chairman Brendan Stewart to discuss the arrangements, and Iraq`s suspension.

The monopoly is strongly opposed by the United States wheat industry on the grounds it is unfair. The unsubsidized Australian industry says it needs the monopoly to compete with subsidized U.S. wheat on world markets.


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