- The Washington Times - Tuesday, February 14, 2006

Australia’s once-dominant grain monopoly, reeling from revelations of shady oil-for-food deals with Saddam Hussein, in the past week has lost its director and its lucrative market in Iraq and may lose its favored status as the country’s sole grain exporter.

Prime Minister John Howard is scheduled to meet today with AWB Ltd. Chairman Brendan Stewart to discuss a possible breakup of the export board, which is a major rival of U.S. growers in the ultracompetitive world grain market.

The meeting is the latest in a series of hits to AWB, formerly known as the Australian Wheat Board, as an independent inquiry probes Australia’s huge wheat deals with Iraq under the widely criticized U.N. program.

A U.N. internal investigation last year concluded that AWB paid about $220 million in kickbacks and other secret payments to Saddam’s regime in the 1990s to secure wheat deals under the oil-for-food program. Mr. Howard said he could make a decision on AWB’s status by the end of next month, when a separate Australian investigation is set to conclude.

AWB Chief Executive Officer Andrew Lindberg quit last week under pressure. On Monday, Iraqi agricultural officials announced that they were blocking any new grain contracts with Australia, at least until the Canberra probe was completed.

The cutoff, which accelerated a sharp slide in AWB’s share price, means that Australian farmers cannot bid on a pending 1 million-ton grain-supply contract.

Some American lawmakers have pressed for U.S. subsidiaries of AWB to be permanently excluded from a U.S. export-credit program in light of the oil-for-food revelations.

Mr. Howard told lawmakers yesterday that AWB’s monopoly over grain sales abroad had “inevitably raised some debate in the Australian community about the question of a single desk in relation to the sale of Australian wheat.”

He said the government, for now, supports the monopoly arrangement and that “there would need to be a very strong national-interest case in order to alter that.”

Ironically, Australia is one of the few countries to conduct a vigorous internal probe of wrongdoing under the oil-for-food program. The inquiry has proven a political embarrassment for the Howard government, which strongly backed the U.S.-led invasion of Iraq in 2003.

Many Australian farmers argue that they need a strong export monopoly to counter what they say are heavy government subsidies enjoyed by U.S. growers.

And some in Canberra have accused their U.S. rivals of exploiting the oil-for-food inquiry to gain a competitive edge.

“It requires a very thick hide for America to be complaining about corruption in international trade,” said Peter Walsh, a farmer and member of Parliament who was quoted yesterday in the newspaper the Australian.

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