Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: WikiLeaks a quid pro quo for Phil Goff

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Phil Goff had no compunction using notes of a private conversation between Don Brash and US officials. Photo / Sarah Ivey
Phil Goff had no compunction using notes of a private conversation between Don Brash and US officials. Photo / Sarah Ivey

Frankly it's been rather delicious to watch Phil Goff squirm on the head of a proverbial pin as he flatly denies the insinuation in a WikiLeaks cable that the former Labour Government was prepared to trade "blood for milk" in Iraq.

Goff may have a point when he says claims in a United States diplomatic cable that said former Prime Minister Helen Clark sent combat engineers to Iraq in 2003 to stop dairy giant Fonterra losing lucrative "oil for food" contracts are "completely false".

Inevitably, there will have been a number of factors in the former Labour Cabinet's decision to deploy New Zealand engineers alongside the British contingent in Basra.

But it would be pushing credulity to claim the Clark Government did not consider the clear desire by New Zealand business - particularly Fonterra - to ensure its Iraqi trade did not go down the tubes when the postwar reconstruction contracts were doled out.

Particularly when America still controlled the game.

In an interview with this columnist in April 2003 - just weeks after the United States-led invasion - Clark said a stable Middle East had to be good for a meat-producing nation like New Zealand.

"Before the Gulf War, Iraq was a good market for New Zealand, so the prospect of a change of government with a lot of foreign money going into rebuild capacity - there's got to be opportunities there."

There was plenty more besides.

It all "hinges on getting some sort of internal political settlement in Iraq pretty quickly ... Fundamentally it's a rich nation. It's got an educated people. It's got its oil - third largest in the world".

And so it went on.

Goff, while speaking about nations like France and Germany which had also opposed the invasion, said then that "they will want to be part of whatever benefits will flow from reconstructing Iraq and rebuilding the relationship [with the United States]".

Given their respective comments in 2003 it would be fatuous indeed to believe the decision to commit troops to the reconstruction effort did not have a tinge of economic reality.

In fact, Clark had also confirmed in April 2003 that the Government was weighing up the extent of its contribution to rebuilding Iraq.

While New Zealand had not participated in the war, the loud drum-roll from business suggested they wanted a slice of the billions of dollars that would be expended on reconstruction efforts.

Auckland Regional Chamber of Commerce chief executive Michael Barnett confirmed at the time that businesspeople taking part in chamber forums had questioned whether they would be cut out "of the war dividend" because of New Zealand's stance.

The leaked United States embassy document revealed Ministry of Defence staff had briefed American officials about the Cabinet meeting in which Clark's Government did an about-turn on sending troops to Iraq.

"Senior MoD officials tell us it was not until Finance Minister Michael Cullen pointed out in a subsequent Cabinet meeting that New Zealand's absence from Iraq might cost New Zealand dairy conglomerate Fonterra the lucrative dairy supply contract it enjoyed under the United Nations Oil for Food programme."

The cable said the Prime Minister "found a face-saving compromise" by sending non-combat engineers to be embedded with British forces.

In fact, Cullen had received Treasury reports on the impact of the Iraq war on New Zealand's business linkages since February that year.

Goff would also have been well aware of the possibility of a negative impact on Fonterra.

The previous October, Goff signed an exemption notice enabling Fonterra to indirectly export dairy products to Iraq after the company gave a cast-iron assurance to the Government its Vietnamese intermediary was operating legitimately under the UN's Oil for Food programme.

That assurance subsequently went into meltdown after an inquiry by former United States Federal Reserve chairman Paul Volcker into widespread corruption surrounding the UN programme.

In Volcker's 2005 report, the intermediary - Vietnam Dairy Products (Vinamilk) - was alleged to have paid US$23.5 million ($34 million) in illegal kickbacks to former Iraqi dictator Saddam Hussein's regime.

Fonterra subsequently denied knowing any bribes were being paid by Vinamilk and the Ministry of Foreign Affairs and Trade (Mfat) said in 2005 its officials had not seen any evidence to suggest the co-op knew of illicit payments to the Iraqi authorities.

All of this suggests the previous Labour Government was indeed prepared to go out of its way to protect Fonterra's Iraq trade.

But that is just part of the story.

The New Zealand troops did not go into Iraq until the UN Security Council issued an invitation to do so - a stratagem which had been discussed between British Prime Minister Tony Blair and Clark when the latter visited him at Downing St in May 2003.

Goff's problem is that he is embarrassed by the WikiLeaks revelation.

He should look closer to home.

He had no compunction using notes of a private meeting between former National leader Don Brash and a visiting United States delegation to claim New Zealand's anti-nuclear policy "would be gone by lunchtime" under a National government.

The WikiLeaks documents have something to say on this score too.

Former United States ambassador Bill McCormick wrote in November 2006 that Goff had "misquoted" an Mfat staffer's notes from the meeting to claim that Brash had promised the nuclear ban would be "gone by lunchtime".

"Brash denied he intended to get rid of the ban without a referendum, but was unable to respond credibly when Labour said that must mean he was planning to scrap the legislation, which many Kiwis view as an iconic part of the country's identity," McCormick said.

It's notable that Goff refused the Herald's request under the Official Information Act to release the full notes of the meeting that Brash had with the six visiting Republican senators.

For Goff it's been the Christmas quid pro quo he didn't expect.

* Have a great Christmas - in next week's column I'll pinpoint the "Heroes and Zeroes" of the year.

- NZ Herald

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