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Australia’s first attempt to sell wheat to Iraq since trade was suspended early this year amid an inquiry into bribes paid to Saddam Hussein’s regime has collapsed.

Wheat Australia says it had been unable to reach an agreement with the Iraqi Grains Board on a contract for the sale of 350,000 tonnes of wheat worth A$100mn (US$75mn).

Wheat Australia, a consortium of domestic wheat companies, was formed early this year after Iraq boycotted wheat from monopoly exporter AWB during an investigation into corruption of the UN’s oil-for-food programme.
A UN report into the discredited programme last year found that AWB, the biggest supplier of humanitarian aid to sanctions-bound Iraq, paid some A$220mn in kickbacks to the regime of Saddam Hussein.

The Iraqi boycott of AWB prompted Australia’s deputy prime minister Mark Vaile to travel to Baghdad in late February to shore-up future wheat contracts with the war-torn country by temporarily lifting AWB’s monopoly. But Wheat Australia spokesman Rhys Ainsworth recently said the latest deal has collapsed: “We’ve been in negotiations for some time now and while negotiations have been progressing positively, there have been a couple of commercial issues that we haven’t been able to reach agreement on. And so those discussions have ended.”

According to reports, the deal came unstuck when the Iraqis insisted on expensive late delivery fees and additional shipping costs.
Wheat is Australia’s second biggest rural export and annual export sales are worth around A$3bn. AWB sold 650,000 tonnes of wheat to Iraq in 2005 and 1.3mn tonnes in 2004.

Vaile’s lightning visit to Iraq, where Australia has deployed some 900 troops, secured an agreement that domestic companies could compete for future Iraq wheat contracts so long as AWB was excluded.