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Australia furious at Iraq for freezing wheat orders

The Australian government reacted angrily yesterday to a report that Baghdad had suspended wheat imports worth hundreds of millions of dollars a year over oil-for-food kickbacks paid to former Iraqi president Saddam Hussein's regime.

Prime Minister John Howard said contracts could not be disregarded "willy-nilly," while Foreign Minister Alexander Downer said Australians would be irritated by a boycott as they had contributed troops to the US-led invasion that ousted Saddam.

The Australian newspaper quoted Iraqi Deputy Prime Minister Ahmed Chalabi as saying all future orders for Australian wheat had been suspended and Iraq was demanding compensation for kickbacks paid to Saddam's regime under the UN's oil-for-food program.

The Australian wheat orders are worth up to A$800 million (US$600 million) a year.

A spokesman for Trade Minister Mark Vaile said the government had received no formal notification of the suspension and had asked its ambassador in Baghdad to seek clarification.

Howard said that as far as the government was concerned, wheat trade with Iraq was proceeding as normal.

"AWB [Australian Wheat Board] does have a contract with the Iraqi government so there are obligations and those obligations just can't be torn up willy-nilly," he told reporters.

Downer said that because of Australia's active military role in removing Saddam from power, a boycott of the country's wheat would annoy many Australians.

"A lot of people certainly would make that argument," Downer said.

"Australia is one of the coalition of the willing, one of the three countries that moved decisively to rid Saddam Hussein's regime from Iraq so there's no doubt about the principled position Australia has taken against Saddam Hussein and his regime," he said. "Our wheat trade in Iraq has been progressing at a steady pace and we've heard nothing about it being disrupted."

Chalabi told the newspaper in a telephone interview from Washington that he expected the AWB to compensate the new Iraqi government for A$290 million in kickbacks paid to the former regime.
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