Australia's Trade With The Middle East

Australian Exports Country Value $ Iraq 829 million Israel 448 million Middle East 7.9 billion China 7.6 billion New Zealand 7.2 billion Taiwan 5.4 billion Singapore 5.4 billion

The announcement this week that Australia has given in-principle support to the notion of an American first strike against nations such as Iraq invites examination of Australia's economic interests in the Middle East.

Figures published by Rob Chalmers in his newsletter, Inside Canberra, paint an interesting picture of Australian exports to the Middle East, with Iraq nearly doubling Israel as a market for Australian goods.

The Middle East is also a significant region for Australia's exports, ranking in value on a par with China and New Zealand, and well ahead of Taiwan and Singapore.

Whilst the United States remains Australia's largest trading partner, other regions are of growing importance.

Trade with Asian nations, particularly Japan, is vital, but the Middle East is a market for products such as cars and wheat that Australia has difficulty selling to Japan and the US.

Chalmers points out that Australian farmers, a mainstay of electoral support for the National Party, and manufacturers, similarly natural allies of the Liberal Party, will be watching the 'war on terrorism' with interest.

The implications of a Middle East conflict in 2002, or later, would have intriguing ramifications for Australia's military alliance with the US and its economic links with other parts of the world.

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These two items appeared in Inside Canberra, Vol 55, No 308, June 21, 2002. Subscriptions to the newsletter are available from Crown Content, 75 Flinders Lane, Melbourne, 3000. Tel: (03) 9654 2800, Fax: (03) 9654 6532.

Reserve Bank Puts Ban On Iraq

With the Howard Government giving hints that Australia might join the United States in a first strike attack against Iraq comes news that on May 22 the Reserve Bank banned foreign currency dealings with the Government of Iraq, its agencies or its nationals. A similar ban has been applied to Libya, another country linked with terrorism. The bans were imposed under the Banking (Foreign Exchange) Regulations. No reason is given for the bans. Has the Reserve Bank been given the nod by the Howard Government that an attack on Iraq is imminent? The move will certainly be noted in Baghdad. Heaven forbid, did the Reserve give any consideration to their action turning the attention of terrorists to Australia? Despite the trade embargo on Iraq that has been in place since the Gulf war, the Reserve's ban will not stop payment for Australian wheat exports to Iraq. This is because Australian wheat is part of the UN Food for Oil deal whereby Iraq must use funds raised from its exports of oil for food and other essential imports. Iraq pays the UN for Australian wheat and the UN passes the funds on to the Australian Wheat Board.

Middle East War Would Hurt Farmers

Exports to Iraq last year were worth $829 million, which would disappear overnight should Australia join in a US war against Iraq. The threat to Australian trade in the Middle East, much of it wheat and live sheep, is something to which the National Party and farmers would have to give serious consideration. The car industry would also be concerned. Six of the top 10 destinations for Australian cars are Middle East countries. It doesn't follow that Australian exports to the Middle East would go to zero should we take part in a war against Iraq. Exports to Israel were $448 million. Nevertheless, a number of Middle East countries would bitterly object to a strike against Iraq. Total exports to the Middle East last year was $7.9 billion and the region is a bigger market for Australia than China ($7.6 billion), New Zealand ($7.15) billion, Taiwan ($5.4 billion) or Singapore $5.35 billion).

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