It has been a relatively quiet year so far in Australian politics, with the main story being an investigation into a scandal involving the Australian Wheat Board, which was accused of paying huge bribes for wheat contracts to Saddam Hussain’s Iraq. The political controversy relates to what the government knew about it and what it did about it.
It seems that the government did not know very much about it, and did absolutely nothing about it. The Cole Enquiry that has been formed to investigate this matter and Prime Minister John Howard will testify tomorrow. I have generally taken the view that the enquiries have been a political circus and conducted for partisan reasons, so I’ve not followed it very closely. Other people have taken a greater interest, and have come to different conclusions. However I still feel that this matter is more a case of cock-up rather then conspiracy.
I got thinking about the case from a different angle though, about the bribes. The fact that bribes needed to be paid at all for a straightforward commercial transaction is a shocking indictment of the regulatory stranglehold Saddam Hussein and the UN had placed on Iraq. This is small beer compared to the literal stranglehold that the tyrant kept his people under. But bribery is a natural part of things in so many parts of the world, in various and many degrees. It is by no means restricted to ‘third world’ countries either. But it occurred to me that the more you need to bribe agents of the state to get anything done, the worse the control the state has over the economy, and is a passable indicator of real, as opposed to nominal, economic freedom in a society.
I think the government is certainly guilty of not being skeptical enough in regards to AWB – this is not a ringing endorsement of the government’s administration, however it’s not a hanging offence either.
The above is a consequence of cutthroat trade competition. The Iraqi wheat contracts were plum, and I have no doubt that others looked on with envious eyes. The government did its Three Wise Monkeys act to deflect attention away from AWB. Yes, it was overly credulous of AWB’s denials and defended AWB falsely at the UN and the US Senate. This is because it wanted AWB to keep selling wheat to Iraq, and many others didn’t.
That’s no excuse, but the overarching issue is how corporations use governments’ apparatus to displace their competitors in the over-regulated international environment. All the self righteous gnashing of teeth on Capitol Hill we’re currently seeing is a symptom of this.
Hmmm…. If bribary levels are a measure of nominal freedom of the market in an unfree land, Indonesia must be downright laissez faire!
I meant it in the opposite direction, Dale, sorry to be unclear. The high level of bribery in Indonesia would indicate extremely onerous levels of regulation. Thus giving a high scope for corrupt officials to cash in.
“The fact that bribes needed to be paid at all for a straightforward commercial transaction is a shocking indictment of the regulatory stranglehold Saddam Hussein and the UN had placed on Iraq.”
Right, it’s all Saddam and the UN’s fault. The US had nothing to do with any economic sanctions and is completely blameless.
And if you believe that, I’ve got a very nice bridge for sale…
Um, is this a new take on bribery? Or do you really mean that it is just the first time you have thought about the problem?
The link between regulation and bribery is not very radical! The Economist alone must have reported on it 20 times in the last five years, particularly in the development context.
Hey, people, are you naive or what ? There is NO transaction in the third world, where no bribes are involved. I repeat: NO transaction ! (At least as far as any government official has a say in that transaction).
If someone sold something to a government, or government owned corporation – he paid a bribe.
And by “third world” I mean about 80% of all nations.
And in the other 20% it’s not a bribe, it’s a campaign contribution.
Bribes? Excuse me? There are no such thing as bribes in the Middle East.
They are called Sponsor’s Fees.
The Australian Wheat Board?
Is that some sort of state monopsony market-rigging organisation?
Maybe a bit like the Milk Marketing Board, or the British Wool Board (the latter of which actually still exists, to our shame and disgust).
How delighfully 1950’s!
You have no idea. The farmers like the idea of a single desk policy, however.
To be fair, technically AWB doesn’t stand for “Australian Wheat Board” these days. It’s just called AWB. You won’t see an expansion of those three letters in any company publication.
I live in the state of Western Australia – we still have a potato board here(!!). Farmers cannot sell their excess crop if it’s outside of their quota. It’s quite bizarre. Why potatoes? Who knows?
Ah, Australia needs to join the EU then (if Turkey can then the little matter of a few thousand miles shouldn’t make much difference). Then you get to lose the word ‘bribe’ and substitute ‘subsidy’ in its place.