Editorial: Saudi sheep deal a fiasco and a shambles

Foreign Affairs Minister Murray McCully

Foreign Affairs Minister Murray McCully

OPINION: The Saudi sheep deal is a fiasco that leaves a very sour taste. The auditor-general's report helps pinpoint exactly what went wrong and how to avoid anything similar in future.

The report says there is no evidence of corruption or bribery, but that is not the important point. Nobody believed that Foreign Affairs Minister Murray McCully, for instance, gained any personal benefit from the payment given to Sheikh Hmood Al Ali Al Khalaf.

But almost everything else about the payment was bad. Essentially, the Government decided to pay $10m (later increased to $11.5m) to the Sheikh to get itself out of a diplomatic jam caused by its own botchery.

The payment was based on a claim that Al Khalaf would sue New Zealand for the damage caused to his business by the Government's shilly-shallying over the issue of live sheep exports to Saudi Arabia.

READ MORE:
* Saudi sheep deal not corrupt, had 'significant shortcomings', report finds
What you need to know about the Government's deal with the Saudi businessman
Govt blocks Saudi sheep papers again
* Auditor General to investigate Saudi sheep controversy

Lyn Provost's report notes that the Cabinet paper gave no assessment "of the substance of that legal risk". In fact, there is no good evidence that Al Khalaf was seriously going to sue. No document has been produced; and a spokesman for the Sheikh has since denied that he intended to sue.

New Zealand infuriated Al Khalaf, it seems, by sending mixed signals about the future of the live sheep trade, which was of vital interest to a man said to be the kingdom's main importer of livestock.

On the one hand officials seem to have been telling him that the trade would continue. Ministers, on the other hand, were saying something different in public.

This is a shambles and the damage is entirely self-inflicted. It's true that the live sheep trade is complex, where powerful domestic lobbies oppose it but powerful overseas interests want it. And in this case the main Saudi player was, it seems, able to threaten an all-but-signed free trade deal with the kingdom.

Here there was a lot of money at stake. The FTA was expected to double New Zealand earnings to $3b within five years.

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So McCully, the arch-proponent of the "realist" or unsentimental school of foreign policy, spent millions to get Al Khalaf to stop causing trouble. The trouble was that his paper to Cabinet didn't make it clear that this was the real aim, and nor did it lay out clearly the risks and the benefits of the decision.  

And it's still not clear what benefits New Zealand has gained. Several years after the decision was made, the allegedly nearly completed FTA has still not been signed.

In the meantime, a messy, byzantine and opaque process was followed to get to an uncertain conclusion. Provost says there is no sign of corruption, but the best foil to corruption is "to demand transparency in how our our public resources have been used and what was achieved with our money".

That is not only a lamentable outcome, it has left a stain on New Zealand's reputation.That is not a good way to run a government. Sometimes, in fact, pure pragmatism is not the guide to action. 

In this case a more transparent approach would have avoided the diplomatic mess that was the root of so much trouble. Transparency, in other words, is the best policy.

 - The Dominion Post

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