Trade relations with revolutionary Iran

Today’s account in The Australian of the 1980 Cabinet papers includes a piece by Cameron Stewart, US plea for Iran sanctions ignored (see here) which commences:

The Fraser government privately condemned the US government's response to the Iran hostage crisis. It was determined to resist US pressure to freeze Australia's lucrative food exports to Tehran.

The 1980 cabinet papers reveal that Australia played an elaborate diplomatic charade with the US during the hostage crisis by publicly voicing strong support for Washington while privately seeking to ignore US requests to apply economic sanctions, including on food, to Iran.

Later:

A cabinet memo from government departments in April 1980 criticised the US request. "Since the beginning of the crisis, the US government has shown scant regard for consultation with us and has on occasion made ill-defined and indeed erratic approaches to us."

It concluded that any decision by Australia to freeze food exports to Iran would have no impact on the regime, which would source food from elsewhere, but would have a serious impact on Australian food producers, especially in the wheat and livestock industries.

This sounds a bit underhand but there is a backstory here. It happened that I was Acting Secretary to the Department of Trade and Resources when at some point in the turbulent aftermath of the 1979 ousting of the Shah and the establishment of Ayatollah Khomeini’s Islamic Republic of Iran it was decided that all non-essential staff should be withdrawn from the Australian Embassy in Tehran.

I had to make the decision about the Trade staff.  I wasn’t prepared to direct anyone to stay in the circumstances of the time, but the junior Trade Commissioner, Alex Karas, contacted me to say that he thought it would really be in Australia’s long term interest for us to keep the Trade office open, to maintain a “business as usual” stance, we can establish and manage a relationship with the new regime, and he was prepared to stay.

I took his advice and accepted his offer – not without some misgivings – so as well as keeping our Embassy open, for which the Fraser Government and presumably its Foreign Affairs advisers are to be credited, we maintained a fully functional commercial relationship through that period, and we are one of the few Western countries to have maintained an Embassy on the ground in Tehran continuously since the 1979 revolution.

We all regarded that as an investment, one that was not without hardship and risk for the diplomatic and trade staff involved, and one that was worth protecting. It was an investment not only in a long term view of our direct interests in an important country in the Middle East, but also in the independence of our foreign policy. To paraphrase John Howard, we would decide who we would trade with and the circumstances under which we would trade with them.

This independent stance not only benefitted us, but it was useful to our friends as well – we actually had people on the ground in Tehran, dealing with the regime from day to day, and reporting back to Canberra. One of the things that hobbles US policy making in relation to Tehran is that, thirty years after cutting diplomatic ties, it has no one in the State Department who has served in Tehran, and precious few to turn to who have first-hand knowledge of the place.  We have quite a few.

Regrettably, this investment was effectively trashed when Alexander Downer became Foreign Minister and joined the anti-Iranian US cheer squad. This was quite unnecessary. Throughout the period since 1979 the Iranians have been in no doubt that we are an ally of the United States, but as long as they perceived us as a country with its own mind, we were worth engaging with seriously.  Once we simply became an echo of US foreign policy, why bother?  The paradox is that we were more useful as an ally of the United States when we were more at arms’ length from their stance on Iran, because we were in a better position to assess what was going on in Tehran and to communicate to each side what might be in the mind of the other.

More recently, the WikiLeaks cables show that we have also paid a price for Kevin Rudd’s reflexive support for Israel: retaliatory steps by the Iranians have made it more difficult for the Australian embassy in Tehran to do its job effectively, which doesn’t seem to me to serve anyone’s interests.