Wednesday , June 20 2018
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Key at G20: IV TV3’s Patrick Gower – Which NZ companies are banking $200m trade with Russia despite ‘sanctions’

KEY AT G20  Gower: Barack Obama yesterday called Vladimir Putin a threat to the world. Do you agree with that?

Key: Potentially. If you look at what’s happening in Ukraine and the wider, sort of, Eastern Bloc and the, you know, potential motivations and intentions, it’s a very serious situation, and I think that’s why you are seeing countries respond, and I think that’s why you are seeing, you know, a very sluggish growth period now, in Europe, as they adjust to, you know, being very uncertain about what’s going to happen next.

Yeah, well, let’s look at that economic threat, essentially, that Russia poses. Russia has put a ban on imports from some of our allies – the United States, Australia, Great Britain, yet New Zealand is still trading with Russia, up to $200 million a year. Is that damaging our international reputation in that we are not being heard by Russia here?

No. If anything, actually, our partners think we’ve taken the moral high ground. So they know that in the end we can’t control who Russia puts on a list and who they don’t. What we have done is actually actively stopped our free trade agreement negotiations right at the, sort of, final point, and they could see us do that. They can see that we’re not going out there overly exploiting opportunities, and in the end, actually, it’s having quite a big impact on dairy products.

Let’s talk about not exploiting those opportunities. How are we doing that? You said that you have talked to Fonterra and told them not to profit from this.

Yeah, well, I mean, look, I think the Minister and MPI and others have all spoken to Fonterra and the likes and said, ‘You know, it would be a terrible look for New Zealand if we went and just filled that void,’ and essentially went around our partners now. The private sector companies – we can’t stop them trading, but, actually, from what we can see, they’re taking a very responsible view.

Isn’t that remarkable, in some senses, to stop New Zealand’s biggest company from trading — from making money?

Yeah, but I think you have to say, ‘OK, this is a short-term position.’ And then there’s a long-term position, and New Zealand takes these issues seriously.

So you can tell a private business what to do — the biggest private business in the country?

Yeah, well, what we can say to them is, ‘It’s not in your best interest to exploit that opportunity, because if you do, then the implications long-term could be negative for New Zealand, and we have responsible business people. They take all sorts of decisions for corporate and social responsibility reasons. I don’t think any of us should be surprised by that.

Would you support further sanctions against Russia? There’s calls for that here. Would you support further sanctions–?

Potentially. I mean, the issue is—

.economic ones, as well. Would New Zealand support those?

Well, the first issue is, are they working? They are certainly slowing down Europe. If you look at Germany, the growth rate was about 2%. It’s now down to 1.2%, and most of that they attribute what’s happening in Europe — in Ukraine and Russia. The second thing is that it’s very challenging. If you look at something like the German economy, it’s quite dependent on Russian gas, so it’s not quite as straightforward as everyone says. You know, New Zealand can’t put unilateral sanctions, unless we change our law.

We could push them on the Security Council, though, couldn’t we?

That’s right.

Is that something you would look at doing?

We’re not even there yet, so it’s pretty early days, but, look, in the end, Russia is bound to be a topic, I think, that’s gonna float around for a while. Don’t forget they’re a Permanent Five member, though, and they can veto anything the Security Council does.

About Fran O'Sullivan

Fran O’Sullivan is Managing Director of NZ INC. She is a former editor of the National Business Review and a prominent columnist for the New Zealand Herald, where she writes on business, politics, and international affairs, and manages the annual high-profile Mood of the Boardroom project. Fran took up the position of Editorial Director – Business for NZME in April 2015.

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