McCully sees opportunity for NZ as Iranian sanctions lifted

With sanctions being lifted on Iran, Foreign Minister Murray McCully says there are big opportunities for New Zealand businesses in Iran and some have been giving the market a lot of thought.

"The opportunities are significant in the short-term and even bigger long-term," Mr McCully says.

He says the Iran nuclear deal could “reset relationships” in the Middle East, and could even “open the door to some sort of resolution on Syria.

“The sort of level of economic wealth that they are going to achieve as a result of the sanctions’ going gives them a chance to spend that money on good things or bad things.”

Mr McCully concedes “we’re not going to get the five countries [Security Council permanent members] that have the veto to surrender it” but still thinks they can be convinced to “behave differently with the veto.”

The foreign minister says he can’t guarantee justice for MH17 families and “it is not good enough” but still hopes to convince Russia to consider a tribunal “later on.”

He also has stern words for the superpowers, who have frequently used the UN's veto provision – most recently Russia as it torpedoed an investigation into the Malaysian Airline plane shot down over the Ukraine. "It's clear that the Security Council fails far too often … And that’s where the big guys on the council have got to get over themselves a bit,” he says.

New Zealand aims to eliminate the veto but Mr McCully will not stake his reputation on a deadline for achieving that goal.

RAW DATA: The Nation/TV3 transcript: Tova O'Brien interviews foreign affairs minister Murray McCully

Tova O’Brien: But there’s also a chance that Russia could be found culpable in that investigation. You’d think the Security Council could have another crack at it, but can you guarantee those families of the MH17 crash victims, that they will get justice?

No, we can’t, and—

Exactly. So that must be infuriating?

Well, it is infuriating, and it is not good enough in terms of UN process. Look, the countries that are driving the investigation obviously made the decision that if the Russians weren’t going to agree to a tribunal now, they probably won’t later. We’re on the Council, and so our job is to try and make sure that we do get Russia to consider the establishment of the UN Security Council tribunal later on, but the—

There’s nothing to say they won’t slap down that veto again?

No. No guarantee, and there’s also the prospect, in the meantime, the investigating countries will find another route, and we’ll certainly support that if that’s what they want to do.

It certainly raises questions about whether the Security Council is broken, is deadlocked as well over the humanitarian crisis in Syria. Ban Ki-Moon, the head of the UN, yesterday said—called it shameful. You’ve said yourself that it calls into question the credibility of the Council. So is the Security Council not fit for purpose?

Oh, it’s clear that the Security Council fails far too often.  As I said, it failed in relation to the Malaysian airliner. It should have been a simple matter of saying, ‘We’re in favour of accountability,’ because there’s only one alternative, and that’s impunity for those who carried out this act. But big questions like Syria – five years now – 220,000-odd people have died, and the Council are having a discussion about chemical weapons, which has been a bit more fruitful. The humanitarian discussions take place, but actually, someone’s got to stop the fighting. And that’s where the big guys on the Council have got to get over themselves a bit. And we’ve tried to encourage that without being unduly rude about it, but we’ve been trying to encourage them to understand that the expectations of the international community are not being met. You can’t have this ongoing saga of Syria, Iraq, Yemen, Libya, with the Council declaring itself to be paralysed, and we’ve got to find a better way of getting the Council to perform.

So to that end – I mean, you’ve got lofty dreams to reform the veto, so why don’t you make a commitment right now that during our term on the Security Council, you will achieve veto reform, even if just at the margins?

I’d love to make that commitment, but I couldn’t guarantee I could carry it out. If I could, I would.

Because it’s too hyper-ambitious, is it?

Well, it’s ambitious, and we’re not going to get the five countries that have the veto to surrender it. No one believes that. For a start, any such proposal’s going to get vetoed, ironically, but there are ways of getting them to behave differently with the veto. The French have already made a start by saying they’ll voluntarily surrender the veto in situations where there are mass atrocities in prospect.

Yeah, they almost never use the veto anyway.

Well, that’s right. And the Brits have actually got quite a moderate view on this themselves. And so we’re working with them. We, as you know, hosted an informal lunch of the permanent reps of the Security Council countries to talk to them about not just the veto, but how we could try and get the Council to be more effective. There are a whole bunch of complex reasons why the Council isn’t effective, and the veto’s just one of them – it’s the biggest one, but it is only one. And we’re trying to work on all these angles in the time we’re on the council. We’re being ambitious. I’m not going to apologise for that.

Okay, I want to move on to Iran now. Critics say that the Iran nuclear deal is giving legitimacy to an illegitimate regime and going so far as to say that it’s strengthening one that is oppressive, brutal and even antis-Semitic. Do they have a point?

Oh, look, I think the Iran deal actually gets us to a point where if it’s ratified by the US Congress, we might see a resetting of relationships in the region and open the door to some sort of resolution on Syria in particular, and some of the other big problems in the region. You’ve got the same actors, actually, involved in most of these disputes one way or the other, and so if you can actually hit that reset button, all sorts of other things are possible. Now, I can’t say that I’m certain that the ball’s going to bounce in a positive direction, but it could. Certainly, I think it’s in Iran’s interests that they should seize this opportunity to reset relationships in the region. The sort of level of economic wealth that they are going to achieve as a result of the sanctions going gives them a chance to spend that money on good things or bad things. And I’m an optimist, and I hope it’s going to be the former.

You’re kind of avoiding my question, but you touched on it a bit there. Iran does fund terrorist organisations. Lifting economic sanctions could boost—release billions of dollars into their economy. They could use that to build a bomb in 15 years when the deal lifts. They could even build a bigger bomb because they’re got more money then, so surely that’s worrying.

Look, there’s plenty of room for negative interpretation on events that have taken place, but I guess the question that I keep asking is why would they bother spending so much time negotiating in Vienna and other places to come to an arrangement that is going to be difficult to manage politically, particularly for both Iran and the United States? You’ve seen the difficulties—

They do it because it’s billions of dollars.

Yeah, but actually, if they’re not serious about it, countries are going to notice. Those snapback provisions in relation to the sanctions sent a pretty clear signal – that if there’s no follow through, then there are consequences. You know, we know they’re involved in Syria; we know they’re involved in other trouble spots there. We need them now to accept that the lifting of the sanctions provides an opportunity that they have got to take, and they’ve got to shift the way they behave in the region as well.

What’s to say they won’t build a bomb in 15 years? Where’s the line that says ‘Iran will not have a nuclear bomb in 15 years’?

Yeah, look, I actually think the 10-year horizon’s probably not so important in this. I think that you’ll find out in the first few years whether the parties are serious about wanting to get on with each other, whether they actually can see that they’ve got better things to do with their time or their money than fight with each other. Again, we can’t be sure, but we’ve got to— if there’s a serious chance that we can see some significant improvement there, we’ve got to take it.

So what about trade with Iran, because there’s huge potential there, isn’t there, for New Zealand? Would you like to see trade boosted with Iran?

Yeah, New Zealand actually hasn’t been formally affected by the sanctions too much, because the sort of food we produce hasn’t been the subject of sanctions. But the impact of the banking sanctions on other countries has been that New Zealand banks which are offshore owned have been pretty much unable to handle the trade. So, yes, there’s a chance for New Zealand agriculture in particular, but other sectors as well, to do well in what is a pretty big sophisticated market. But, of course, everyone else is queuing up there too.

In the ‘70s Iran took 60% of our lambs, so there is potential there.

Yes.

And The Nation understands that big New Zealand companies like Fonterra, Tegel, Silver Fern Farms, they’re all looking for opportunities, so what are your hopes for New Zealand companies trading with Iran?

Look, those companies are mostly involved there now but not in the way and on the scale that they would hope. But, look, people have seen this opportunity coming.

What next for them? What are they going to get?

Well, I know that New Zealand Trade and Enterprise and the Ministry of Foreign Affairs have been giving a lot of thought to this. Fonterra have. All I can say to you is that if this thing does stick, and it’s going to take a while – there’s another few months to go before we see any sanctions lifted – but if that does happen, the opportunities are significant in the short-term and even bigger long-term.

So are there no concerns about boosting trade with a country with an abysmal human rights record and a country that funds terrorism?

Well, I mean, again, we approach these things on the basis that if we’re able to talk to other countries and trade with them, we’re better able to influence them. The question I always ask myself about these things is – if I do what’s proposed, will we become part of the problem or part of the solution?

So by trading with Iran, we’re somehow going to be able to persuade them to stop beheading people, to stop funding terrorist organisations?

Not within a week or two, but I think that is the impact. We see this in other jurisdictions as well –where countries see themselves having a stake in the international community, they start to accept its rule. Not immediately – takes time – but as I say, I think we become part of the solution if we have dialogue, if we have engagement.

And just a couple more questions touching on that. Benjamin Netanyahu is bitterly opposed, obviously, to the deal. He says that Israel weren’t at the table but were, in fact, on the menu. Is Netanyahu right to be concerned, or is he completely out of order?

Yeah, look, I’ve had a meeting with Prime Minister Netanyahu in Jerusalem only a few weeks ago, and I got the benefit of his views in significant detail and with some force. And, look, if you look at the map, you can see why Israel is concerned, but I don’t think they should make the mistake of thinking no one else cares about Israel’s security either. That’s something that’s been on everyone else’s minds, and I know the US, in particular, who have a strong security relationship there. We actually need Israel to try and see its way through the impasse that it has with many of its Arab neighbours. There is, in fact, now, if the Iran deal sticks, an opportunity—and if Iran follows through, proving its relationships in the neighbourhood, there really is a chance for Israel not just to find a peace with these countries but also to become a significant trading partner. We are one of the few countries that has very good relations with both Israel and Palestine. We need to put some value on that and make sure that we actually play a constructive role.

Just quickly on the Trans-Pacific Partnership, it’s in its closing stages across the country in Hawaii, but the deal for dairy has been described as ‘woeful’. How do we get from woeful to a win for New Zealand?

Well, I’m not up to date with what’s been happening there, but I have heard the stories that there needs to be significant improvement in the dairy deal on offer. I took the opportunity when I was in Washington to make sure that New Zealand’s very strong interest in seeing a fair deal for dairy was registered, but, look, a deal that doesn’t involve an opportunity for dairy is obviously not something that the New Zealand government would be keen on.