Lisa Owen interviews Foreign Minister Murray McCully

On Saudi sheep deal, McCully says that the “circumstances” around New Zealand’s live export ban – including discussions between NZ government, investors and Gulf governments – gave Hamood Al-Khalaf grounds to sue New Zealand government.

Owen: …so what was the legal basis for the lawsuit?
McCully: That will actually— The advice was that those circumstances outlined did provide such a basis—

Evidence of a lawsuit threat by Al-Khalaf can be seen in “what the officials in the Ministry of Foreign Affairs advised me of and what I observed from my own discussions”

Says legal advice on Saudi sheep deal belongs to Ministry of Foreign Affairs and Trade and it’s “a matter for the Ministry” whether they release it.

Says “window is going to start to open in July” for getting Israel and Palestine leaders back into negotiations and New Zealand will use its presidency to encourage progress.

“…the overwhelming impression you do have talking to both sides is that they’re not that far apart…The two parties could make surprising progress, but you’ve got to get them in a room, and that’s been the big problem.”

While Benjamin Netenyahu has rejected Security Council intervention in the peace process, McCully says Israel is “less allergic to the notion that the Security Council might try and bring the two parties together, and that’s the sort of thing that we’ve got in mind” as Security Council President.

New Zealand wants to “take forward” the French proposal that the permanent Security Council members surrender their veto when discussing “mass atrocities”

Says $11.5m New York apartment has been paid for by “selling or downsizing in some other places” and will “work very well for New Zealand”

Lisa Owen: New Zealand takes over the rotating presidency of the UN Security Council in July, and Foreign Minister Murray McCully is just back from meetings in the Middle East. But his moment of glory is being undermined by the Saudi sheep scandal. Since 2003, both Labour and National have refused to lift the ban on export of live sheep for slaughter, but complaints from a Saudi investor led to National setting up a farm in Saudi Arabia that cost taxpayers $11.5 million. Opposition parties are calling it a stitch-up. We’ll get to that shortly, but first the Foreign Minister says now is the moment to kick-start Middle East peace talks. In a speech in Dunedin last night, he went as far as to say Israel and Palestine ‘aren’t that far apart’. So when we spoke earlier, I suggested many would find that hard to believe.
Murray McCully: Look, I’ve been visiting on a reasonably regular basis for most of the time I’ve had this job, and the overwhelming impression you do have talking to both sides is that they’re not that far apart. One of the most difficult issues, of course, is what the land swaps might look like. You know, if you’re talking about 1967 boundaries plus or minus 6% or 7% or whatever it is, I think there’s general acceptance that that is something that they both have their own views about that aren’t too far apart. There are more difficult topics, like what is the future of Jerusalem. The issue of security for Israel is obviously a really thorny issue, but it’s one that’s been confronted in other places before. So, yeah, look, I think you can take a ‘glass half full’ or a ‘glass half empty’ view. I’ve always taken a ‘glass half full’ view, and I think that the two parties could make surprising progress, but you’ve got to get them in a room, and that’s been the big problem. They haven’t sat in a room. They haven’t had direct talks. Now, the New Zealand view on that has always been that the Security Council should play a role here, not to try and multi-lateralise a process that’s got to be led by the two principals but to give multilateral support to the two principals as they engage.
So in what way do you think New Zealand could help them get into a room?
Well, we’re a member of the UN Security Council for this year and next, and we think that’s where the action needs to be, if you like, led and supported from, and that’s simply because while US leadership is indispensable, it is not by itself, in my view, sufficient. We need to have the rest of the international community playing its role, and that’s where we think that the UN Security Council’s a pretty good place to start that conversation.
But the thing is with that, Mr McCully, the thing is that Netanyahu doesn’t think the UN has a place in this.
Yes, Mr Netanyahu and I have had that discussion directly on a couple of occasions. It’s not their first choice, but— and I think what they’re really allergic to is the idea that the Security Council might start the process by imposing a whole lot of conditions, conditions in their view that would favour the other side. I think they’re less allergic to the notion that the Security Council might try and bring the two parties together, and that’s the sort of thing that we’ve got in mind. Look, I think both parties can see that there are long-term benefits for them in getting together and finding a way forward. I think they can both understand that there are big problems for each of them if they don’t. And while it’s possible to look at the situation over the last year or two and say, ‘Well, things have just got worse,’ actually, if we don’t get them into a room now, they’re going to get worse still. They’ve got the prospect of the ICC—
If there was a will to push forward with this, wouldn’t it have happened 10, 20, 30 years ago?
Yeah, well, I mean, I’ve heard that said many times over, and there’s always a reason for delaying this process, as President Abbas said when I met him in Ramallah a few days ago. You know, we’re being told the Council can’t deal with the issue now because we’ve got to wait for the Iran talks to end. We had to wait for the Israeli elections. Then we’re going to have to wait for the American elections. Next thing it’ll be the elections in Zimbabwe we’ll have to wait for. So it’s air of frustration around the place, and I think that whatever difficulties you can observe from the past, let’s just focus on what can be done now and let’s focus on what the Security Council, of which we are a member, can bring to try and get the two parties into a room.
Can you get them around the table in the month that New Zealand is holding the presidency? Is that your ambition?
No. That’s not our ambition. The window is going to start to open in July for discussion around the Middle East peace process, but I think it’s more likely that we’ll see this extend – the discussions extend – into August and possibility September. We’re not connecting this in any way to our presidency, but we certainly intend to use our presidency to try and ensure that that window is, if you like, pursued by the parties and that we don’t find more excuses again for putting this issue off the agenda.
I want to talk about vetoes. The permanent Security Council members can exercise a veto against resolutions they don’t like. America, for example, has used it more than other countries to stop the debate, actually, on Israel-Palestine issues. Now New Zealand wants to scrap that veto. How do you get people to give up power?
Yeah, well, that’s obviously a pretty sensible question to ask, and the short answer is that waving a big stick around isn’t going to work here because the five players that have the veto are simply going to dig their heels in. Now, we have seen a glimmer of light on this, because one of those that hold the veto, France, have put forward an idea that they should all voluntarily surrender the veto by agreement in areas where the question of mass atrocities arises. And we think that’s a really constructive idea. It doesn’t involve anything binding. It’s something that the Security Council members, the P5, as they call them, the permanent members, should think about. So we’ve certainly encouraged the French idea. We simply think it should be—
Do you think you can get that done, though? Can you get that over the line?
It’s not going to happen next month. But this is a process that started in the 1940s, so I think that we need to take a realistic view of how we can take it forward. But it’s really important that we should do so, because if you look at most of the major conflagrations and conflicts around the world where the UN has proved to be impotent, it’s been because either of the use of the veto or the threat of the use of the veto; often the latter. And so we do need to find a way past this. If you look at the fact that last year the international community spent about US$10 billion- US$10.5 billion supporting the humanitarian needs of those affected by conflict and another US$8 billion supporting peacekeeping operations, you can see that you use a lot of resource much more effectively to support the world’s poor if we can simply stop the Security Council from being so impotent in the face of serious conflict.
Can you tell me what your other priorities are on New Zealand’s agenda for the presidency?
Yeah look we do get to have one big open event that’s not just the Security Council members but other countries can be involved in- and we’ve chosen to have an event that highlights the security challenges for small developing island states. So we’re saying we’ll hold an event which will give them a chance to talk about the security issues affecting them. That will include everything from people coming in and plundering their fish stocks to the challenges around climate change, small arms and other security challenges of that sort. And we think that’s a very important thing for us to do during our presidency. There’ll be other things that happen on the agenda that, if you like, hard-wired into the UN diary. A significant item will, of course, be the six-monthly rollover of the Cyprus Mandate. Cyprus has been around for 50 years, but for the first time we’re starting to see the prospect of talks between the Turkish and Greek going into groups, get together. The change in the leadership in the north made that possible a while ago, and the UN is actually leading for the first time a very constructive and positive process there.
Minister, I want to move on to another issue – the Saudi sheep farm. Now, you’ve said we needed to do this deal for this farm; otherwise we faced a lawsuit- potentially $20-30 million lawsuit. So what evidence have you got that this legal threat was real and still live when you went to Cabinet in 2013 wanting approval for this deal?
Actually, it’s not what I said. It’s what some media reported, and I’m not accusing TV3 of this-
Well, Minister, I’ve got the Cabinet paper right here, and in it you- it refers to the fact that the Saudi parties want compensation, $20-30 million for losses.
That’s correct. And if you look at the pages immediately before that, you’ll see that they highlight two or three other quite big problems first. So, yes, there was the issue of potential litigation by the Saudi parties against the New Zealand government, and as the paper records, that was a $20-30 million issue. We were advised-
So what evidence do you have-? What evidence did you have of that threat, that it was real and live?
Well, the paper records precisely what the officials in the Ministry of Foreign Affairs advised me of and what I observed from my own discussions. We had been asked to release the legal advice on that, and we’ve said- I’ve said that’s a matter for the Ministry. It’s their advice, and the Ministry said no, they’re not going to prejudice their position by doing so. But I want to take you back to the-
Who gave-? Who gave the legal advice, Minister? Who gave-? Who provided the legal advice?
Well, it’s the Ministry’s advice. Ask the Ministry. What I’m saying to you, though, is that-
But as the minister who went to Cabinet- as the minister who went to Cabinet with this proposal, wouldn’t you have looked at that? Wouldn’t that have been due diligence on your part to have a look at that legal advice?
Of course, but it is the ministry's advice, but I want to go back to your question. What I said to you is what I said to Cabinet that there were other bigger issues then the prospect of litigation, and they recorded — you've got the Cabinet paper there. Look at the couple of pages preceding it — they point to much bigger problems. The prospect of the Saudi— existing Saudi trade of $1.5 billion being impacted by this, the wider prospect of the GCC trade of $4.5 billion a year being impacted, and on top of that the fact that the GCC free-trade agreement discussions, which were very well advanced, had been brought to a shuddering great halt by this. That is a $5 billion to $6 billion a year problem we had to fix, so I wish people would look at the paper and report faithfully the fact that these were a mix of problems of which the potential litigation was actually by far not the biggest.
But this is really important, and I want to get it clear for our viewers here. So did you read the legal advice? You saw it. Who was it from and what did it say?
I'm not going to release the ministry's legal advice. It is theirs, and as far as the Cabinet—
Could you just tell us what was in it? Can you just explain what was in it?
No. What's in the Cabinet paper is the summary of it that was given to Cabinet. It wasn't drafted— the paper wasn't drafted by me. It was drafted by officials across a number of agencies, and I have every confidence in the veracity of the comments in the paper. It's over to the ministry—
So what was the basis for the legal action? Can you tell us what the basis for the claim was, then?
I can tell you that, in pretty simple terms, the Saudi parties had been, since the 1990s, investing in building up a cross-bred flock in New Zealand for exportation to Saudi Arabia. In 2003 by agreement, that practice was banned because of an unfortunate shipment experience out of Australia, but they were still told they should continue to invest and that the government of the day would set these matters right. That was reiterated to them again by both the Saudi government and the investors in 2007, and by the time they got to 2010 when the three-year rollover of the prohibition regulations came up. Relationships with not just the investors, and not just with the Saudi government, but with the other governments of the Gulf States have now become poisoned with this process.
But, Minister, with respect, none of those grounds that you've just listed— with respect, none of those grounds that you've just listed are legal grounds for a lawsuit, so what was the legal basis for the lawsuit?
That will actually— the advice was that those circumstances outlined did provide such a basis—
Against a particular minister? Against a particular minister or the government generally?
Look, this was advice to the Ministry of Foreign Affairs. They've got their own legal division, and it's a very experienced legal division. If the ministry wants to release any information, it's fully entitled to do so. I'm not going to do so on their behalf. That is not the way to deal with New Zealand's legal interests or New Zealand's international trade interests.
This matters because it prompted you to spend $11 million on a farm, didn't it?
Well, actually, you'll see from the paper that it was a somewhat more complex process than that.
Okay, well, this farm, can you describe it to me? What does it look like? Is there grass there? What is it like?
I have not visited the farm, and it's not my job to do so. My job is to make sure that the arrangements that have been put in place are lawful and that they are appropriate, and that they are agreed to by the authority of the Cabinet, and that's what's been done here.
Minister, Mr Al-Khalaf, he seemed to be under the expectation that we were moving towards resuming live-sheep exports. So is there any possibility that we could resume live-sheep exports for slaughter?
This whole process is, in my view, an acknowledgement that the New Zealand policy is very unlikely to change — certainly under this government.
Okay, well, Minister, just before you go, I want to ask you — there's a lot of criticism over the cost of this apartment in New York, $11 million; what's your response to that?
This is an acknowledgement that we're not going to leave New York. We're going to be players in the United Nations for a long time ahead, but we have been selling or downsizing in some other places so that we've got some funds to, if you like, reprioritise.
So you think this was a good call? You don't disagree with the decision?
This apartment is just across the road from the United Nations. It's not just going to be a place for the ambassador to live. It's going to be a place where they can hold meetings, where they can have representational functions. This will actually work very well for New Zealand, I'm sure.
Thank you very much for joining me this morning, Foreign Minister Murray McCully. Thank you.
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