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By John Helmer, Moscow

Eating sheep’s balls is an acquired taste, though if you’re from the Caucasus or Azerbaijan, the taste comes with your mother’s milk, so to speak. If you are an Australian politician, complaining in public that someone else is biting yours is an everyday thing.

Australia has always been sensitive below its belt, where the colonial and imperial powers – Great Britain, the United States, Japan (briefly), and China for the next millennium – like to keep a tight grip. The former prime minister, Kevin Rudd, has a hands-on relationship with China, too – his brother Greg operates a fortune cookie business in Beijing. That hasn’t inhibited Kevin from promising Washington he is ready to go to war with China if the US Government thinks that’s a good thing.

Rudd was removed from the prime ministry in June 2010 by Julia Gillard, a person for whom sheep’s balls are more of a predatory target than a romantic or cuisinary one. That too sums up her career ambition – she doesn’t have them, so she eats those of them who do. This used to make for nationwide amusement; but according to the Australian polls, neither Gillard nor Rudd can win the next Australian election, which must be held before November of next year.

The two of them dislike Russia with a vigour that is old-fashioned Churchillian. Early this month, Rudd portrayed himself to the local media, hands waving around Foreign Minister Sergei Lavrov to demonstrate just how big his, I mean Australia’s balls are in the Pacific.

Rudd was telling Lavrov that Australia’s plans for regime maintenance and regime change on the Pacific island map don’t allow for a Russian interest.

Rudd went on to tell Lavrov it is inappropriate that Russia should deliver foreign aid to the Fijian government, and stand in the way of the Australian plan to restore democracy to the island, replacing Prime Minister Frank Bainimarama, a naval officer, triple putschist and the dominant politician on the island for more than a decade. Rudd was especially angered by the idea that Russia might be negotiating fishing and mining rights agreements, writing cheques for the island treasuries, etc., in return for island votes in UN debates on Georgia, and recognition of the Russian-backed states in the Caucasus, Ossetia and Abkhazia. Uncorroborated reports in Australia and New Zealand suggest the Kremlin may have authorized $50 million per big island.

“This kind of cheque-book diplomacy undermines development assistance in the region,” announced one of Rudd’s subordinates. Rudd should know – here’s the stub of the Australian cheque-book for the islands for 2008-2009:

The most recent report by the Australian government’s Pacific Island philanthropy AusAID shows that Canberra has been increasing its payouts to every one of the islands, and by large amounts. Fiji’s cheque has grown by 13% since 2009; Tonga’s is up by 52%. The total is now more than $1.1 billion per annum.


Country / Regional Programs Estimated outcome 2010–11 $m
Papua New Guinea 454.1
Solomon Islands 269.1
Vanuatu 59.1
Samoa 44.8
Fiji 36.0
Tonga 32.0
Nauru 29.3
Kiribati 31.5
Tuvalu 8.8
Cook Islands 4.5
Niue 4.7
North Pacific 8.4
Regional and Other Pacific 134.1
Pacific 1 116.3

In 2010 AusAID spent a total of A$4.4 billion worldwide, growing at a rate of 16% per annum. That year Russia spent $472.3 million, down 40% from the previous year.

Geostrategy and buying democracy aren’t Gillard’s best subjects. Her forte is arithmetic and home economics — counting votes and money.

Her interest in Russia has found next to no public articulation. When she met President Dmitry Medvedev in November 2011, almost nothing she (or he) said has been reported by either side. That doesn’t mean that Gillard didn’t express her particular interest in Russian business.

At the behest of BHP Billiton, the oligarch of the Australian economy, Gillard ratified an agreement negotiated by a predecessor prime minister allowing Russian refineries to process Australian uranium ore into nuclear fuel. This is a money-spinner for Sergei Kirienko’s Rosatom and the internationally listed Russian uranium miner, ARMZ.

Australian government support for Georgia in its abortive war against Russia in August of 2008 had led to delays in ratification of that deal.

Gillard has also publicly pushed for the lifting of the Russian ban on imports of kangaroo meat. One reason is that the flooding of the northeastern state of Queensland in 2010 generated a regrowth of savannah grasses on which the kangaroos feed. This in turn has triggered more than 50% growth in the numbers of red and grey kangaroos, and wallabies. They are eating their way across the cattle runs owned by farmers who have been voting in increasing numbers against Rudd’s and Gillard’s Australian Labor Party.

There is an umbilical link between Gillard’s electoral prospects, the number of kangaroos, and Russian demand for meat. Until the ban on kangaroo imports was imposed in 2009 the Russian market accounted for more than half of Australia’s kangaroo exports. Most of the 5,300 tonnes of kangaroo, which were shipped to Russia in the year before the ban, went into sausage plants in Russia’s fareastern Primoriye region, where domestic beef and pork production is too small to fill the sausage skins. In December, according to John Kelly, head of the Kangaroo Industry Association, “until the Russian Government market access suspensions are lifted, the kangaroo population will continue to spiral out of control. A ministerial envoy should be sent to Moscow to get the issue sorted.”

Right now, though, Gillard and Rudd are the wild beasts out of control. Russian and Australian meat traders say there will be no action on the kangaroo ban before a new government is put in place by Vladimir Putin after the presidential election in March. That will be too late — either for Rudd, who represents the Griffith constituency in Queensland, or Gillard, from the Lalor constituency in southwestern Victoria. They have called a parliamentary party vote on their leadership in Canberra next week. If kangaroos in the constituencies are allowed proxy votes, Rudd will win.

More quietly than Gillard, Rudd or their spokesmen have acknowledged to date, the Australian government has a special relationship with Oleg Deripaska, who is the largest foreign investor in Australia’s bauxite and alumina industry, and the principal offtaker of its exports. For reasons that aren’t quite transparent, Deripaska enjoys more favour than Vladimir Potanin, who has invested much more in Australia than Deripaska, through the Western Australian mines owned by Norilsk Nickel. In 2007, Potanin paid US$5.3 billion for the Australian and South African assets of LionOre Mining. The same year, the Ukrainian Gennady Bogolyubov paid A$1.2 billion to buy manganese, nickel and chrome mines of locally listed Consolidated Minerals, also in Western Australia. Potanin’s and Bogolyubov’s investments in Australia have dwarfed Deripaska’s; in 2004 he paid US$401 million in cash, plus US$60 million in assumed debt, for a 20% stake in Queensland Alumina Limited.

Deripaska has also buttered up the Australian ambassador in Moscow, Margaret Twomey, along with the Queensland premier, Anna Bligh. He has tried lobbying Marius Kloppers of BHP to neutralize the long-held suspicion on the part of Rio Tinto’s aluminium branch that he is a high-risk business partner. His Australian lawyers issue libel litigation threats to keep the local media tame.

Even they have published the suspicion that Deripaska has been playing bluff and double-cross with Gillard, Rudd, and Bligh, threatening that if they won’t agree to his demands for new bauxite mining rights in Queensland, he will go to Fiji instead. The cheque-book diplomacy in Fiji which Rudd has been complaining of to Lavrov may be banked by Deripaska.

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