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Lateline -

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Tonight - a tale of two cities - state controlled Iranian TV, says the streets of Tehran are calm.

A number of people gathered in front of Iran's parliament to protest the results of the the results
of the election have been dispersed by security forces.

Reports on the Internet tell a different story.

They were beating people, like, it was a massacre, they were trying to beat people so they would
die. This was exactly a massacre, you should stop this, you should stop this.

This Program is Captioned Live.

Good evening, welcome to Lateline, I'm Tony Jones, parliament rises after one of the weirdest weeks
that anyone can remember. There'll be more twists and turns in the Godwin Grech fake email affair
before it's over, but many important questions could remain unanswered until the key players write
their memoirs. We can be confident about one thing historical footnotes will record his reliance on
the email as the biggest blunder email as the biggest blunder in Malcolm Turnbull's leadership. If
it's true, as reported, If it's true, as reported, that there was a universal view in his
leadership team that the email should not be used, the damage to his credibility may be serious.
The Government has spilt blood in the water and early election talk is growing louder, for a damage
assessment we'll be joined by former Liberal leader John Hewson, and a key architect of Labor's
last election victory Tim Gartrell. First the headlines - paying a toxic debt Air Force personnel
exposed to poisonous chemmicals to be compensated. Opium and the Taliban, an Australian writer's
eight month urn journey into Afghanistan's heart of darkness, on Lateline Business, a $2 billion
write-down BHP Biliton ready to sell sell its Ravensthorpe Zinc

Iranian MPs snub President's party

Iranian MPs snub President's party

Broadcast: 25/06/2009

Reporter: John Stewart

Media reports from Iran have said more than one third of the country's MPs snubbed an invitation to
celebrate President Mahmoud Ahmadinejad's re-election.


TONY JONES, PRESENTER: More than a third of Iran's MPs appear to have snubbed an invitation to
celebrate President Mahmoud Ahmadinejad's election win.

Local media reports say that 290 MPs were invited to the victory party but 105 didn't turn up.

The split may be a sign that the harsh crackdown on protesters is creating divisions within Iran's
political leadership.

John Stewart reports.

JOHN STEWART, REPORTER: According to Iran's state controlled television service the streets of
Tehran are calm and under control.

STATE-RUN PRESS TV: A number of people gathered in front of Iran's Parliament to protest the
results of the election have been dispersed by security forces.

JOHN STEWART: But the latest images from Tehran posted on YouTube tell a very different story. With
most foreign media forced out of Iran, these pictures can't be authenticated but they're backed by
eyewitness accounts of an increasingly brutal crackdown by the authorities.

A distraught woman who spoke to CNN said protesters had been attacked as they went to an Opposition

IRANIAN WOMAN: All of a sudden some 500 people with clubs and wood, they came out of here. They had
masks and they pulled into the streets and they started beating everyone and they tried to beat
everyone on Sadi Bridge and throwing them off of the bridge.

JOHN STEWART: The crackdown appears to be working, with reports that fewer people are taking to the

IRANIAN WOMAN: They were beating people, like hell. This was a massacre. They were trying to... and
this was exactly a massacre. You should stop this, you should stop this.

JOHN STEWART: News agencies are reporting that since the election Iran has jailed more than 140
political activists, including 70 academics, and at least 17 people have been killed.

The Iranian Government is blaming outside interference and Western-backed infiltrators for the

ALI FAZLI, REVOLUTIONARY GUARDS: The masterminds of this sedition who were captured in team houses
and documents discovered shows their link with Western, European and Zionist backers.

JOHN STEWART: There has also been no sign of Opposition Leader Mir Hossein Mousavi for several days
now. Iran's Supreme Leader Ayatollah Khamenei says neither the system nor the people will give in
to pressure.

But some clerics are beginning to speak out against the Supreme Leader. Dispute being under house
arrest, one of the top Iranian dissident clerics, Grand Ayatollah Hossein Ali Montazeri, warned the
nation's rulers that their continued suppression of protests could destablise the regime. Some
commentators believe the ultimate challenge to the Supreme Leader will not come from the streets
but from within.

John Stewart Lateline.

Baghdad bombing kills up to 70

Baghdad bombing kills up to 70

Broadcast: 25/06/2009

Reporter: Tony Jones

Nearly 70 people have been killed and over 130 injured after a bomb exploded in a Baghdad market in


TONY JONES, PRESENTER: In Iraq, more than 70 people have been killed by a bomb at a crowded market
in Baghdad.

More than 130 others were reported injured.

The market was in the capital's mainly Shiite district of Sadr City, and the bomb was hidden in a
vegetable cart.

The attack comes less than a week before US troops are due to pull out of Iraqi towns and cities.

But the message from the United States is that the plan won't be affected by the recent upsurge in

be affected by the upsurge in violence.

Questions raised over Turnbull-Grech meeting

Questions raised over Turnbull-Grech meeting

Broadcast: 25/06/2009

Reporter: Susan McDonald

The heat has again been on Malcolm Turnbull after it was revealed he had a meeting with Treasury
official Godwin Grech before Mr Grech gave evidence at a senate inquiry into the OzCar scandal last


TONY JONES, PRESENTER: At the beginning of this week the Opposition had high hopes, but they've
come crashing down, with no Government scalps over the OzCar affair, and its Leader under pressure.

The Coalition is still trying to skewer the Treasurer - saying he gave special treatment to the
Prime Minister's car dealer friend.

But today the heat was back on Malcolm Turnbull.

It's been revealed he had a meeting with the public servant Godwin Grech before Mr Grech gave
damaging evidence against the Prime Minister at a Senate Inquiry last week.

From Canberra, Susan McDonald reports.

SUSAN MCDONALD, REPORTER: The carnival is over. And the caravan moves on. But the OzCar affair
that's screeched through Parliament this week kept delivering right to the end.

MALCOLM TURNBULL, OPPOSITION LEADER: Can the Prime Minister confirm...

KEVIN RUDD, PRIME MINISTER: As the Leader of the Opposition has so many many many questions to

SUSAN MCDONALD: The ABC has confirmed Malcolm Turnbull had a meeting with the Treasury Official
Godwin Grech, sometime after his first Senate testimony about Kevin Rudd's car dealer friend, John

GODWIN GRECH: The representations that were made by both the Prime Minister's Office and the
Treasurer's Office were professional.

SUSAN MCDONALD: But crucially before his second.

GODWIN GRECH: I certainly had the impression that he wasn't your average constituent.

TONY ABBOTT, OPPOSITION FRONTBENCHER: Malcolm Turnbull has said that he knows Godwin Grech. He's
said that he has spoken to Godwin Grech and what's wrong with that.

SUSAN MCDONALD: It was the Liberal Senator Eric Abetz who played chief inquisitor at the enquiry.

CHRIS EVANS, LABOR SENATE LEADER: Did Senator Abetz meet with Mr Grech before the hearings? Did he
seek to misuse those hearings? I think he's got to explain, was there are conspiracy involved

SUSAN MCDONALD: It's been reported Senator Abetz was at the meeting with the Treasury official who
police suspect forged an email purporting to show the Prime Minister was seeking favours for a

Senator Abetz's office has refused to comment on the report for reasons that mirror Mr Turnbull's

ERIC ABETZ, LIBERAL SENATOR: If something is given to me confidentially, it will remain so with me,
even if it becomes uncomfortable for me.

CHRISTINE MILNE, GREENS SENATOR: What is very clear now is that the performance from Senator Abetz
in the Estimates was stage-managed performance.

SUSAN MCDONALD: The Senate tried to set up an investigation into Senator Abetz's conduct in the
OzCar hearing, but the attempt was blocked by the Opposition.

ERIC ABETZ: Are you really wanting a Senator to breach a confidence and pursue that?

SUSAN MCDONALD: The Federal Police investigation gathers pace. Two of the Prime Minister's staffers
have been interviewed, his press secretary Lachlan Harris and his economic adviser Andrew Charlton.
The Government says both fully cooperated.

JOE HOCKEY, SHADOW TREASURER: My question is to the Treasurer...

SUSAN MCDONALD: Down but not out, the Opposition ended the week the way it began, zeroing in on
Wayne Swan's treatment of John Grant's case.

JOE HOCKEY: The Treasurer personally spoke to only one John Grant from John Grant Motors.

SUSAN MCDONALD: Tony Abbott had the Prime Minister in his sights again over a fundraiser for Kevin
Rudd seven years ago attended by Mr Grant.

The Government took the high moral ground.

KEVIN RUDD: Those opposite have not asked a single question on the economy. Not a single question
on families, not a single question on education.

SUSAN MCDONALD: They'll have to wait until after the six week winter break, when the Opposition
plans to regroup.

ANDREW ROBB, OPPOSITION FRONTBENCHER: Well there's better weeks, yes. But these things happen in
politics, you know. You get the good with the bad.

SUSAN MCDONALD: There will be little respite for Malcolm Turnbull. In the course of the winter
break police, the Auditor Generals and parliamentary investigations all promise precious details
needed to piece together a clearer picture of the OzCar affair.

Susan McDonald, Lateline.

Friday Forum with John Hewson and Tim Gartrell

John Hewson and Tim Gartrell discuss OzCar

Broadcast: 25/06/2009

Reporter: Tony Jones

Former Liberal Leader Dr John Hewson and the chief executive of AusPoll Tim Gartrell join Lateline
to discuss the OzCar scandal.


TONY JONES, PRESENTER: We are joined in the studio by John Hewson, former Liberal leader and Tim
Gartrell, until recently Labor's national secretary, one of the masterminds behind Kevin Rudd's
2007 election victory and heading up market research company Auspoll.

John Hewson, first to you, how much damage has the fake email affair done to Malcolm Turnbull's

JOHN HEWSON, FORMER LIBERAL LEADER: Well it's hard to conclude at this stage, there's a lot to go,
a lot to unfold, and with the police inquiry who knows how long it will go, it could go for some

Clearly his judgment has been called into question, we'll have to see how it goes.

The tragedy is he had a really good case against Swan, he had a case to answer, it got lost in all
the intrigue and miscalculations of the strategy.

TONY JONES: You say his judgment has been called into question, on what issue?

JOHN HEWSON: I think people... what was his role in relation to this email, what did he know, what
didn't he know, his failure to answer that, relying on the email to some extent. They are all
elements, there are probably 10 or 12 different ways in which people are now looking at it, and
it's easy to be smart after the event, going in saying he should have done this or that. The way
things are done few in politics is very few people are involved in these strategic decisions, they
call it as they see it at the time.

TONY JONES: You could see a collective slumping of shoulders, you sensed the mood change through
the course of the week. It was a bad look, how hard is it to recover from?

JOHN HEWSON: They can recover, they are going into six weeks of the long break, where many of them
will go away and overseas, issues will change and come and go. The police inquiry I imagine will
continue, it will be a constant reminder.

Andrew Robb summed it up saying it wasn't the best week they'd had.

TONY JONES: He looked grey faced.

JOHN HEWSON: He has that capacity, he obviously wasn't part of the strategic decision we were
talking about.

TONY JONES: Tim Gartrell, what do you say, from the other perspective. The Government certainly
looks like it smelt the blood in the water of a badly wounded opponent.

TIM GARTRELL, CEO AUSPOLL: The best thing for the Government, this it's not about this week, but
the next year and 18 months. With Peter Costello going, they had to pick a moment to start to train
the guns on Malcolm Turnbull. That's what they started to do.

TONY JONES: Malcolm Turnbull picked the moment - just the wrong one or issue.

TIM GARTRELL: He turned the gun on himself basically or it blew up in his face. They are going to
start setting some themes about Malcolm Turnbull, he's in a rush, he's impatient. Is he a bit of a
risk? All important things in the lead up to the election. That's the long take. There's little
event that have happened, they are starting laying down markers for the campaign.

TONY JONES: One of the markers was an actual Mark, Mark Latham. The suggestion that he had the
appearance of failed Labor leader, one of their own. Extraordinary when you think about it.

TIM GARTRELL: It's seared on the memory of a lot of Labor people what happened in 2004, the way the
Liberals managed to very cleverly get the notion of risk into the campaign, make it about economic
risk but really about the character of Mark Latham, that's what you are seeing now, that's why you
had a seasoned campaigner like Anthony Albanese going very directly down the Mark Latham route.

TONY JONES: Is that a danger, when you hear the strategy as it's laid out, it has a ring of

JOHN HEWSON: There's a bit of wishful thinking in what Tim just said. Economic events will run
significantly against the Government, issues of rapidly rising unemployment, a million people
unemployed, for a guy representing the interest of working families, that will bite, and those
issues will make it more difficult for the Government. They'll do what Tim says, tagging Malcolm,
position him, try and paint him in a particular light. The main game, and the big thing about this
week, is an incredible waste of time from the point of view of the big issues, like the economy...

TONY JONES: Which the Government has consistently said through Question Time, as they tried to
deflect the initial attack from the Opposition.

JOHN HEWSON: You go and talk to the punters, they'll tell you - they are over this, they are long
past this issue, it's only of interest to a few people in Canberra, a few media and a few
politicians. The big issues are there, as unemployment rises and the myth of us having avoided a
recession evaporates, life will be tough for the Government and Malcolm will have a chance to
re-establish his position, going back to the main game: the debt and deficit issue.

TIM GARTRELL: But John people are going to start thinking about Malcolm Turnbull and start to see
him as an alternative leader, that's why I made the comment and why the Labor Party and journalists
and others will start focusing more and more on Malcolm Turnbull, there's no other alternative,
he'll be the leader at the next election.

TONY JONES: These themes are not only picked up by the Labor Party, but the media and indeed it
some Liberals who are backgrounding journalists, the impetuosity, the strong will causing him to
ignore the advice of others, those kind of issues are coming up from his own people evidently.

JOHN HEWSON: It's unfortunately something that happens more on the Liberal Party side than the
Labor side. There's still a few aspiring to greatness behind him, but as time goes on they'll pull
together behind him. Some of those weaknesses he got to make strengths, his toughness, his focus,
his capacity to deliver an argument and to argue a case. He has to turn what they are trying to
make weaknesses into strengths. It's part of the game and it's what you'll see over the next 12, 18
months or not that long, an early election still I think is on the cards.

TONY JONES: I asked this about the senior Liberals, I said at the beginning it's been reported that
there was almost a universal view in the leadership team that the email should not have been used,
so the overreaching, the impetuosity comes up, do you see it in him, they are genuine flaws that he
could possibly turn to his advantage, they are flaws, are they not?

JOHN HEWSON: They are features of Malcolm's character, they can be strengths as much as weakness,
it's true of any of us. The fact that the leadership team now, ex-post thinks it's a problem to use
it, I wonder how many in the beginning... when the news came through, here is the killer email, how
many would have said, "We won't use it, put it to one side", I think it's so easy to be wise after
the event and there's an element of that pretty pronounced in the Liberal Party all the time.

TONY JONES: Tim Gartrell, where do you think this will go now, this particular case, the faked

TIM GARTRELL: As John said, the whole police investigation is going to roll out. We won't hear a
lot about it daily, because Parliament is not sitting for another six or seven weeks, but we'll
hear about it as more news rolls out of the police investigation and all the rest.

TONY JONES: It was reported today, of course, that Malcolm Turnbull and Senator Eric Abetz, the
very man that was going to cross-examine Godwin Grech, actually met him in a secret meeting prior
to him giving that crucial evidence last Friday.

It's not illegal, but it does appear wrong, you don't know what happened in that meeting. There are
an awful lot of questions still unanswered.

TIM GARTRELL: My question is why is the leader, why is the Opposition Leader involved in such an
early stage in these investigations? John, when he was Opposition Leader took things to the Labor
Party, I was involved in Opposition, in researching documents and a lot of other people Senators
Ray and Faulkner would get into this process, it was a long drawn out process, people were very
careful. One thing you did was didn't jump the leader in quickly you let it go through the Senate
slower, much slower than Senator Abetz has done, you create a bit of a firewall but you have to
make sure the documents are genuine. I talked to a senior person today involved and they said 80
about per cent of documents coming to them they never used because they were worried about
authenticity, sources, that stuff.

JOHN HEWSON: You can't do too much homework. I ran three of these issues in my time, the gold lunch
in Western Australia, the foundation of WA Inc with Hawke at the time. The whiteboard with Ros
Kelly, and the Marshall Islands and Graham Richardson. In the third case, I got a brown paper
envelope full of emails, I wasn't sure if they were or weren't valid. We didn't run on them, but
questions. Not emails, faxes. The answers to the questions contradicted the faxes, the faxes then
disproved the answer, and day after day you chipped away. You can't do too much homework. As Tim
says you have to be sure before you go...

TONY JONES: This is the central flaw, it appears that the homework, the checking, the veracity of
this wasn't done, the Leader himself was involved in sitting down with the main source.

JOHN HEWSON: I go back to my point, put yourself in his position, you get an email, you are pretty
sure it's authentic, you are lead to believe it's authentic, maybe you put Eric Abetz out there,
let him have a run, if he falls off, bad luck. But the point it...

TONY JONES: You wouldn't have sat with actual sources in secret meetings?

JOHN HEWSON: No, you always have to operate, as I used to say to my staff, if you are not prepared
to read it on the front page of 'The Australian' don't do it, don't say it or be part of it. I
think you have to be very careful as to the process, and we don't know whether there's anything
wrong with this process or not.

TONY JONES: What about the actual propriety of sitting down with someone about to give damaging
evidence. First of all, the man who is going to cross-examine him sits down and gives the answers,
the context changes dramatically from what he said in his first appearance before the Senate on
June 4th, to the one last Friday. On the first appearance he says nothing wrong happened, everyone
behaved with perfect propriety to me as a public servant. By the next appearance he's saying
completely different things. It looks very bad.

JOHN HEWSON: It does, it looks pretty dicey across the board, and who knows who did what and who
said what and who attended what. The advantage of the police inquiry as a legitimate police
enquiry, is it will investigate all of that.

The government doesn't come out well, Treasury doesn't come out well either. There's a lot of water
to go under this bridge. Who knows where that will go.

TIM GARTRELL: I think the Government probably came out ahead this week, John.

TONY JONES: Look, I mean, you'd have to say that. The Government is clearly sort of cock-a-hoop.
One of the questions is whether they will now be seriously contemplating taking advantage of this
with an early election.

TIM GARTRELL: I am not a believer in early elections, that they happen that regularly.

TONY JONES: Double dissolution election gives them a chance to get back control of the Senate.

TIM GARTRELL: There's a three-month trigger, it's arguable what happened with the delaying of the
CPRS legislation ... there's always a long way to go with these things, people always start talking
about early elections. I think there'll be an election late next year.

TONY JONES: What if the first vote happened in August on the climate change legislation, the second
vote before the end of the year, what's the earliest possible time after that?

TIM GARTRELL: Once the three months triggers, you're looking at December, so you're probably
looking more like February, people don't want to campaign over Christmas, so February next year.

That's on the cards.

TONY JONES: February/March is what people behind the scenes are saying as the main date, where you
could have a double dissolution election, that sounds about right to you?

TIM GARTRELL: Yes, but I think the government will go past the real date, the 16 August, where they
can start calling a normal election, half Senate, full house election.

JOHN HEWSON: I think the point about the ETS is the only way they'll get that passed is with a
double dissolution, joint sitting of both houses to get it through. Inevitably that'll be the case,
I don't think the positions will switch. The trigger will be there, it's whether they use it.

Go back to the economic scene, rapidly rising unemployment, increasing evidence of debt, pressure
on debt and interest rates, the probability of an early election is high.

TIM GARTRELL: John, the economic news is bad around the world, but the recent news today is that
Australia is doing pretty well. I think that's got to be factored in.

JOHN HEWSON: We are just later into it, our bad news is to come, the fact everyone is relieved we
didn't have a technical recession, we'll have one. Go back to 1990. We had a negative quarter, then
one positive quarter, "No technical recession". And then two consecutive quarters of negative
growth and the recession we had to have as Keating said.

TONY JONES: Let's imagine a double dissolution election in February or March, what happens?

JOHN HEWSON: Malcolm can make that a contest.

TONY JONES: Even now, when he's seriously damaged his own credibility?

JOHN HEWSON: He can be seen to rebuild and regroup and to go on to the attack. Focusing on the real
issues. Out there the last week to most people has been an incredible waste of time, a game
politicians play at the expense of the rest of us.

TONY JONES: Who will they blame for the waste of type, the Government or the Opposition, who?

JOHN HEWSON: They'll blame politicians and go back to the issues, who is making a stand who is
contributing on issues that matter. There's so many issues that matter, they'll get worse as the
economic conditions deteriorate.

TONY JONES: Tim Gartrell?

TIM GARTRELL: I don't necessarily think so, I think the stimulus package is having a positive
impact, people in tough times turn to incumbent governments and people with first-term Governments
in tough times turn to those governments. I don't think the rougher times will necessarily
translate to people rushing towards the Liberal Party and rushing towards Malcolm.

TONY JONES: Final quick question for you. The Government got out from under a potential scandal.
Have they learnt a tough lesson not to do anything that appears to benefit a political friend?

TIM GARTRELL: People have to be careful. I think the case against Wayne Swan is not that strong.
Lots of Ministers talk to people and then refer them to the department. That's all that happened
here. He referred this guy to the processes in Treasury, the guy hasn't got anything out of the

TONY JONES: Quick response.

JOHN HEWSON: I think you are better off being a mate than not a mate in that process.

TONY JONES: John Hewson, Tim Gartrell, thank you for joining us tonight.

JOHN HEWSON: Thank you.

TIM GARTRELL: Thank you.

Inquiry calls for payments to F-111 maintenance personnel

Inquiry calls for payments to F-111 maintenance personnel

Broadcast: 25/06/2009


A parliamentary inquiry has recommended that an ex-gratia payment be made to Air Force personnel
who were poisoned by toxic chemicals while working on F-111 fuel tanks


TONY JONES, PRESENTER: Air Force personnel poisoned by toxic chemicals expressed relief that a
Federal Parliamentary Committee recognised their plight. The personnel working in the confines of
the nation's F-111 fuel tanks over several decades suffered a range of debilitating medical

Today the committee recommended ex-gratia payments should be made to everyone that worked on the

David Mark reports.

DAVID MARK, REPORTER: They were the pride of Australia's skies for decades, but the nation's fleet
of F-111s had a fundamental design flaw, their fuel tanks leaked, so for 27 years thousands of Air
Force personnel used toxic chemicals to remove and reapply a sealant to stop the leaks, they called
themselves the 'The Goop Troop'.

DAVID GRADY, EX-RAAF: Amberley on a hot day in summer is uncomfortable. When you are inside an
F-111 fuel tank, which is extremely cramped at the best of times working inside there with
chemicals, and fuel that had not been fully depuddled, was rather horrendous.

DAVID MARK: David Grady worked on the so-called de-seal/re-seal program in the late 1970s. Nowadays
they use protective equipment. From 1973 until 2000, it was a very different story.

DAVID GRADY: I had to take off my shoes and socks, and get into the aeroplane, and then basically
all I had on was shorts on in the summer, and then a T-shirt on in the winter.

DAVID MARK: The toxic chemicals took a devastating toll on David Grady's health.

DAVID GRADY: It went into headaches, with lung problems, I had bowel problems, and then suffered
from depression.

DAVID MARK: He's not the only one.

STUART ROBERT, LIBERAL COMMITTEE MEMBER: Over time it became evident that men were getting sick and
were suffering from a whole range of ubiquitous and unknown illnesses.

DAVID MARK: A 2004 report into the health effects of the de-seal/re-seal illnesses found many
suffered medical continues: skin conditions, neurological symptoms, erectile dysfunction and mental
health disorders. Some died from cancer, others have taken their own lives.

DAVID GRADY: At times it's suicidal, really, that was because of the delays in Department of
Veteran Affairs, in their false promises, and leading up to the ex-gratia page.

DAVID MARK: In 2005 the then minister for veterans affairs De Anne Kelly announced some of the
workers could receive an ex gratia payment of up to $40,000. But David Grady was one of 2,000
de-seal/re-seal workers not eligible for the money, and the strain has been tough for his whole

AMANDA GRADY: It's been difficult. But deep down I have known that David could pull through it, and
that he did have the strength to do it.

DAVID MARK: Today a report was tabled in Federal Parliament recommending a change.

ARCH BEVIS, LABOR COMMITTEE CHAIRMAN: The committee's recommendations made clear, it doesn't matter
what unit you were in, when you did the work. As far as we are concerned if you did the work you
qualify for the support of that scheme.

DAVID MARK: That means access to the payment, counselling and family support for those that missed

ARCH BEVIS: For the 30-odd years that this was being done, they are owed an apology, I think, for
what they were put through.

Relief that for once and for all we might be able to put this whole thing behind us.

DAVID MARK: The victims are hoping that Parliament will accept the recommendations as soon as

David Mark, Lateline.

Afghan opium production decreasing: UN

Afghan opium production decreasing: UN

Broadcast: 25/06/2009

Reporter: Steve Cannane

The UN drug report has revealed opium production in Afghanistan is falling, but the country still
produces 93 per cent of the world's supply.


TONY JONES, PRESENTER: the United Nations Office on Drugs and Crime has released its world drug
report revealing opium production in Afghanistan fell last year and is expected to fall again this
year. But despite the drop, 93 per cent of the world's opium supply still comes from Afghanistan
and according to an Australian journalist studying the drug trade there, until farmers are provided
with viable alternatives, eradication won't be possible.

Steve Cannane reports on the eight-month journey into Afghanistan that Gregor Salmon took while
writing his new book 'Poppy'.

STEVE CANNANE, REPORTER: Gregor Salmon spent eight months following the opium trade across
Afghanistan. His book 'Poppy' is based on interviews with opium farmers, police and politicians.

Last year's opium crop was 7700 tonnes, the second biggest on record. While some provinces boast
they are poppy free, Gregor Salmon thinks the eradication program will fail

GREGOR SALMON, POPPY AUTHOR: The thing about eradication is it sounds great, you go and smash the
crop. It's like saying to Queensland cane farmers, "Don't grow sugar cane", you can imagine the
response, it would be outright hostility, there'd be resistance, and there'd be demands for you to
provide suitable and concrete alternative plans.

STEVE CANNANE: Today's UN report says opium cultivation fell in Afghanistan by 19 per cent in 2008.
But if you read the fine print, the amount of opium produced went down by only 6 per cent due to
higher crop yields.

Afghanistan is under pressure to stop the flow of heroin onto the streets of Europe and North
America. And that has led to poppy eradication programs. But this farmer from the Nangarhar
Province says he has no choice but to grow poppies.

FARMER TRANSLATION: We have no facilities, we need a proper irrigation system, we don't need to
grow this, this is poison. If we put it in our mouths we'll be dead, we have no choice only to grow
this because it needs less water. Wheat does not make sufficient profit to cover the cost.

GREGOR SALMON: These farmers are subsistence farmers, they are not paying off a Lexus, so what they
plant is to enable them to feed themselves and their family. The impression I got from farmers when
I put to them what eradication keeps occurs, and no follow through in aid. They say, "We'll turn to
the Taliban."

STEVE CANNANE: The International Monetary Fund estimates that 3.3 million Afghans or 12 per cent of
the population are involved in opium cultivation. Over 50 per cent of Afghanistan's GDP comes from
the crops.

Drug money not only helps fund the Taliban, corrupt police and politicians take their cut as well.
Gregor Salmon spoke to a number of Afghan leaders, convinced that President Hamid Karzai's brother
is one of those making big money from the drug trade.

GREGOR SALMON: With regards to Ahmed Wali Karzai, I spoke to a number of MPs, and I spoke to tribal
Elders from Kandahar, they said that they firmly believe that he was the drug kingpin of the south.

STEVE CANNANE: Ahmed Wali Karzai is the Chairman of the Provincial Council in Kandahar. In October
last year the 'New York Times' reported that top officials in the White House believed he was
involved in drug trafficking.

Journalist Tom Lasseter confronted Ahmed Wali Karzai with these allegations at his home in Kandahar
last month.

TOM LASSETER, JOURNALIST: Ahmed Wali Karzai started to get upset. Then he cut the interview short,
and then as I was leaving his house, he started yelling obscenities and threatening to beat me.

STEVE CANNANE: Tom Lasseter spoke to over 20 past and current Afghan officials, one of them was a
former regional intelligence coordinator.

TOM LASSETER: Daoud Mohammed Khan said that Ahmed Wali Karzai had essentially forced him through an
intermediary to release a Taliban Commander whose men had arrested in well-known drug transit

STEVE CANNANE: When asked about the specific allegations Ahmed Wali Karzai told Tom Lasseter, "He's
dead, let's leave it there."

Daoud Mohammed Khan was killed in a roadside bombing soon after talking to Tom Lasseter. Hamid
Karzai maintains there's no proof his brother is involved in the drug trade. But another
now-decreased MP told Gregor Salmon there is evidence.

GREGOR SALMON: One of the critics of Ahmed Wali Karzai was a guy called Haji Habibullah Jan, who I
spoke with in Kabul, but he was gunned down a few months later. He was involved in an incident
earlier where a car-load of heroin was found, and the commander, I think it might have been Haji
Habibullah himself took the call and Ahmed Wali Karzai said, "This is my stuff, let it go through."

STEVE CANNANE: If Ahmed Wali Karzai is a drug lord, don't expect him to be arrested anytime soon. A
US State Department report issued earlier this year said no major drug trafficker had been arrested
or convicted in Afghanistan since 2006.

Steve Cannane, Lateline.

A quick look at the weather - look at the weather - late showers in Sydney, Canberra, rain clearing
for Hobart and developing in Brisbane. Wet and windy in Perth, showers easing in Adelaide, cloudy
in Melbourne. Fine in Darwin. That's all from us, Lateline Business coming up in a moment. If you'd
like to look at tonight's discussion with Tim Gartrell or John Hewson or review stories or
transcript visit the web site Now here is Lateline Business with Ali Moore.