Equity markets fell sharply in Asia after news media reported the arrest in Canada of Huawei’s chief financial officer Meng Wanzhou, pending extradition to the United States on charges of violating US sanctions against Iran.
The news has stunned financial market participants and policy analysts, for two reasons.
First, never before has the United States attempted the extraterritorial rendition of a foreign citizen – Meng is a Chinese national – in connection with sanctions violations. It has imposed travel and banking restrictions, but seeking an arrest warrant for this is entirely without precedent.
Earlier this year, the US government banned exports of US computer chips to the Chinese telecommunications equipment ZTE in retaliation for violations of sanctions against Iran, but sought no arrests.
Second, Meng was arrested on December 1, the day that President Trump and his economic team dined with President Xi Jinping and his advisers at the Group of 20 Summit in Buenos Aires. Trump has every interest in striking a deal with China that would enable him to declare some measure of victory in a trade war, and China has shown every indication that it is willing to make concessions to the United States on intellectual property protection, financial market opening and, at least in rhetoric, on industrial policy, while increasing its imports from the United States.
Who ordered arrest?
The question is: Who ordered the arrest, and why?
It is possible that President Trump knew about it and sanctioned the arrest, to be sure. But it is unlikely that the president would escalate the conflict with China with the arrest of a senior executive of China’s flagship high-tech manufacturer on the same day that he sought to de-escalate the trade war.
If Trump did not initiate the arrest, who did? There are two alternative possibilities.
The first is that the order came from administration officials who believe that the United States must provoke a confrontation with Beijing now, before China becomes too powerful to intimidate. Some parts of the permanent bureaucracy and the intelligence community believe that China’s economy is fragile and that an economic war would produce an economic crisis and political instability, perhaps even toppling Xi Jinping.
That view may seem fanciful, but it is argued seriously, for example by some former senior officials of the Trump administration.
The second possibility is that Trump’s enemies in the permanent bureaucracy simply want to prevent the president from negotiating a deal with China that would enhance his image and remove risks to economic growth.
The Trump administration has been uncharacteristically silent about the matter. Trump and his closest advisers have shown no hesitation to comment about China trade matters.
Beijing demands release
The only public comment from an American politician came from Senator Marco Rubio (R-FL), who earlier this year fought the Trump administration’s efforts to reach a settlement with ZTE. Rubio “celebrated the arrest” in an email to the website Axios.
The US Department of Justice declined to comment. The sanctions regime against Iran is the responsibility of the Treasury’s Office of Terrorism and Financial Intelligence, now directed by Undersecretary of Treasury Sigal Mandelker, a law enforcement veteran who served in the Bush Administration after the 9/11 attacks and advised Homeland Security Secretary Michael Chertoff during the George W. Bush Administration.
The Office of Terrorism and Financial Intelligence is a joint project with the Central Intelligence Agency. Undersecretary Mandelker’s predecessor in the position, attorney David Cohen, subsequently became a deputy director of the CIA. Ms Mandelker’s office initiated the administration’s sanctions against ZTE earlier this year. The Wall Street Journal reported on April 25 that the Justice Department was investigating whether Huawei violated American sanctions against Iran.
For its part, China expressed outrage at the arrest, and its embassy in Canada demanded the release of Meng.
Most of all, China’s government was taken by surprise, and is trying to understand what happened and why.
In any case, the Vancouver arrest raises serious issues. If the White House is behind the action, it casts doubt on the administration’s desire to come to any sort of accommodation with China.
Or, if the arrest was initiated by rogue elements in the administration, it would suggest that Trump is having difficulty controlling his own government.
Enb Libra You certainly speak like the typical american thuggish bully that you are. The world is beginning to hate deep to the core, the white barbarians, particularly the despicable english speaking anglo saxons.
Alex Wijaya San
Canada does not care a whit. It’s a rich country and strong partner of the western alliance. Anyway, you’ve got Djibouti, Cambodia, maybe, maybe Pakistan.
Alex Wijaya San
Canada does not care a whit. It’s a rich country and strong partner of the western alliance. Anyway, you’ve got Djibouti, Cambodia, maybe, maybe Pakistan.
Rachel Fong India is an ally of the US.
Rachel Fong India is an ally of the US.
Yue Fai San you can do that and bully Korea and other small countries. Not with US. You boycott iPhones and China will lose millions of jobs. It’ll be like hitting your own head. LOL
Yue Fai San you can do that and bully Korea and other small countries. Not with US. You boycott iPhones and China will lose millions of jobs. It’ll be like hitting your own head. LOL
Alex Wijaya
As a policy and law, any company or any entity that deals with US companies are required to strictly follow US laws, be it inside or outside. That’s part and parcel of doing business in US. If co can’t follow it gets get sanctioned. If it doesn’t want to be sanctioned, don’t deal with US. Be a pariah. It’s as simple as that.
Alex Wijaya
As a policy and law, any company or any entity that deals with US companies are required to strictly follow US laws, be it inside or outside. That’s part and parcel of doing business in US. If co can’t follow it gets get sanctioned. If it doesn’t want to be sanctioned, don’t deal with US. Be a pariah. It’s as simple as that.
since when US law become international law? not everyone is a lap dog to the US like canada is.
since when US law become international law? not everyone is a lap dog to the US like canada is.
Canada just don’t get how much trouble they get themselves into to please their master in washington dc.
Canada just don’t get how much trouble they get themselves into to please their master in washington dc.
Winston Medved with your logic, what to do with the millions of American Indian and decendants of African American slaves marginalized by US government’s past and present policy.
Winston Medved with your logic, what to do with the millions of American Indian and decendants of African American slaves marginalized by US government’s past and present policy.
The US has a history of imposing it’s values. In 2015 when 18 officials of FIFA were indited for corruption. They had done nothing wrong, and FIFA had been well managed for many years with no corruption.
The US has a history of imposing it’s values. In 2015 when 18 officials of FIFA were indited for corruption. They had done nothing wrong, and FIFA had been well managed for many years with no corruption.
Rachel Fong Comrade why do chinese women want to have round eyes ?
Rachel Fong Comrade why do chinese women want to have round eyes ?
Comrade I can tell you the arrests of Fang Fang, Dr He, Meng Hongwei and 1m uighurs has nothing to do with trade negotiations