Hey, you; out there in the cold
getting lonely, getting old – can you feel me?
Hey, you; standing in the aisles
with itchy feet and fading smiles – can you feel me?
Hey, you, don’t help them to bury the light…
Don’t give in without a fight.
From, Hey You, by Pink Floyd
The arrest and detention of Huawei CFO Meng Wanzhou at Vancouver International, as she was changing flights for Mexico, was a deliberate slap in the face to China. The fact that it was executed even as US President Donald Trump – I still can’t say that phrase without a vertiginous feeling of unreality, like “Marriage Counselor Harvey Weinstein”, or “noted philanthropist Imelda Marcos” or “Senator James Inhoffe” – was meeting with Chinese President Xi Jinping to get the latter’s agreement to a truce in the trade war between the two countries makes it appear to have been a carefully-coordinated backstab meant to extract the maximum in humiliation. It infuriated China and its people, and the effects are only beginning to make themselves felt. To get a little perspective, imagine the American reaction if China had arranged to have the late Steve Jobs arrested in Singapore for jaywalking, and insisted on its right to extradite and try him.
Before we go any further, let’s put the conclusion before the analysis – this is all about kicking the feet out from underneath Huawei in North America. Huawei was already blowing the doors off of Apple in smartphone sales, and it cannot be allowed to get a 5G network foothold in North America. To quote the voice of America’s wireless community, CTIA President and CEO Meredith Attwell Baker, “The race to lead the world in 5G is on, and the competition is intense. Every country knows wireless leadership creates jobs, investments, and innovation. They’re taking action because they want to win. We do too.” She further forecast that 5G would add three million jobs and $500 Billion to the US economy. The sort of prize Washington would do just about anything to keep for itself. Huawei is a direct threat to Apple, and Apple was the USA’s most profitable company for the third year in a row in 2017. It’s not that America will not tolerate competition in a fair market – it will just not tolerate competition from China, which it considers a heretic enemy. Unfortunately for America, many of its most lucrative expansion opportunities for American companies – like Apple – are in China, so it mostly kept such thoughts to itself. Until recently.
We’ll get back to Apple in a second. But first, I’m not sure how many people realize what a brilliant strategy it was on Washington’s part to have Meng Wanzhou arrested in Canada, by Canadian officials, jailed in Canada and conditionally released on posting a crazy $7.5 million bail by a Canadian court. At a single stroke, it wrecked Canada’s plans for a trade deal with China which was outside American review and manipulation, damaged brand Canada in China for existing trade, and – incredibly – allowed the USA to position itself as Canada’s friend with its vow to intercede on behalf of Canadians detained in China. Quite a coup at a time when Canada’s relationship with its southern neighbour is as uncomfortable as it has been since Canadians burned the White House.
Seen in that context, the headline I chose is a bit misleading; Canada does want to be seen as playing in the same league as the Big Boys, and in that sense, the fallout it is experiencing is its own fault. However, Canada has an extradition treaty with the United States, and is bound by law to arrest and detain an individual the USA says is subject to arrest and detention to prevent that individual’s escaping extradition proceedings. It is pretty hard to believe an important executive like Meng Wanzhou never flies via US airports, where the USA could arrest her itself, especially considering the offense she is alleged to have committed is a decade old, and hardly urgent. Doubly so considering that master diplomat, Donald Trump, has mused that he might intervene in the issue if it means a trade deal with China more to American advantage than Xi Jinping was previously willing to consider, thereby shouting to the rooftops that the entire arrest scheme was politically motivated, and the purpose is to apply leverage to China for trade concessions.
Another article I read blamed the United States, and suggested the USA manipulates allies into doing its dirty work, so that it never gets any of the punishment itself, and that is what is happening now; sales of Canada’s iconic Canada Goose luxury winter jackets fell like a rock in China, losing 20% in four days, and there have been calls by Chinese activists to boycott other Canadian brands.
Which brings us back to Apple, suggesting that point of view at least is inaccurate. China is mad as hell at Canada for being Washington’s lackey, but a good part of the blame is going right where it belongs. Apple’s planned expansion in China has hit a wall – no pun intended – while a growing list of companies in China argue for practical support of Huawei by requiring only Huawei software and equipment for company upgrades, and others offer deals for employees purchasing Huawei phones. At least one company announced it would punish employees who bought an iPhone. Such policies have serious potential to not only endure, but to spread to other products associated with America.
Well, let’s take a look at the case Washington has against Meng Wanzhou. Sorry to keep using the full name, but I’m never sure with foreign names which one is the family name, and don’t want to accidentally pretend that she and I are on a chatty first-name basis.
First off, according to CNN, Washington signed off on her arrest warrant months ago. Which once again begs the question why they had to have her nabbed by Canadians in Canada, rather than arresting her themselves in the United States. I’m sure such a high-powered executive racks up quite a few frequent-flier miles, and I will once again point out it is hard to believe she never passes through American airports. Next, the alleged offense – lying to HSBC Bank to imply that Skycom, a Huawei subsidiary based in Hong King, was a separate company and to so bypass American sanctions on Iran – occurred not earlier than 4 years ago and perhaps as far back as 9 years. Next, what gives America the right to order the rest of the world to not do business with Iran? If the USA has a problem with it, it can order Americans not to do business with Iran. It can even threaten to penalize the American operations of foreign companies who do business in the USA. But ordering the extraterritorial arrest of a foreign company’s CFO is way, way over the line. To cite just one reason, American trade sanctions are not international law.
But even if we assume the accusation is true… so what? HSBC is not an American bank. America has no legal right to order Chinese companies to not do business with this country or that country, and in fact it smacks pretty strongly of juvenile playground behavior: I order you not to be friends with David, because you’re friends with me. Also, if it turned out to be accurate, Huawei could join a long and distinguished list of companies who thumbed their noses at American sanctions and continued to do business with both America and Iran. A list which includes Baker Hughes, BASF, Canon, BP, Daimler, Deutsche Bank, Caterpillar, Conoco-Phillips, Hewlett-Packard, Exxon-Mobil (what a surprise), Ingersoll Rand and Samsung. HSBC is also listed, and the information accompanying reads, “HSBC, a banking and financial services giant headquartered in London, opened a representative office in Iran in November 1999. The bank has provided various loans to Iranian business over the decade, including a $108 million loan to the National Petrochemical Company of Iran in 2003. Dr. Nasser Homapour, senior representative for HSBC in Iran, said at the time, “The completion of this sizable transaction represents an important step in HSBC’s progressive engagement with Iran in general, and NPC in particular.’ Due to pressure by the United States and other governments, the bank announced in 2007 that it would not seek any new business in Iran, but the company continues to maintain an office in Iran and service existing customers. “We will honor all existing binding commitments where permitted,” said HSBC spokesman, Ahmad Othman.” So HSBC basically already told the USA to go fuck itself with its sanctions, it maintains 229 branches in the United States with total impunity…but Washington has decided to go after Huawei? Something…uhhh…smell funny to you?
Oh, whoops. I forgot somebody. Halliburton. You remember – Dick Cheney’s old company. While ol’ Dick was the ramrod of the company, in a position much like Meng Wanzhou’s present office, Halliburton provided oil and gas drilling services to Iran through foreign subsidiaries, exactly as Huawei is accused of doing but for the difference in services provided. How was Halliburton punished for its conscious subversion of American sanctions? Why, with a multibillion-dollar no-bid contract to rebuild Iraq’s oil sector after the United States military blasted the shit out of Iraq on totally fabricated grounds which it admitted it simply made up. And what about ol’ Dick – how was he punished? Well, Washington helped him become the most powerful Vice-President in American history, leading to half-serious jokes that if the actual President disappeared, most would not even notice.
I think at this point we can safely set aside any notion that the United States of America judiciously and even-handedly took action against international companies who violated American sanctions against Iran. Which, just by the bye, is the backbone of their case against Meng Wanzhou and Huawei.
Oh; that, and Huawei would use a 5G network to spy on western countries and steal their secrets. Because that’s just the way the Chinese are – sneaky.
Allow me to laugh my reaction for you. Ha, ha. The USA, which would be happy to provide western countries and anybody else with all the 5G networks it could use, is the spyingest, snoopiest country on the planet, bar none. The United States government spies on its own citizens – perhaps just to keep in practice – without the requirement for a warrant and without judicial oversight. The US Intelligence Services tap and monitor the phones of world leaders. The NSA needs a database just to remind it of all the databases it has full of people’s private information. Since 2013, the US government has been the biggest buyer of malware, and according to a report by Der Spiegel based on internal NSA documents, the agency routinely intercepts shipments of computer equipment bought online and installs malware which can allow remote access by American intelligence agencies. In fact, a possible motive for shutting out Huawei is that the US government does not want Americans using a network it cannot infiltrate; how ironic would it be if using a Chinese network prevented Americans from constant surveillance in private by their own government?
But that’s kind of farfetched. And although American efforts to portray the Chinese as villains is almost cartoonish in its naked self-interest, it would be difficult to argue the Chinese are completely disinterested in obtaining American technological secrets and proprietary information. But the way to prevent that is simply to improve security, and not to fall for dumb phishing scams. Don’t use lazy passwords like “password”. Compete fairly; if Huawei can supply a quality network for a competitive price, the vaunted free-market laws America worships dictate that it is a cheat to use national-security grounds to keep them out – especially when Apple expects to go on selling more and more of its products to China. Although that issue may already be out of everyone’s hands, especially Apple’s.
As the Washington Post discusses, trying to decouple technology from international trade is not only not going to work, trying is liable to leave the USA in a much weaker position trade-wise, with sluggish innovation and suspicion attached to its products.
At the same time, it’s becoming harder and harder for Western multinational firms to ignore technological developments in China. Research and development spending by Chinese firms rose by 12.5 percent in 2017, with much of it directed at next-generation technologies such as 5G wireless networks.
Such investment creates the risk that Chinese firms might leave U.S. companies in the dust when it comes to the digitization of the developing world. Under plans such as the “Digital Silk Road,” the Chinese government and state-owned enterprises are making a major push to build both hardware and software across Asia, Africa and Latin America. If U.S. companies are frozen out of these ecosystems, they may face limited market share in some of the world’s fastest-growing countries.
Instead of mature trade discussion and internal security procedures to protect sensitive material, the USA is taking the lazy way out, and trying a two-front approach of forcing its competitors out of the domestic market, while criminalizing their operations and frightening consumers that foreign networks will spy on them more than their own government already does. Like everyone else, Canada is being asked to take sides, and to make sacrifices for which, to all appearances, there will be no reward for loyalty. In fact, Canada has something in common with China; both countries are being kept at arm’s length by the US government and are the targets of American tariffs for ostensible national-security reasons. At the same time, America demands ever-greater access to both markets for its own products and services.
This is not a time for sloganeering and blind loyalty.