China Detaining Canadians After Huawei CFO's Arrest In Diplomatic Incident

Huawei Logo Dec 3 2018 AH
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The Chinese government appears to be retaliating for the recent arrest of Huawei Chief Financial Officer Meng Wanzhou, with Beijing recently detaining the third Canadian since the December 1 ordeal as part of what it describes are unrelated probes into illegal activities. Canadian Prime Minister Justin Trudeau doesn’t share that sentiment, having officially urged caution while reflecting on recent developments. Ottawa has no evidence that this month’s arrests of Canadian nationals in China are related to Ms. Meng’s case and further escalating the matter could easily be “counterproductive,” the PM said this week, warning both his political allies and opponents against “political posturing” until more details on the matter come to light.

While information about this week’s arrest conducted by Chinese authorities is still scarce, what some interpreted as retaliation from Beijing started last week after Beijing detained Canadian businessman Michael Spavor and diplomat Michael Kovrig. The Trudeau administration already showed more willingness to link Mr. Spavor and Mr. Kovrig’s case to the arrest of Ms. Meng, with the incident already being infused with political undertones by United States President Donald Trump. In a recent interview, President Trump said he’s prepared to intervene in Ms. Meng’s process if doing so would help the U.S. gain leverage in its ongoing trade talks with China. As Huawei’s C-suite executive was arrested in Vancouver on the request from the stateside Department of Justice, Beijing interpreted those comments as evidence that the U.S. judicial system isn’t independent and accused Washington of taking hostages in their recently suspended trade war. The arrest itself happened just as President Trump and President Xi Jinping were negotiating a 90-day truce at a G20 summit in Argentina.

No end in sight


And while China’s now threatening with retaliation, arguing Ms. Meng’s arrest and potential extradition are illegal, the Justice Department remains adamant it isn’t interested in pursuing a political agenda. Instead, U.S. authorities are suspecting Huawei’s CFO of defrauding a number of banks in relation to a Hong Kong company Skycom Tech, an alleged Huawei satellite established with the goal of violating stateside trade sanctions the Commerce Department imposed against Iran. While China’s ZTE pleaded guilty to similar transgressions in 2017 and almost went bankrupt earlier this year after violating the original settlement and prompting further sanctions from Washington, Ms. Meng’s case is possibly even more serious seeing how the Justice Department is accusing her of being personally involved in a conspiracy to import American goods into Iran. Stateside authorities have until early February to formally request her extradition. Provided they succeed in that endeavor, the 46-year-old executive is facing up to 30 years in federal prison for fraud.

While not many details on Ms. Meng’s case are currently known, it’s unlikely the DOJ would have moved against her in cooperation in Canada less it possessed substantial evidence of her wrongdoings seeing how the industry veteran is not only one of the highest-ranking executives of the world’s largest telecom equipment manufacturer but also happens to be one of three children of Huawei founder Ren Zengfei. A Vancouver court agreed to release her on bail equivalent to $6.5 billion last week and she’s presently under limited house arrest after being labeled a flight risk, a notion her legal team repeatedly dismissed as frivolous. The current state of affairs suggests the incident is still in its early stages and Ms. Meng’s case could still bring Washington-Beijing tensions on a whole other level.

Far from unprecedented


While the Huawei CFO’s arrest marks a new degree of conflict escalation between Huawei and the U.S. government, the animosity between the two is far from unprecedented and dates back to at least the early 21st century. Washington has recently also been pressuring its allies to drop Chinese telecom tech from their 5G rollout plans, with Australia being the first to do so. German wireless giant Deutsche Telekom recently followed suit as part of its ongoing talks with stateside authorities reviewing the proposed merger of Sprint and its subsidiary T-Mobile. Recent reports indicate South Korea, Japan, and Canada are also considering doing the same in a move that would significantly limit Huawei’s ability to maintain its global wireless dominance. The Western intelligence community has long argued Huawei has suspicious ties to the Chinese communist regime and poses a major spying threat, a notion the company dismissed as baseless on countless occasions. Still, Beijing’s strict censorship laws allow it to easily force any domestic company into complying with broad information requests with little to no actual justification, making security concerns associated with the company’s technologies an ongoing issue regardless of the fact Huawei was never involved in any major cybersecurity scandal, which is something it’s always quick to highlight.