JEFFREY D. SACHS. The War on Huawei (Project Syndicate, 11.12.18)

The Trump administration’s conflict with China has little to do with US external imbalances, closed Chinese markets, or even China’s alleged theft of intellectual property. It has everything to do with containing China by limiting its access to foreign markets, advanced technologies, global banking services, and perhaps even US universities.

NEW YORK – The arrest of Huawei CFO Meng Wanzhou is a dangerous move by US President Donald Trump’s administration in its intensifying conflict with China. If, as Mark Twain reputedly said, history often rhymes, our era increasingly recalls the period preceding 1914. As with Europe’s great powers back then, the United States, led by an administration intent on asserting America’s dominance over China, is pushing the world toward disaster.

The context of the arrest matters enormously. The US requested that Canada arrest Meng in the Vancouver airport en route to Mexico from Hong Kong, and then extradite her to the US. Such a move is almost a US declaration of war on China’s business community. Nearly unprecedented, it puts American businesspeople traveling abroad at much greater risk of such actions by other countries.

The US rarely arrests senior businesspeople, US or foreign, for alleged crimes committed by their companies. Corporate managers are usually arrested for their alleged personal crimes (such as embezzlement, bribery, or violence) rather than their company’s alleged malfeasance. Yes, corporate managers should be held to account for their company’s malfeasance, up to and including criminal charges; but to start this practice with a leading Chinese businessperson, rather than the dozens of culpable US CEOs and CFOs, is a stunning provocation to the Chinese government, business community, and public.

Meng is charged with violating US sanctions on Iran. Yet consider her arrest in the context of the large number of companies, US and non-US, that have violated US sanctions against Iran and other countries. In 2011, for example, JP Morgan Chase paid $88.3 million in fines in 2011 for violating US sanctions against Cuba, Iran, and Sudan. Yet Jamie Dimon wasn’t grabbed off a plane and whisked into custody.

And JP Morgan Chase was hardly alone in violating US sanctions. Since 2010, the following major financial institutions paid fines for violating US sanctions: Banco do Brasil, Bank of America, Bank of Guam, Bank of Moscow, Bank of Tokyo-Mitsubishi, Barclays, BNP Paribas, Clearstream Banking, Commerzbank, Compass, Crédit Agricole, Deutsche Bank, HSBC, ING, Intesa Sanpaolo, JP Morgan Chase, National Bank of Abu Dhabi, National Bank of Pakistan, PayPal, RBS (ABN Amro), Société Générale, Toronto-Dominion Bank, Trans-Pacific National Bank (now known as Beacon Business Bank), Standard Chartered, and Wells Fargo.

None of the CEOs or CFOs of these sanction-busting banks was arrested and taken into custody for these violations. In all of these cases, the corporation – rather than an individual manager – was held accountable. Nor were they held accountable for the pervasive lawbreaking in the lead-up to or aftermath of the 2008 financial crisis, for which the banks paid a staggering $243 billion in fines, according to a recent tally. In light of this record, Meng’s arrest is a shocking break with practice. Yes, hold CEOs and CFOs accountable, but start at home in order to avoid hypocrisy, self-interest disguised as high principle, and the risk of inciting a new global conflict.

Quite transparently, the US action against Meng is really part of the Trump administration’s broader attempt to undermine China’s economy by imposing tariffs, closing Western markets to Chinese high-technology exports, and blocking Chinese purchases of US and European technology companies. One can say, without exaggeration, that this is part of an economic war on China, and a reckless one at that.

Huawei is one of China’s most important technology companies, and therefore a prime target in Trump administration’s effort to slow or stop China’s advance into several high-technology sectors. America’s motivations in this economic war are partly commercial – to protect and favor laggard US companies – and partly geopolitical. They certainly have nothing to do with upholding the international rule of law.

The US is trying to targeting Huawei especially because of the company’s success in marketing cutting-edge 5G technologies globally. The US claims the company poses a specific security risk through hidden surveillance capabilities in its hardware and software. Yet the US government has provided no evidence for this claim.

recent diatribe against Huawei in the Financial Times is revealing in this regard. After conceding that “you cannot have concrete proof of interference in ICT, unless you are lucky enough to find the needle in the haystack,” the author simply asserts that “you don’t take the risk of putting your security in the hands of a potential adversary.” In other words, while we can’t really point to misbehavior by Huawei, we should blacklist the company nonetheless.

When global trade rules obstruct Trump’s gangster tactics, then the rules have to go, according to him. US Secretary of State Mike Pompeo admitted as much last week in Brussels. “Our administration,” he said, is “lawfully exiting or renegotiating outdated or harmful treaties, trade agreements, and other international arrangements that don’t serve our sovereign interests, or the interests of our allies.” Yet before it exits these agreements, the administration is trashing them through reckless and unilateral actions.

The unprecedented arrest of Meng is even more provocative because it is based on US extra-territorial sanctions, that is, the claim by the US that it can order other countries to stop trading with third parties such as Cuba or Iran. The US would certainly not tolerate China or any other country telling American companies with whom they can or cannot trade.

Sanctions regarding non-national parties (such as US sanctions on a Chinese business) should not be enforced by one country alone, but according to agreements reached within the United Nations Security Council. In that regard, UN Security Council Resolution 2231 calls on all countries to drop sanctions on Iran as part of the 2015 Iran nuclear agreement. Yet the US – and only the US – now rejects the Security Council’s role in such matters. The Trump administration, not Huawei or China, is today’s greatest threat to the international rule of law, and therefore to global peace.

Jeffrey D. Sachs, Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, is Director of Columbia’s Center for Sustainable Development and of the UN Sustainable Development Solutions Network. His books include The End of Poverty, Common Wealth, The Age of Sustainable Development, Building the New American Economy, and most recently, A New Foreign Policy: Beyond American Exceptionalism.

print
This entry was posted in Asia, International Affairs. Bookmark the permalink.

2 Responses to JEFFREY D. SACHS. The War on Huawei (Project Syndicate, 11.12.18)

  1. R. N. England says:

    Whether or not Trump had anything to do with the abduction of Meng Wanzhou, he will probably attempt to use her it as a bargaining chip in some “deal”, and as usual be outsmarted by the Chinese. The great advantage China has is the combination of intelligent government and media control. They have no problem with media stirring up the kind of public outrage that feeds profits but forces the government into war in order to maintain its popularity. As in Putin’s Russia, the government and the public of China can approach foreign policy, by and large with cool heads. A good and effective government governs public opinion so that the public interest is served. Thankfully, the Chinese and Russian governments are managing to do this at present. In the West, public opinion is controlled by the highest bidder (mostly advertisers) in a frantic atmosphere like the floor of a stock exchange. Once outrage becomes a fad (whipped up in the first place by the arms industry, or in this case by the 5G losers) all the media operators have to ride the bandwagon to stay profitable. Under those circumstances, a match between public opinion and the public interest is not possible.

    The Chinese government and corporations are at present working hard (offering good deals) to keep markets open in the US, but also to open them elsewhere, and grow other economies (markets) as quickly as possible. Part of the Chinese strategy is to keep the Americans placated by making them think they have had victories. The long-term aim is to smoothly manage the self-inflicted decline of America and of the size of its markets, by propping it up for as long as possible, but at the same time shifting trade elsewhere. It is in nobody’s interest for America to suddenly implode. China will try very, very hard to prevent that, because of the grave danger it would pose to China and the World it depends on.

    In the Meng Zhou situation, China is a bit like the Church sending missionaries into the jungle. There are risks for the missionaries. The Church will do their best to rescue them from trouble, but trouble for individuals will not change their main strategy.

    Analogies with history fall down because no government in the history of the world has been as powerful and as cool-headed as the Chinese government. We are not dealing with the usual collection of idiots that inevitably came to blows in the past.

  2. Marilyn Shepherd says:

    A far better explanation than the hysterical reds under the beds being peddled in Australia.

Comments are closed.