Sieren's China: Huawei and diplomatic dynamite

Wednesday December 12 2018

By Frank Sieren

It's not yet clear whether it was poor timing or a provocation: On December 1, the day on which the US and China had achieved a rapprochement in their trade dispute, the Canadian police arrested Huawei financial chief officer Meng Wanzhou, the daughter of company founder Ren Zhengfei, at Vancouver Airport on charges of fraud at the request of US prosecutors.

The prosecutors claim that Huawei sold goods to Iran via the Hong Kong-based shell company Skykom between 2009 and 2014, thus violating a trade embargo against Tehran. From the US perspective, there is a logic to prosecuting a Chinese company if it does business with a third country. US companies supply Huawei with parts and technology. All foreign companies have to sign an agreement that they will not sell products to countries on the US list of sanctioned countries. Ericsson and Samsung also sold goods and technology to Iran during this period but the US could not do anything as neither of them uses US parts.

Questionable arrest

Huawei claims it sold the company in 2009. So, for the moment, it's one person's word against the other's. It is true that Huawei was already once found guilty of copying code developed by US networking hardware giant Cisco. But that was 15 years ago and there has been nothing substantial since then. However, even if the current charges are confirmed, the arrest remains questionable. Meng Wanzhou has been granted bail for $10 million (€8.8 million). The Washington Post spoke of a "ridiculous overreach."

One can only imagine what might happen if somebody in a similarly important position at Apple were arrested in China. In any case, with things as difficult as they currently are between China and the US, this serves only to exacerbate tensions. Both the Canadian ambassador to China, John McCallum, and the US ambassador Terry Branstad were summoned to the Foreign Ministry in Beijing. This doesn't have to bother the US prosecutors but it seems as if world politics are being conducted via a legal dispute. Huawei, as a rival to Cisco and Apple, has clearly become too powerful. Founded by a former People’s Army officer, the company embodies China’s success in catching up with the West in terms of technology and its aim of surpassing it as soon as possible as part of President Xi Jinping's "Made in China 2025" program.

Breathtaking growth

Huawei's growth in the past 10 years has worried its international rivals. The Shenzhen-based company started selling cellphones only six years ago, yet in the first six months of 2018, it sold 95 million phones around the world. That was 30 percent more than in the same period last year and, for the first time, more than Apple.

Huawei does not make only cellphones and other devices but is also the leading networking equipment supplier in the world. It is not allowed to sell its technology in the US because it is allegedly configured so that it can spy for the Chinese government. Australia has also banned Huawei technology, and New Zealand and Japan are exploring to what extent they should restrict market access to the company.

In Britain, Huawei has been forced to improve in certain areas. But everywhere else, Huawei has unrestricted access to the markets, even in Taiwan, which most of the world does not recognize as an independent country but which is under US military and political protection.

Warnings against Huawei in Germany

In Germany, Huawei supplies Deutsche Telekom and hopes to supply the infrastructure for 5G soon. But there have been warnings by critics such as Green party politician Konstantin von Notz that the government is "dangerously naive" with regard to the company.

However, the German Finance Ministry, the domestic intelligence agency BfV and the Federal Office for Information Security (BSI) have said that there is no hard evidence that the equipment of any particular suppliers can be used for purposes that endanger security.

Moreover, considering the NSA scandal and the eavesdropping on even Chancellor Angela Merkel’s phone, the US should perhaps also face scrutiny when it comes to monitoring data traffic of other countries. There is a major difference between the US and China, however: Certain firms may be closely linked to the democratically elected government of the US but in China, even firms considered private are much closer to the authoritarian government, which keeps them in constant check.

Of course, it would not be in Huawei's interest to let itself be used by Beijing, as it would lose its image internationally. But whether it will actually have the freedom to go against the Chinese government if needs be remains to be seen. However, for now, it has to be said that no evidence has been put up to back the US prosecutors' charges.

Even US President Donald Trump, who has said he did not know about the arrest ahead of time, doesn't seem happy. He said nothing about the case for a while, before suggesting in a tweet on Wednesday that he would intervene even in judicial procedures if this could have a positive impact on the trade dispute with China.

US isolated on Iran deal

Trump does not have much international support regarding his Iran policy, either. In 2015, the US, China, Germany, France, Britain and Russia signed a deal with Iran. The idea was that sanctions would be mitigated in return for Iran curbing its nuclear armament program. The International Atomic Energy Agency always confirmed that Iran was fulfilling its obligations.

But early this summer, Trump unilaterally abandoned the deal and imposed new sanctions, which led to reprimands from the UN's International Court of Justice. Meng's arrest reinforces the impression that the US is not interested in finding a political consensus with its Western partners on this issue.

The EU should call on Huawei to be as cooperative as possible. If it wants to sell its products internationally, it should stick to international rules. On the other hand, the EU should also call on the US prosecutors to be as transparent as they can be and to provide hard evidence for their charges. Not only is the reputation of the US legal system at stake but the credibility of Western values generally. This is thus no longer an internal US matter; it also involves Europe.

Frank Sieren has lived in Beijing for over 20 years.

Advertisement