Trump’s new Chinese gauntlet

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The arrest in Canada of a senior executive of the Chinese communications firm Huawei on a warrant issued by the United States was always set to bring a quick end to the temporary trade war truce agreed between the Chinese and American presidents at the G20 only days before.

Meng Wanzhou, the daughter of Huawei’s founder and now its chief financial officer, was detained in Vancouver when she was changing planes. Washington wants her extradited to the US to face charges that between 2009 and 2014, she used a company, covertly owned and controlled by Huawei, to trade with Iran in defiance of international sanctions. If she is taken to America and found guilty, she could face up to 30 years in jail.

It was widely known that Tehran used various ruses to flout the extensive ban on international trade. Moscow did little to stop a flourishing smuggling business through Azerbaijan and almost certainly connived at the illegal movement of goods by air and sea. But China, even though it has long been Iran’s biggest oil customer, was rarely cited among the sanctions busters. But it is now clear the Americans were busy monitoring what was really going on and obviously believe they have sufficient evidence to prosecute Ms Meng.

The problem is, of course, that Huawei, whose rumored close links to the People’s Liberation Army underpin current concerns about the security of the telecoms equipment it is selling around the world, is a very big beast in terms of Chinese corporates.

It is hardly surprising that Beijing has reacted with fury, calling in both the Canadian and US ambassadors to protest vigorously at Meng’s arrest. It would seem more than likely that besides scrapping the 90-day trade war truce, the Chinese government will themselves move against a North American individual whom they will accuse of wrongdoing. Under Xi Jinping, the authorities have mounted many high profile corruption trials, some of which are seen to have been political moves against dissidents.

The irony is that Canadian premier Justin Trudeau is one of the fiercest critics of US President Donald Trump’s assault on globalized free trade. It will be a matter of despair that his country has been caught up in the battle between Beijing and Washington. And the Chinese will think nothing of his protests that he has no power to influence the Canadian judges considering if Ms Meng should be handed over to the US authorities.

The warrant for the Huawei executive has apparently been issued for some time though it is not clear if Washington had much warning that she would touch down in Canada.

That the Americans are prepared to target such a high-profile individual despite the inevitable reaction probably has a lot to do with the Trump administration’s uncompromising approach to most everything. There may yet be some sort of face-saving deal but even so, a very powerful point has been made. Those who seek to break Trump’s fresh sanctions on the regime of the Iranian ayatollahs do so at their peril. This clearly includes European companies that Brussels is encouraging to ignore Washington’s edicts. No one, it seems, is too big to be arrested. The Iranian regime may not now be feeling quite so confident that it can avoid once again being brought to its economic knees.


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