Huawei affair raises fears of ‘hostage diplomacy’ by China

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WASHINGTON – Talks between the Justice Department and a top executive at Huawei, the Chinese telecommunications giant, had spanned more than 12 months and two presidential administrations, and boiled down to a global dispute: whether Meng Wangzhou, daughter of the founder of Huawei, admit any wrongdoing.

Since her arrest in 2018, Ms Meng had refused to admit that she misled global banking conglomerate HSBC about Huawei’s relationship with Iran ten years ago, even though it was the key to her release. of detention in Canada, where she was released. deposit to her of them luxurious homes in Vancouver. In mid-September, as a Canadian judge was set to rule on her extradition to the United States, federal prosecutors told Ms. Meng’s attorneys they were ready to withdraw from settlement negotiations. and bring in Ms. Meng, the tech royalty. China, on trial in Brooklyn.

Then came a breakthrough: On September 19, after a new lawyer seized the case on her behalf, she accepted a “statement of facts” which the Justice Department said would be helpful in her ongoing case against Huawei itself – a company that had been in the crosshairs of the Department of Justice and U.S. national security agencies for years.

Five days later, Ms. Meng was on a plane to China, greeted like a hero. Two Canadians, mostly held hostage on trumped-up charges, were on their way back to Canada, along with two young Americans who had been denied exit from China for three years over a case involving their wanted father. by Chinese authorities.

The seemingly well-orchestrated exchange – details of which have been confirmed by government officials, diplomats and others familiar with the legal matter – raised a host of questions. Was this a first signal of a reluctant rapprochement between Washington and Beijing after a downward spiral in their relationship unprecedented in modern history? Was it a life-saving victory for both sides, who have recovered their citizens, and the end of an irritant in relations that emerged last month during a call between President Biden and President Xi Jinping?

Or was it a success for China’s “hostage diplomacy”, to use a phrase that appears in an accusing letter sent Tuesday by Representative Jim Banks of Indiana to Attorney General Merrick Garland?

“By letting her go without even a slap on the wrist,” Mr Banks wrote of Ms Meng, “the United States is announcing to all potential criminals that we are not very serious about the enforcement of our sanctions laws. It is a dream come true for Iran, Hamas, Russia, North Korea and all the other entities that have been hit by our sanctions. “

White House officials, from press secretary Jen Psaki to policymakers designing a strategy to deal with the complexities of concurrent competition, containment and cooperation with China, deny that there is had any agreement – or a change in Chinese policy. “There is no connection,” Ms. Psaki said.

The Chinese have told another story, filling its press and social media with stories describing Ms. Meng as a victim. In their account, the charges against her were retaliation against China’s efforts to wire the world with China-led 5G networks.

The near-simultaneous release of the two Canadians and the two Americans, some senior officials in Washington say, was designed to sound like a political move by the Biden administration, despite its protests – and not the independent judgment of prosecutors that the House Blanche insisted. was at stake. A senior administration official said it was in China’s best interest to make it look like a Cold War spy swap because it would go along with the narrative that Ms. Meng was guilty of nothing other than promoting Huawei’s business to the world.

(In the end, she agreed to a deferred prosecution agreement, which will ultimately result in the dropping of all charges, a subtlety that was lacking in Chinese accounts, as well as any mention of her “statement of the facts.”)

“We cannot determine how the Chinese or others run their business there,” Psaki said on Monday. “It’s a little different.”

But Ms Meng’s arrival in China also undermined Huawei’s long insistence that it is entirely independent from the Chinese government and would never allow its networks to be controlled by government officials. When she landed, the event was covered live on state television and the buildings were lit in celebration. People’s Daily called it a “glorious victory for the Chinese people” that would pave the way for further victories. She spoke of her loyalty to the Communist Party and to a company operating under Chinese laws and guidelines.

In Washington, Huawei has long been at the center of American fears of technological dependence on Chinese companies. Both classified and unclassified studies have explored the extent to which it could use its control of global networks to redirect or stop Internet traffic. Documents released by Edward J. Snowden more than eight years ago revealed a National Security Agency covert operation against Huawei, dubbed “Shotgiant,” to break into Huawei networks and figure out corporate ownership. .

The Trump administration has attempted to stop the spread of Huawei networks by threatening to cut European nations off from U.S. intelligence. The Biden administration has attempted a softer approach, including striving to promote technologies that would offer American companies and those of their allies a competitive alternative. None of that changes with Ms Meng’s release, officials insist – and they doubt China is now willing to engage with the United States on a range of other concerns, from cyber activity to trade disputes.

“I don’t think anything has changed significantly, which is that China has to play by the rules,” Commerce Secretary Gina Raimondo told NPR on Tuesday.

With so much geopolitical competition, prospects for a deal to release Ms. Meng looked dim just a month ago, despite Ms. Meng’s three-year detention in Canada.

Immediately after Canada detained Ms. Meng, 49, at Vancouver International Airport, China arrested and jailed two Canadian men, Michael Kovrig, a former diplomat, and Michael Spavor, an entrepreneur. They were charged with espionage.

Ms. Meng’s arrest also complicated hopes that China would let two American siblings, Georgetown University student Victor Liu and McKinsey & Company consultant Cynthia Liu, leave the country. President Donald J. Trump discussed Liu siblings with Chinese President Xi Jinping at a summit in Argentina in late 2018, said Evan Medeiros, a professor at Georgetown University who has been involved in efforts to free the brothers and sisters.

But Ms Meng was arrested on the day the summit ended, and a former senior Trump administration official who was present at the event said it killed any hope the two young Americans would be released. China did little to hide the fact that their fate was linked to the case against Ms. Meng, and therefore to the case against Huawei.

Like many of those who have described the details of the case, the former official requested anonymity to discuss sensitive matters.

Talks were revived in May, when Ms Meng hired Washington attorney William W. Taylor, who had just won a not guilty verdict in another high-profile case involving a well-known Washington attorney. Meanwhile, Canada began to pressure Washington to do something about the two Canadians being held in China. Prime Minister Justin Trudeau publicly called for their release, and the case was a frequent topic of conversation with U.S. diplomats.

But administration officials insisted the justice ministry was immune to such pressures.

President Xi also spoke about Ms. Meng’s plight, most recently during a phone call with Mr. Biden on September 9. Mr Biden has remained silent, administration officials said. But they would not say if, at the time of the appeal, he was aware of the Justice Department’s discussions with her about a possible deferred prosecution agreement.

A week later, the Justice Department told Ms. Meng’s team that it would renounce the deal unless she admits her wrongdoing. While lawyers for justice knew they could lose the extradition case, they feared that without his testimony about what happened in the effort to sell telecommunications equipment to Iran, the the ministry’s case against Huawei could fail. And they didn’t want to leave a precedent that Beijing could push its way out of legal liability.

On September 19, Taylor let prosecutors know she would compromise, offering the “narrative” without an admission of wrongdoing – and without a fine. While the statement essentially admitted almost all of the allegations the ministry had made against her, the formal plea would be “not guilty.”

Now the Justice Department can use his statement as evidence in its Huawei case. Clearly, he is aggressively pursuing this case: Just days after the deal was announced, prosecutors said in a court filing that they obtained Huawei’s financial records.

Dan Bilefsky in Montreal and Michael Forsythe in New York contributed reporting.


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