2021-09-29 01:52:24 Huawei Case Raises Fears of ‘Hostage Diplomacy’ by China

Huawei Case Raises Fears of ‘Hostage Diplomacy’ by China

WASHINGTON (AP) — The talks between the Justice Department and a top executive from Huawei, the Chinese telecommunications giant, had lasted more than a year and two presidential administrations, and had boiled down to a single point of contention: whether Meng Wanzhou, Huawei’s founder’s daughter, would admit to any wrongdoing.

Ms. Meng had refused to admit that she had misled the global banking conglomerate HSBC about Huawei’s dealings with Iran a decade ago since her arrest in 2018, despite the fact that this was the key to her release from detention in Canada, where she was out on bail at her two luxurious homes in Vancouver. In mid-September, with a Canadian judge about to rule on whether she would be extradited to the United States, federal prosecutors informed Ms. Meng’s lawyers that they were ready to abandon settlement talks and bring Ms. Meng, China’s tech royalty, to trial in Brooklyn.

Then, on Sept. 19, after a new lawyer was appointed to represent her, she agreed to a “statement of facts” that the Justice Department believed would be useful in their ongoing case against Huawei itself — a company that had been on the Justice Department’s and American national security agencies’ radar for years.

Five days later, Ms. Meng boarded a plane bound for China, where she was greeted as a hero. Two Canadians were on their way back to Canada after being held hostage on trumped-up charges, along with two young Americans who had been denied exit from China for three years due to a case involving their father, which Chinese authorities were looking into.

The seemingly well-planned exchange, the details of which were confirmed by government officials, diplomats, and others familiar with the legal case, raised a slew of questions. Was this the first sign of a grudging rapprochement between Washington and Beijing following an unprecedented downward spiral in their relationship? Was it a win for both sides, who regained control of their citizens, and the end of an irritant in relations that arose as recently as last month during a phone call between President Biden and President Xi Jinping?

Or was this a success for China’s “hostage diplomacy,” to use a phrase from an accusatory letter sent to Attorney General Merrick Garland on Tuesday by Representative Jim Banks of Indiana?

“By letting her go without even a slap on the wrist, the United States is broadcasting to any would-be criminals that we are not very serious about enforcing our sanctions laws,” Mr. Banks wrote of Ms. Meng. This is a dream come true for Iran, Hamas, Russia, North Korea, and every other entity that has been sanctioned by us.”

Officials at the White House, from press secretary Jen Psaki to policymakers devising a strategy to deal with the complexities of competing with, containing, and cooperating with China, deny that there was any kind of agreement — or a shift in China policy. “There is no connection,” Ms. Psaki stated.

The Chinese told a different story, portraying Ms. Meng as a victim in the media and on social media. According to them, the charges against her were brought in retaliation for China’s efforts to connect the world with Chinese-led 5G networks.

The near-simultaneous release of two Canadians and two Americans, some senior officials in Washington believe, was designed to make this look like a political decision by the Biden administration, despite its protests — rather than the independent judgment of prosecutors, as the White House insists. According to one senior administration official, it was in China’s best interests to make this look like a Cold War spy swap, because it would feed the narrative that Ms. Meng was only guilty of promoting Huawei’s business around the world.

(In the end, she agreed to a deferred prosecution agreement, which will eventually result in the dismissal of all charges, a nuance that was absent from the Chinese accounts, as was any mention of her “statement of facts.”)

“We have no idea how the Chinese or others conduct business over there,” Ms. Psaki said on Monday. “It’s a little different.”

Ms. Meng’s arrival in China, however, calls into question Huawei’s long-held claim that it is completely independent of the Chinese government and would never allow its networks to be controlled by government officials. When she landed, the event was broadcast live on state television, and buildings were lit up to commemorate her arrival. The People’s Daily referred to it as a “glorious victory for the Chinese people” that would pave the way for future victories. She spoke of her devotion to the Communist Party and to a company that operates under Chinese laws and regulations.

Huawei has long been at the center of American concerns about technological dependence on Chinese firms in Washington. Studies, both classified and unclassified, have looked into the extent to which it could use its control of global networks to redirect or shut down internet traffic. Documents leaked by Edward J. Snowden more than eight years ago revealed a secret National Security Agency operation against Huawei code-named “Shotgiant,” which aimed to break into Huawei’s networks and learn about the company’s ownership.

The Trump administration attempted to halt the spread of Huawei networks by threatening to cut off European countries’ access to American intelligence. The Biden administration has tried a softer approach, including an effort to promote technologies that would provide a competitive alternative for American and allied companies. Officials insist that Ms. Meng’s release changes nothing, and they doubt that China is now willing to engage with the US on a variety of other issues, ranging from cyber activity to trade disputes.

“I don’t think anything has changed meaningfully, which means China has to play by the rules,” Gina Raimondo, the commerce secretary, said on NPR on Tuesday.

With so much riding on the geopolitical contest, the prospects for a deal for Ms. Meng’s release appeared bleak even a month ago, despite Ms. Meng’s three years in Canadian detention.

China arrested and imprisoned two Canadian men, Michael Kovrig, a former diplomat, and Michael Spavor, an entrepreneur, shortly after Canada detained Ms. Meng, 49, at Vancouver International Airport. They were accused of espionage.

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

However, Ms. Meng was detained on the day the summit ended, and a former senior Trump administration official who was present at the event said that any hope of the two young Americans being released was dashed. China made no secret of the fact that their fates were inextricably linked to the case against Ms. Meng, and thus the case against Huawei.

The former official, like several others who spoke about the case, requested anonymity in order to discuss sensitive issues.

Ms. Meng hired Washington power lawyer William W. Taylor in May, after he had just won a not-guilty verdict in another high-profile case involving a well-known Washington attorney. Meanwhile, Canada began to put pressure on Washington to intervene in the case of the two Canadians detained in China. Prime Minister Justin Trudeau publicly demanded their release, and the case was frequently discussed with American diplomats.

However, administration officials have been adamant that the Justice Department is immune to such pressures.

President Xi has also mentioned Ms. Meng’s fate, most recently during a phone call with Mr. Biden on September 9. According to administration officials, Mr. Biden remained silent. They would not say whether he was aware of Justice Department discussions with her about a possible deferred-prosecution agreement at the time of the call.

A week later, the Justice Department informed Ms. Meng’s team that the deal would be terminated unless she admitted wrongdoing. While Justice attorneys were aware that they could lose the extradition case, they were concerned that if she did not testify about what happened in the effort to sell telecommunications equipment to Iran, the department’s case against Huawei would fail. And they didn’t want to set a precedent in which Beijing could use force to avoid legal accountability.

On September 19, Mr. Taylor informed prosecutors that she would accept a “statement of facts” with no admission of wrongdoing — and no fine. While the statement admitted to nearly all of the allegations leveled by the department, the formal plea would be “not guilty.”

Her statement can now be used as evidence in the Justice Department’s Huawei case. Clearly, it is aggressively pursuing that case: Prosecutors said in a court filing just days after the deal was announced that they had obtained Huawei’s financial records.

Reporting was contributed by Dan Bilefsky in Montreal and Michael Forsythe in New York.

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Huawei Case Raises Fears of 'Hostage Diplomacy' by China