The War on Huawei


December 20, 2018,Image result for huawei meng wanzhou

The War on Huawei

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 business people, 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.

10 thoughts on “The War on Huawei

    • If really Russia-gate is “a given, indisputable, essential and proven fact” that the alt-media Mother Jones claim it is, why is it that to this very day, Mueller’s investigation is inconclusive, doubtful even by the look of it?

    • “… Mueller’s investigation is inconclusive ….”

      Really? Where have you been?

      Robert Mueller has not submitted his report to the Congress yet, but Donald Trump has stopped tweeting “no collusion” and “witch hunt”. Even the Fox News is getting more and more reluctant to defend him. More and more Congressional Republicans are abandoning him, as evident by the Republican Senate smacking him down today for demanding that Mitch McConnell use the nuclear option to get his wall money. He is losing the support of Republicans in the Senate he needs to stop impeachment.

      Robert Mueller investigation is catching up with Donald Trump, his family, and his top associates. We’ve got the Southern District of New York. We’ve got the New York attorney general. Criminal investigations, multiple charges on multiple fronts against his top associates. On top of that the Democrats are going to take over the House in January. This is gonna be a very, very ugly two years if Trump insists on staying in the White House and fighting criminal charges that are inevitable.

      The list of Trump crimes under investigation now by the Department of Justice includes: (1) Money laundering; (2) conspiring with foreign agents to defraud American voters in the 2016 presidential election; (3) perjury; (4) obstruction of justice; (5) witness tampering; 6) fraud associated with the 2017 Trump Presidential inaugural committee. And that may not even be a complete list, because Mueller has yet to submit his report to the Congress. There may be plenty more that comes to light that we cannot yet envision, because Michael Cohen, David Pecker, Rick Gates, Michael Flynn, Allen Weisselberg, Maria Butina and many others are singing like Lady Gaga.

      It appears to me that Robert Mueller is toying with Donald Trump. He keeps dribbling out new information and new evidence to increase the heat on Trump, his family and his criminal cohorts. What we’ve seen so far seems like the tip of an iceberg. The only question is if Mueller going to indict a sitting president, but Don Jr is likely to go to prison. Maybe Ivanka and Jared Kushner too. And as more of that iceberg of evidence comes to the surface, and is revealed to the American public, Donald Trump’s chances of staying in office will continue to be reduced to nearly nothing.

    • Dear LaMoy,

      Many thanks to you for now I have realized the errors of my view; it is indeed very stupid of me not to believe that American voters are influenced by Mr Putin to vote for a Russian candidate (i.e. Mr Donald Trump). Indeed, guided by your wisdom, I now see clearly that the American voters are indeed stupid enough to be so influenced by Mr Putin.

    • MFMuhammed:

      You’re a very polite person, a well-educated gentleman. I can see that from your writing.

      We’re all on Din’s blog to put in our own two cents. But an opinion is not a fact. A fact is a statement that can be supported to be true or false by data or evidence. In contrast, an opinion is a personal expression of a person’s feelings or thoughts that may or may not be based in data. Indeed, many of our opinions are based on emotions, personal history, and values — all of which can be completely unsupported by meaningful evidence.

      For example, we may hold the opinion that Trump was a better candidate than Clinton. Just as we may hold the opinion that green is better than red. And blue cheese tastes better than cheddar. That the world is flat instead of round. Whether our opinion is valuable depends on how we reached that conclusion. Is our opinion based in data? Or not?

      I assume you don’t live in the US, so you’re not well informed with news happenings in the States. Just as I am not well informed of things in Malaysia. Dr. Phua had studied, worked and lived in the US for many many years. Apparently he still has the interest to keep up with current events in the States.

      Anyway, Muhammed, it’s very nice knowing you.

  1. The US has always regarded China’s Huawei private enterprises as a security threat to its national network. The reason is that Huawei’s business involves some high-tech products in communication. National Security Agency (NSA) has invaded Huawei’s servers for seven years, and so far has not produced relevant evidence. This was reported by The New York Times back in March 2014:

    Now Donald Trump is using the extra territorial “long arm jurisdiction” to apply hegemonial reach of US laws and warrants to transform international corporate competition into a political competition, and Canada is an accomplice! Now all corporate executives are fair game to hijack for ransom.

    Huawei has in recent years been ostracized in a host of developed markets amid a US-led Five-Eyes campaign to discredit Huawei citing security concerns. Japan and India have been invited to join the campaign to boycott Huawei’s products.

    While Japan has joined the US-led campaign against Huawei, India has its own geopolitical agenda. Instead, India has invited Huawei to participate in the 5G trials in India, an obvious sign of improvement in relations between India and China. The Indians are smarter than the Japanese to realize that, though China is a competitor, it’s nevertheless a neighbor and the US is a faraway agitator.

    https://timesofindia.indiatimes.com/india/huawei-a-global-headache-enters-5g-trials-in-india/articleshow/67136795.cms

    If Huawei can beat out the competition to provide network equipment for 5G in India, the world’s hottest mobile market, some of those markets participating in the US-led boycott could look like peanuts in the future.

  2. Janus Dongye, Researcher at University of Cambridge (2012-present)
    Updated Mon
    Before the analysis, here is the latest situation:

    The detailed reason for this arrest has been revealed. Huawei CFO Wanzhou Meng is suspected of conspiracy to defraud multiple financial US institutions. The US Judiciary found that there was a company called Skycom that traded with Iran during 2011–2014 and Huawei was suspected to control the company Skycom at that time.

    So the accusation is about the old Iran sanctions 7 years ago. And you might wonder why someone brought this up at this particular time. Whether it was true or not, I am sure Huawei would use its legal department and best lawyers to defend itself. The case would cost months to settle and Huawei would lose a CFO temporarily to direct the company during the time. We will closely watch the situation and changes.

    However, there is something else that you need to know to understand this incident. I hope I can change some of your perspectives.

    Global 5G Battle
    5G is the fifth generation of cellular mobile communications. It succeeds the 4G (LTE/WiMax), 3G (UMTS) and 2G (GSM) systems. 5G is the new critical node for the future global supply chain. This is the ultimate technology that determines the communication/mobile networks in the next 10 years. Therefore this is a big cake that everyone wants to get a slice from it.

    The whole 5G framework can be divided into two key technology: the modem chipset and router infrastructure.

    On one hand, the modem chipset is installed in your phones and other sensors that need to be connected to the Internet.

    The current 5G modem chipset patent (IP) is held by:
    Huawei (China)
    Qualcomm (US)
    Samsung (Korea)
    MediaTek (Taiwan)
    Intel (US)
    Apple (US) (rumoured)

    On the other hand, the router infrastructure is placed in base stations all over the buildings and towers. It directly talks to the 5G modem in your mobile phones and translates your 5G requests to the Internet.

    The current 5G router patent (IP) is held by:
    Huawei (China)
    Nokia (Finland)
    Ericsson (Sweden)
    ZTE (China) Surprise Hah?
    Cisco (US)
    Samsung (Korea)

    There are two hidden traps from this 5G technology that other people might not tell you:

    The router and the modem chipset must be compatible, and therefore a standard must be settled in order for them to talk.
    The modem chipset is deeply coupled into the system on a single chip with CPU and GPUs. The system is normally shipped as a package.
    If you hold the 5G modem IP in a SOC (System-on-chip), you can also bind your CPU and GPU IP in a package. That means whoever controls the 5G IP would also control the whole market of the CPU and GPU intellectual property. If you hold the 5G router standard, you can also control the modem standard and then control the whole system standard.

    For example, if the US were to allow Huawei to sell its 5G router devices to Verizon or AT&T, then Huawei could make all of its base stations to only support its own modem standard. Then you could end up with the whole system package delivered by Huawei as well. Then the US might have to buy more devices made by Huawei in order to use 5G.

    That’s how Qualcomm rose from a small company to the top simply based on its 3G patents. And you can see that Huawei and Samsung is the dominant player here that they both control the modem and router patents.

    However, owing to the pressure of the US government, Samsung surrendered its chip IP right to US companies. This is the fundamental difference between Samsung and Huawei. Because the South Korean market is so small and therefore Samsung has to surrender to the US in order to survive.

    Samsung Galaxy S10 Comes with Qualcomm Snapdragon 855 SoC and 5G Service – Tech News Watch

    You might wonder why Samsung does not use its Exynos processors in US but it has to use Qualcomm one? That is the pressure from the US government.

    Meanwhile, Huawei gets the full cultivation in the Chinese market and does not fear the US government. It never intends to go to the US market as well. What it focuses on is the adoption in China and the rest of third-world countries. If you read the following recent news, you can get a feeling that China is really leading the global 5G battle in all three fields: technology, adoption and market.

    Chongqing launches first 5G trial network

    ‘World’s first’ 5G call completed by Vodafone and Huawei

    China Mobile and China Unicom to start 5G trials | TelecomLead

    Briefing: China’s mobile operators granted nationwide 5G licenses · TechNode

    The Chinese government said it would perform nationwide 5G adoption using Huawei technology around March 2019. Please note that this is a market of 1.4 billion people that is US population and Europe population combined. And the Chinese government is pushing this really hard, unlike the US stuck in legislation as you can imagine.

    Meanwhile, the first adoption of 5G belongs to South Korea, which is four months ahead of China:

    South Korean carriers set surprise commercial 5G launch for December 1

    And compared to the US government, both Chinese and Korean government are very efficient in promoting 5G infrastructures. In this manner, US companies are really lagging behind. This could firstly cause wide-spread fears among the US companies. It is very likely that those companies would lobby the US Congress to ban Huawei at first. The arrest happens just before the Huawei 5G technology is going to be adopted commercially in China.

    It is very likely that some people wanted to disrupt the growth of Huawei. Everyone talks about the Huawei arrest. But no one is talking about who initiated the investigation against Huawei and who filed the case in the US juridical system in the first place?

    Another interesting side note during the incident:

    Cisco temporarily bans employees from China

    I suspect CISCO could the one who actually filed the case to ban Huawei.

    CISCO:

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