The fault lines of diplomatic recrimination .
The Huawei episode raises serious concerns over issues that are germane to international business and trade. One of the world’s largest telecom companies, Huawei, is at war with a few powerful western nations led by the The United States. This is not a new spat. The conflict, which has been simmering for quite a few years, reached its crescendo on December 1, 2018, with the detention and arrest of Sabrina Meng Wanzhou, its Chief Financial Officer, in Vancouver, Canada, for allegedly breaking U.S. sanctions on Iran by way of bank frauds. The U.S had asked Canada to detain her.
Ms. Meng, a tech heiress, is the daughter of Huawei’s founder Ren Zhengfei and was arrested while in transit at the airport. A Canadian court has granted her bail, but she could face extradition to the U.S. The incident, which has led to an uproar in China, has left Canada embarrassed, as any decision will have a bearing on its ties with Beijing.
The more recent conviction (January 14) of a Canadian national Robert Lloyd Schellenberg to death by a court in China for drug trafficking has only aggravated the controversy. Significantly, this conviction was based on a retrial that took place after the arrest of Ms. Meng. The fact that Canada does not have a death sentence on its statute books complicate relations between the two countries. The Canadian Prime Minister, Justin Trudeau, has assailed this as a political move. Additionally the recent detention in China of two other Canadian citizens (one, a diplomat on leave) on national security grounds has muddied the waters further.
The Chinese assessment is that the U.S. is exercised over the growing stature of Huawei and the resultant threat to U.S. technology companies and links this to the action against Ms. Meng. It must be remembered that Huawei has overtaken Apple to become the second largest maker of smartphones, and its investments in research and development is growing at a frenetic pace.
Need for protocol
The conflict between China and the West, especially the U.S., raises serious concerns over issues that are germane to international business and trade. The first is its impact on the troubled state of international relations and international law that operates in such cases. There is also the issue of the apparent ease and arbitrariness with which a nation determined to outwit a rival can hit the latter hard. There does not seem to be an ethical set of rules.
No one suggests that Ms. Meng did not transgress U.S. law. She may have acted surreptitiously to counter the U.S. sanctions against Iran. The point, however, is whether such drastic action against a top executive was warranted, especially in the context of the fragile relationship between the two nations. The implications of the incident, in terms of the need for a protocol between nations in the area of criminal justice must be pondered over. Some experts cite the concept of ‘long-arm jurisdiction’ in support of the U.S. action — such jurisdiction empowers a nation to enforce its laws and rules over foreign entities, generally through courts.
The concept has a political color to it and, therefore, questionable in cases such as Ms. Meng’s arrest. The Chinese criminal action against three Canadian nationals also smacks of vindictive conduct. On the other side, the detention of Ms. Meng was obviously meant to send out a signal not only to China but also to prospective violators of U.S. sanctions. If this was the objective, this was achieved, with the rider that a nation acting so peremptorily may have to brace itself to meet retaliatory action by the targeted nation, as borne out by the Chinese action against the three Canadians, one of whom now faces execution. This collateral damage to Canada should set alarm bells ringing, especially in the West.
Issue of cybersecurity
A second important issue relates to cybersecurity. China, along with Russia, has long been suspect in the eyes of the West for spying, the basis for this being proven instances of online attacks and unestablished cases of breaches in western computer systems. In the case of Huawei, the western line is that as it is a corporation close to the Chinese establishment, its activities cannot be purely technological and commercial. Ren Zhengfei had links with the People’s Liberation Army (PLA). The specific charge against Huawei is that in every piece of hardware sold by it, there are microchips and devices that provide substantial information to the Chinese authorities. The irony is that there has been no major irrefutable evidence communicated to the rest of the world to substantiate this charge. Western agencies say that Huawei is so smart and skillful that it is impossible to ferret out such evidence. On its part, the latter has dismissed the charges against it as fanciful and motivated, only in order to keep it at bay after its successful forays into American hardware bastions.
The third is the issue of the continued fragility of cybersecurity as far as the average computer user is concerned. Breaches even in highly protected environments across the globe hardly instill confidence in ordinary customers who have bought devices and follow procedures, often at great expense, to plugging security loopholes in their systems. There is, therefore, a growing reluctance on the part of many large corporations to invest more in cybersecurity. From this perspective, an emerging philosophy is that security can never be 100% and that one should not be unduly agitated over inevitable cyber attacks, as long as they do as they do not cause major loss, economic or reputational.
There is no means to guess the impact of the U.S. action on to-be-released and game-changing 5G technology, and in which Huawei has great stakes. China may be expected to up the ante if any Western nation actually goes to the extent of banning Huawei from a role in the up-gradation. China suspects that the anti-Huawei campaign is only at the instance of its competitors to cut it down to size on the eve of the launch of a valuable product. But this again is in the realm of speculation.
R.K. Raghavan is a former CBI Director. The views expressed are personal.
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