Latest News Clips 2018.12.17

                        

1.      The War on Huawei

Project Syndicate   Dec 11, 2018

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 businesspeople, 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.

A recent diatribe against Huawei in the Financial Times is revealing in this regard.

2. Theresa May's Brexit strategy left brutally exposed by Brussels failure

Labour declares deal ‘dead in the water’, as hopes of further talks on backstop disappear

The Guardian    14 Dec 2018 

 Theresa May rowed with Jean-Claude Juncker at the Brussels summit. Photograph: ec.europa.eu/PA

Theresa May has come home from Brussels empty-handed and without hope of further negotiations over the Irish backstop, with the failure to achieve any kind of breakthrough leaving her brutally exposed.

Plans to work over Christmas on a legal guarantee over the temporary nature of the backstop had run into a brick wall, EU officials said, despite May’s claim that she would be holding further talks “in the coming days”.

Brussels sources claimed May was just keeping up a pretence that the legal guarantee she had promised rebellious Tory MPs during this week’s leadership challenge was still on the cards.

Without clear evidence that she has made progress, May faces mounting jeopardy in Westminster, with Labour seriously considering tabling a vote of no confidence before Christmas, if it believes the prime minister’s DUP partners might support it.

Jeremy Corbyn accused May on Friday of “dangerously running down the clock”.

“The last 24 hours have confirmed that Theresa May’s Brexit deal is dead in the water. The prime minister has utterly failed in her attempts to deliver any meaningful changes to her botched deal,” he said.

One shadow cabinet member said the moment at which Labour would table a no-confidence vote was getting “much, much closer”, but said it would depend on the stance of the DUP. “We are watching like hawks,” he added.

Some of May’s allies also fear renegade Brexiters from the right wing of the Tory party could throw their weight behind Labour in the hope that a no-confidence vote would result in a more Brexit-friendly Conservative being installed in her place.

The work and pensions secretary, Amber Rudd, has called for MPs across the political divide to build a Brexit consensus, warning Britain’s departure from the EU is “in danger of getting stuck”. Writing in the Daily Mail, Rudd said it is possible Theresa May will ultimately be unable to persuade enough of her own MPs to back her deal, suggesting it is time to “abandon outrage and accusations” and “try something different”.

Rudd said a “practical, sensible and healing approach” was needed for MPs to coalesce around a deal to avert the danger of Britain crashing out of the EU.

The cabinet minister is the most senior Conservative so far to suggest support may need to be won from outside the Tory-DUP alliance in order to get a deal over the line in the Commons.

In Brussels on Friday, EU leaders insisted they would not do any more to sweeten the Brexit deal containing the backstop that 100 Tory MPs want her to ditch.

The European council president, Donald Tusk, spoke of his respect for May but he was unable to hide the fact that he could not give the prime minister what she had come for.

“I have no mandate to organise any further negotiations,” Tusk said. “We have to exclude any kind of reopening our negotiations on the withdrawal agreement. But of course we will stay here in Brussels, and I am always at Prime Minister Theresa May’s disposal.”

The prime minister’s Brexit aide Olly Robbins had been holding secret negotiations since Monday over a two-stage plan to secure the legal guarantee that Downing Street believed could turn MPs in its favour.

But leaders ripped up a prepared script on Thursday night in which they would have offered both warm words and the promise of further assurances in January.

The prime minister had been seeking a “joint interpretative instrument” that would put a duty on both sides to try to get out of the Irish backstop within 12 months of it coming into force.

Member states led by France and Ireland lined up to reject further concessions, warning that May’s deal appeared doomed to failure whatever was offered. They instead reiterated that they did not want to trigger the backstop, and that if it did come into force it would be a short-term arrangement.

Asked three times whether the UK could get further concessions or legally binding assurances that go beyond the current agreement, the German chancellor, Angela Merkel, offered May no succour.

“The 27 member states have given assurances. They are contained in the conclusions of yesterday evening,” she told reporters. “So that is our position, that is what we have put on the table and now we expect Great Britain to respond.”

With Downing Street’s plan in tatters, the EU’s leaders instead turned their fire on the House of Commons for showing the prime minister a lack of respect, as they sought to convince MPs to back the deal.

3.   Europe in Disarray

Project Syndicate      Dec 13, 2018

In what by historical standards constitutes an instant, the future of democracy, prosperity, and peace in Europe has become uncertain. And with the US under President Donald Trump treating its allies like enemies, the continent must confront the growing threats it faces largely on its own.

NEW YORK – It was not all that long ago – just a few years, as hard as that it is to believe – that Europe appeared to be the part of the world most closely resembling the end-of-history idyll depicted by Francis Fukuyama at the end of the Cold War. Democracy, prosperity, and peace all seemed firmly entrenched.

Not anymore. Parts of Paris are literally burning. The United Kingdom is consumed and divided by Brexit. Italy is led by an unwieldy left-right coalition that is resisting EU budget rules. Germany is contending with a political realignment and in the early phases of a transition to a new leader. Hungary and Poland have embraced the illiberalism seen across much of the world. Spain is confronting Catalan nationalism. And Russia is committing new acts of aggression against Ukraine.

In what by historical standards constitutes an instant, the future of democracy, prosperity, and peace in Europe has become uncertain. Much of what had been widely assumed to be settled is not. NATO’s rapid demobilization after the Cold War looks premature and precipitous.

There is no single explanation for these developments. What we are seeing in France is populism of the left, the result of people having difficulty making ends meet and rejecting new taxes, whatever the justification for them. This is different from what has fueled the rise of the far right across Europe: cultural defensiveness amid local and global challenges, above all immigration.

The European Union, for its part, has gradually lost its hold on the public imagination. It has been too remote, too bureaucratic, and too elite-driven for too long. Meanwhile, renewed Russian aggression may simply reflect President Vladimir Putin’s judgment that, having realized large political returns on his previous military “investments” in Ukraine and Syria, he had little to fear or lose from further actions.

Europe’s political class deserves its share of responsibility for today’s growing disarray. The EU introduced a common currency without a fiscal or banking union, making it all but impossible to conduct a coherent economic policy. The decision to put the UK’s continued EU membership to a popular vote, while allowing a simple majority to decide the issue and failing to spell out the terms of departure, was misguided.

Likewise, opening Germany’s borders to a flood of refugees, however pure Chancellor Angela Merkel’s motives, was sure to trigger a backlash. Most recently, French President Emmanuel Macron did himself no favors by backing down to the “Yellow Vest” protesters and offering compromises more likely to fuel additional demonstrations and exacerbate his country’s budget predicament.

We should not assume things will get better. It is only a matter of time before France’s far-right National Rally (formerly the National Front) and political parties across Europe figure out how to combine economic and cultural populism and threaten the post-World War II political order. Italy’s hybrid populist government is a version of just that.

The UK will remain torn over its relationship (or lack thereof) with the EU no matter what comes of Brexit; and it is entirely possible that a post-Brexit UK might come under serious strain itself, given renewed calls for Irish unity and Scottish independence. There is no formula for dividing power between Brussels and capitals that would be acceptable to both the EU and national governments. Meanwhile, it is far from certain that Putin is content or done with his aggression against Ukraine or conceivably others.

Moreover, in a world of increasing inequality, violence within and between countries, and climate change, the pressures posed by immigration are more likely to worsen than fade away. And economic dislocation is bound to intensify in a world of global competition and new technologies that will eliminate millions of existing jobs.

Why this matters should be obvious. Europe still represents a quarter of the world’s economy. It is the largest constellation of democratic countries. The last century demonstrated more than once the cost of a breakdown of order on the continent.

Alas, just as there is no single cause that explains Europe’s increasing disarray, there is no single solution either. To be precise, there is no solution of any sort. There is, however, a set of policies that, if adopted, would help leaders manage the challenges.

Latest News Clips 2018.12.10

                   

1.      Huawei faces catastrophe in the technology cold war

If the US can prove the Chinese firm broke sanctions, Huawei could grind to a halt

The Guardian  6 Dec 2018 

The arrest in Canada of the chief financial officer of the Chinese mobile network and handset tech firm Huawei marks a new stage in a technological cold war between western spy agencies and Beijing. This development could be catastrophic for Huawei: according to reports, the US suspects it broke sanctions by selling telecoms equipment to Iran. If that is proven, the response could exclude Huawei from many of the world’s most valuable markets.

That quiet war of words had already begun to ramp up this week when first the head of the UK’s secret service, Alex Younger, said in a speech that “we need to have a conversation” about Huawei’s involvement in the UK’s telecoms network. Then on Wednesday, BT revealed it is stripping out Huawei’s networking kit from parts of the EE mobile network.

Huawei has been the world’s largest telecoms network equipment company since 2015, ahead of European rivals Ericsson and Nokia, and far above domestic competitor ZTE and South Korea’s Samsung.

But the company has for years struggled against suspicions that it has bowed to pressure from the Chinese government to tap or disrupt telecoms systems in foreign countries. That has seen it banned from selling its profitable network equipment to the US, Australia and New Zealand – three of the “Five Eyes” group of intelligence-sharing countries (the other two being the UK and Canada).

But Meng Wanzhou’s arrest on a federal warrant in Canada is a dramatic escalation. As well as being the CFO and deputy chairwoman of one of the world’s largest makers of telecoms networking equipment that is essential to phone, smartphone and internet traffic, she is also the daughter of Huawei’s 74-year-old founder Ren Zhengfei. Ren attracted suspicion from western agencies because of his role working in IT for the Red Army before he set up the firm in 1987.

The latest developments are feeding into a climate of growing suspicion and distrust about Chinese technologies and equipment. The discovery that some smartphone handsets send western users’ data to servers in China raised eyebrows in 2016; increasingly, there are questions about what covert functions might be built into systems. A dramatic story from Bloomberg in October claimed that China had inserted monitoring chips into servers used by Apple and Amazon. That was denied fiercely by the companies, but feeds into a narrative where China’s dominance of technology manufacturing is seen by intelligence agencies as posing a risk to countries entirely dependent on telecoms networks.

Meng’s arrest appears to be part of a case that the US is building against Huawei. The industry already knows how serious that could be: in May the Trump administration instituted a ban against ZTE for breaking a promise not to sell equipment to Iran. The ban prevented any US company selling its equipment to ZTE – and essentially throttled it, because it relies on US-designed chips. At the same time, the UK’s National Cybersecurity Centre, which draws on expertise from the government’s GCHQ spy centre, warned bluntly against using ZTE equipment in UK networks on the grounds that “the national security risks … cannot be mitigated”. ZTE plunged to a billion-dollar loss that quarter.

The US has long suspected that Huawei has also been involved in breaking sanctions. Internal documents seized from ZTE when it was found to be breaking sanctions showed that it knew of another Chinese company, codenamed F7, was doing the same by setting up “cut out” companies to which it would sell equipment. This would then be sold on to the sanctioned country. In one crucial passage, ZTE’s document says that “F7’s proposal to acquire US 3leaf company was opposed by the US government.” In 2010, Huawei sought to acquire 3leaf – but backed away after US government opposition.

Asked if it was the company referred to as F7 in the ZTE document, Huawei said: “Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU.”

If the US can prove that Huawei broke Obama-era sanctions against Iran, it could precipitate a rush of bans against the company. If, like ZTE, it were banned from receiving American parts, its smartphone business, the world’s second largest behind Samsung, would grind to a halt. It may already be preparing for such an eventuality. It makes its own smartphone chips, but still relies on Google’s Android software. News emerged recently that it is working on its own alternative mobile phone operating system. John Delaney, a mobile systems analyst from researchers IDC says that would be sensible: “The American government’s hostility to Huawei means it’s possible that Google could be forbidden to continue licensing Android to the company.”

2.      Visiting Paris? Yellow Vests could wreak havoc on your plans

France 24   : 07/12/2018

If you’re a tourist in Paris, Saturday would be a good day to go to Versailles or, say, Giverny. Or anywhere outside of the city, because the threatened Yellow Vest protest promises once again to plunge the capital into chaos.

That’s not to say that the city won’t be safe – the police are deploying 89,000 security forces nationwide and about 8,000 forces and a dozen armoured vehicles in Paris to try to avoid anything like the destruction and mayhem that occured last weekend. Even then, the hotspots were largely avoidable. It’s just that, if you are a tourist, many of those hotspots are exactly where you will want to be.

The Champs-Élysées, for example, was the epicentre of last weekend’s chaos, so this is one to definitely avoid on this, the fourth weekend of protests – or Act IV, as its proponents are calling it. Stores on the famed thoroughfare have been told to keep their doors shut, protect their windows and remove outdoor furniture.

Most of them will simply close, as will the Eiffel Tower, the Louvre, the Petit Palais, the Grand Palais, the Pompidou Centre and the Catacombs. Both the Garnier and Bastille opera houses have cancelled Saturday's performances, as have other theatres, and six Ligue 1 football matches have been postponed, including that of Paris Saint-German versus Montpellier. Many other museums have not yet specified what action they will take, so check with your destination before you head out.

However, the closures don’t have to mean that your weekend in Paris is ruined. Don’t forget there’s a Disneyland just a short train ride away. And they say you can get amazing deals on high-end brands at the La Vallée Village outlet centre – conveniently accessible by RER trains – and right now its Christmas decorations are up. Plus, getting your Christmas shopping done this early in the season is nothing to be sniffed at.

Unmellow Yellows

All the safeguards are in place to prevent a repeat of last weekend when, in the worst rioting in central Paris since 1968, demonstrators torched cars, looted shops and defaced the Arc de Triomphe. As a result, hundreds of people were arrested.

The protests have taken place every weekend since November 17. They arose from opposition to a proposed tax on fuel but have since grown into a broad challenge to President Emmanuel Macron and his policies, which are widely seen here in France as favouring the rich. The protesters' name comes from the fluorescent-yellow safety vests all French motorists are required to keep in their cars.

This weekend, authorities are braced for “significant violence” as demonstrators from both the far right and the far left are expected to converge on the capital, and be joined by a fair number of hooligans just along for the tumultuous ride. Authorities believe the latter were responsible for the worst of the violence last weekend.

Since the movement began, four people have died in the protests and hundreds of others have been injured.

If you must go out in Paris, avoid the trouble spots by keeping yourself informed of the protest route and giving it a wide berth. While the exact course is hard to predict, rallying points include the Champs-Élysées, Bastille, Denfert-Rochereau and the Eiffel Tower.

Gaffe-prone Macron

Faced with the deepest crisis of his presidency so far, Macron, who has made repeated gaffes that paint him as out of touch with non-elites, has been surprisingly absent and largely intransigent in face of the unrest, though the government did say it would annul next year’s fuel tax hike. However Macron's office also said he would stick to his decision to cut the wealth tax on high earners, which the Yellow Vests want rolled back.

Members of Macron’s government, though, have been more conciliatory. Prime Minister Édouard Philippe said he was open to adopting new measures to help low-paid workers. Finance Minister Bruno Le Maire said he was willing to accelerate tax cuts.

Despite the violence, the demonstrators seem to represent the sentiment of the majority of French citizens. An opinion poll conducted this week showed that 72 percent of those surveyed backed the protests. And the movement has inspired others, including students demonstrating against proposed educational reforms.

3.      A Second Chance for Britain

The Project Syndicate    Dec 7, 2018

 

In 1950, the British reacted with a mixture of horror and disdain to the proposed European Coal and Steel Community, suspecting a French plot to lure a pragmatic people into some utopian foreign project. The basic arguments against “Europe” have not changed at all since then, unlike the consequences of acting on them.

NEW YORK – On May 9, 1950, when European countries were just beginning to emerge from the ruins of war, the French statesman Robert Schuman announced his plan to create the European Coal and Steel Community. By pooling these vital war materials under a common European authority, violent conflict between France and Germany would become unthinkable. The Germans were delighted. The Benelux countries and Italy would take part as well. A first step toward a European union had been taken. Shortly after Schuman’s announcement, the British were invited to join in the discussions.

They reacted with a mixture of horror and disdain, suspecting a French plot to lure a pragmatic people into some utopian foreign project. The Labour Party, then in power in Britain, couldn’t imagine sharing sovereignty over the United Kingdom’s vital industries. And Conservatives failed to see how a global power could possibly be part of such a narrow European club. It was all very well for the Continentals to band together. But Britannia would continue to rule the waves, together with the other English-speaking peoples in the Commonwealth and the United States.

It is easy, in hindsight, to mock the British for missing the European boat with such blithe arrogance. But it is at least understandable. After all, the British with their proud democracy had stood alone against Hitler’s Germany and helped to free the European countries that had surrendered to the Nazis. One cannot really blame them for feeling a trifle superior.

What is depressing, however, about the Brexit disaster that is making such a mess of British politics now is that the basic arguments against “Europe” have not changed at all since 1950. Jeremy Corbyn’s Labour Party ideologues view the European Union as a capitalist plot to undermine the purity of their socialist ideals. And Brexiteers on the right still dream of Britain as a great power, whose global reach should not be hampered by membership of European institutions. Another strand of nationalism, which is more English than British, is the romantic attachment to a “special relationship” with the US.

Alas for the British, the world has changed a great deal since 1950. The British Empire is over, the Commonwealth is little more than a sentimental relic of the past, and the relationship with the US may be very special to the English, but it is much less so to the Americans.

But something else, perhaps even more important, has changed as well. When the British government turned down the chance in 1950 to help shape Europe’s future, some Conservatives criticized Labour for being a bit too hasty. As the opposition, the Tories had to say that. But their hearts were not really in it, for, as the New York Times reported at the time, the government’s position “reflects a good deal of British feeling toward Europe, regardless of party lines.”

Britain – if not every part of England – is now a much more European country. London in 1950 was still a completely British city, where “aliens” were a distinct minority. In the last decades of the twentieth century, it became the unofficial capital of Europe. More than three million Londoners are foreign born, with hundreds of thousands of young Europeans working in banking, law, fashion, catering, the arts, and many other industries. London has a larger French population than many French cities.

No wonder, then, that the majority of Londoners voted to remain in the EU. And so did most young people in Britain who bothered to vote in the referendum. The Britain of 1950 would be unrecognizable to them.

So who are the 51% who voted to leave the EU? And why? Protecting socialism has limited appeal, as do ideals of pure national sovereignty or fantasies of Britain striking out alone as a global power. Fear of immigration appears to be the main reason why people voted to leave. In some cases, this stemmed from genuine worries that Eastern European builders, say, were making it harder for British citizens to do the same jobs for a decent wage. But very often, the people who are most afraid of being “swamped” by foreigners live in areas where immigrants are very few.

At the same time, most British citizens take it for granted that they are nursed and treated in hospitals by immigrants, served in supermarkets by immigrants, and aided in banks, post offices, social service centers, airports, and public transport by immigrants. Without immigrants, the British economy and services would collapse.

Some pro-Brexit politicians have stoked immigration fears more brazenly than others. The most notorious image used in the Brexit campaign was a poster showing a stream of young men, looking vaguely Middle-Eastern, with the text: “We must break free of the EU and take back control.” In fact, the young men in the picture were nowhere near the UK’s borders. The photograph was taken in Croatia.

The more respectable Brexiteers talk more about sovereignty than immigration. Their anxiety about losing control may be genuine. Figures like Boris Johnson, with his Churchillian pretensions, or Jacob Rees-Mogg, who resembles a minor character in a P.G. Wodehouse novel, are anachronisms. In earlier times, they might have run an empire. Now they are mere politicians in a middle-ranking state.

Brexit for the likes of Johnson or Rees-Mogg is more like a deluded grab for power, undertaken in the name of the common people, supposedly in revolt against the elites of which these politicians are themselves conspicuous members. Their nostalgia for grander forms of rule has already done great damage to the country they claim to love. This is all the more reason, now that the potential catastrophe of Brexit is so plain to see, why those common people should have a second chance to vote for a way to avoid it.