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.