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How the Huawei cover sparked fears of ‘hostage diplomacy’ by China


WASHINGTON — Talks between the Justice Department and a chief executive of Huawei, the Chinese telecommunications giant, had spanned more than 12 months and two presidential governments and boiled down to one overarching dispute: whether Meng Wanzhou, the daughter of Huawei’s founder , give in to every mistake.

Since her arrest in 2018, Ms. Meng had refused to admit she misled global banking conglomerate HSBC about Huawei’s dealings with Iran a decade ago, even though that was key to her release from detention in Canada, where she was on the go. . bail against her two luxury homes in Vancouver. In mid-September, as a Canadian judge was about to rule on whether to extradite her to the United States, federal prosecutors told Ms. Meng that they were willing to walk away from settlement negotiations and Ms. Meng, bring in tech royalty. China, in court in Brooklyn.

Then came a breakthrough: On September 19, after a new lawyer entered the case on her behalf, she agreed to a “statement of fact” that the Justice Department said would be valuable in their pending case against Huawei itself — a company that had been operating for years. been in the crosshairs of the Department of Justice and the United States National Security Agency.

Five days later, Ms. Meng was on the plane back to China, where she was greeted as a hero. Two Canadians, essentially held hostage on trumped-up charges, were on their way back to Canada along with two young Americans who had been denied entry to China for three years over a case involving their father, wanted by Chinese authorities.

The apparently well-orchestrated exchange — details of which were confirmed by government officials, diplomats and others with knowledge of the lawsuit — raised numerous questions. Was this the first sign of a grudging rapprochement between Washington and Beijing after a downward spiral in their relationship that has no precedent in modern history? Was it a face-saving victory for both sides, getting their citizens back, and the end of an irritation in relations that emerged in a phone call between President Biden and President Xi Jinping last month?

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

“By letting her go without so much as a slap on the wrist,” wrote Mr. Banks of Ms. Meng, “the United States is sending any criminals that we don’t take it very seriously in enforcing our sanctions laws. This is a dream playing for Iran, Hamas, Russia, North Korea and any other entity that has been hit with our sanctions.”

White House officials, from press secretary Jen Psaki, to the policymakers devising a strategy to address the complexities of competing with, controlling, and collaborating with China simultaneously, deny that there was any sort of deal — or any kind of deal. change in Chinese policy. “There is no connection,” said Mrs. Psaki.

The Chinese told a different story, filling the press and social media with stories portraying Ms. Meng as a victim. According to their story, the charges against her were in retaliation for China’s attempts to wire the world with China-led 5G networks.

The near-simultaneous release of the two Canadians and two Americans, some senior officials in Washington believe, was intended to make it look like a political decision by the Biden administration, despite its protests — not the independent verdict of prosecutors the White House has ruled. played on insistence. A senior government official said it was in China’s interest to make this look like a Cold War spy swap, because that would play into the story that Ms Meng was guilty of nothing more than promoting Huawei’s activities around the world. world.

(In the end, she agreed to a deferred prosecution agreement, which will eventually result in the dropping of all charges, a subtlety missing from the Chinese accounts, along with any mention of her “factual statement.”)

“We cannot control how the Chinese or others manage their affairs there,” Ms Psaki said Monday. “It’s a little different.”

But the arrival of Mrs. Meng in China also undermined Huawei’s long-standing insistence that it is completely independent from 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 festively lit up. The People’s Daily called it a “glorious victory for the Chinese people” that would pave the way for other victories. She spoke of her loyalty to the Communist Party and to a company that operates under China’s laws and guidelines.

In Washington, Huawei has long been the center of US fears of technological dependence on Chinese companies. Classified and unclassified investigations have explored the extent to which it could use its control over global networks to redirect or shut down Internet traffic. Documents released by Edward J. Snowden more than eight years ago revealed a covert operation by the National Security Agency against Huawei, codenamed “Shotgiant”, to break into Huawei’s networks and understand the ownership of the company.

The Trump administration tried to stop the spread of Huawei networks by threatening to cut European countries off from US intelligence agencies. The Biden administration has tried a softer approach, including an effort to promote technologies that would give US and allies companies a competitive alternative. That won’t change with Ms. Meng’s release, officials say — and they doubt China is now willing to engage with the United States over a range of other concerns, from cyberactivity to trade disputes.

“I don’t think anything substantial has changed, i.e. China has to abide by the rules,” Commerce Secretary Gina Raimondo told NPR on Tuesday.

With the geopolitical battle so severely tested, prospects for a deal to release Ms. Meng looked bleak even a month ago, despite Ms. Meng’s three years of detention in Canada.

Immediately after Canada Mrs. Meng, 49, at Vancouver International Airport, China arrested and set up two Canadian men, Michael Kovrig, a former diplomat, and Michael Spavor, an entrepreneur. They were charged with espionage.

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

But Mrs. Meng was taken into custody on the day the summit ended, and a former senior Trump administration official who attended the event said that wiped out any hope of the two young Americans being released. China made little secret that their fate was intertwined with the case against Ms. Meng, and thus the case against Huawei.

Like some of the people who described details of the case, the former official asked for anonymity to discuss sensitive topics.

Discussions were revived in May when Ms. Meng hired Washington power attorney William W. Taylor, who had just won a not-guilty verdict in another high-profile case involving a well-known Washington attorney. Meanwhile, Canada began to pressure Washington to do something about the two Canadians detained in China. Prime Minister Justin Trudeau publicly called for their release and the case was regularly discussed with US diplomats.

But officials across the administration were adamant that the Justice Department was protected from that pressure.

President Xi also brought the fate of Ms. Meng brought up, most recently during a telephone conversation with Mr. Biden on September 9. Mr Biden remained silent, government officials say. But they declined to say if at the time of the call, he was aware of Justice Department discussions with her about a possible stay-of-charge agreement.

A week later, the Justice Department told Ms. Meng said it would get off the deal unless she admits she did something wrong. While Justice lawyers knew they would lose the extradition case, they feared that without her testimony about what happened in the attempt to sell telecommunications equipment to Iran, the ministry’s case against Huawei would fail. And they didn’t want to set a precedent for Beijing to forcefully push its way out of legal liability.

On September 19, Mr Taylor informed prosecutors that she would compromise, offering the “statement of fact” without admitting she had done anything wrong – and without penalty. While the statement essentially admits that nearly all of the allegations the department has leveled against her are admitted, the formal plea would be “not guilty.”

Now the Justice Department can use its statement as evidence in the Huawei case. It’s clear it’s pursuing that case aggressively: Just days after the deal was announced, prosecutors said in a court filing that they had obtained Huawei’s financial records.

Dan Bilefsky in Montreal and Michael Forsythe in New York contributed reporting.

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