December 07, 2018

Neocons Sabotage Trump's Trade Talks - Huawei CFO Taken Hostage To Blackmail China

CNN reports that White House chief of staff John Kelly is expected to resign soon. There have been similar rumors before, but this time the news may actually be true. That is bad for Trump and U.S. policies. Kelly is one a the few counterweights to national security advisor John Bolton. His replacement will likely be whoever Bolton chooses. That will move contFrol over Trump policies further into the hands of the neo-conservatives.

It was Bolton who a week ago intentionally damaged U.S. relations with China.

The U.S. Justice Department arranged for Canada to arrest the chief financial officer of Huawei, Meng Wanzhou, over alleged U.S. sanctions violations with regards to Iran. The case is not over the sanction Trump recently imposed, but over an alleged collision with the sanction regime before the nuclear deal with Iran. The details are still unknown.

Meng Wanzhou is a daughter of the founder and main owner of Huawei, Ren Zhengfei, and was groomed to be his successor. The company is extremely well regarded in China. It is one of its jewel pieces and, with 170,000 employees and $100 billion in revenues, an important political actor.

The arrest on December 1 happened while president Trump was negotiating with president Xi of China about trade relations. Trump did not know about the upcoming arrest but Bolton was informed of it:

While the Justice Department did brief the White House about the impending arrest, Mr. Trump was not told about it. And the subject did not come up at the dinner with Mr. Xi. Mr. Trump’s national security adviser, John R. Bolton, said on NPR that he knew about the arrest in advance, ..

Bolton surely should have informed Trump before his dinner with Xi, in which Bolton took part, but he didn't.

It was a trap. The arrest is a public slap in the face of China and to Xi personally. It will not be left unanswered. Whatever Trump may have agreed upon with Xi is now worthless. John Bolton intentionally sabotaged the talks and the U.S. relations with China.

Huawei is Chinese manufacturer of telecommunication equipment. It is the world leader in 5G wireless technology that will soon replace the wireless networks we know today with much higher data capacities, faster response times and many new features.

After Huawei was founded in 1987 it copied technology from Cisco and other U.S. manufacturers. Today it is a technology power of its own. It is one of the leading inventor in the 5G field and over the last years filed thousands of patents related to it. Its success in the field is genuinely self made:

With 5G, Chinese companies started developing know-how early. Huawei has invested $600 million in 5G research since 2009, according to a company spokesman, and has committed an additional $800 million for this year. The company is testing 5G equipment with European telecom operators including BT, Deutsche Telekom and Vodafone. As of early 2017, 10 percent of the 1,450 patents essential for 5G networks were in Chinese hands, according to analysts with Jefferies, who wrote that they expected the figure to rise. That number includes intellectual property rights held by Huawei; another Chinese equipment maker, ZTE; and others.

Huawei's share in 5G patents has since risen further. Right now it is the only true 5G supplier that can build a complete network.

The company is still depending on computer chips manufactured in Singapore, Taiwan and the United States. But Huawei and other Chinese companies are now investing in their own chip manufacturing technology. They plan to use the 7 nanometer process which only few other companies in the world provide. Huawei is also investing in qantum computing.

The December 1 arrest of Meng Wanzhou and a number of other incidents on that day gave raise to a number of interesting conspiracy theories in the Chinese web sphere (via Peter Lee, links added):

Red @OmeletteRed - 19:09 utc- 6 Dec 2018 A great explanation of the Huawei Kidnapping, written by a comrade in the Deng Gang Central discord. There may be a lot more than meets the eye in Canada’s shock arrest, at US behest, of Huawei’s CFO and heir apparent Meng Wanzhou (link below). Chinese sources have assembled the following facts: April 2017: A director of Chinese tech giant Huawei personally escorted famed Shanghai-born physicist Zhang Shoucheng from the latter’s hotel in Shenzhen. Jackson & Wood Professor of Physics at Stanford University, Zhang was in town to attend an IT summit.

Sept. 2018: Prof. Zhang receives a European physics award, one of his many honors. His work in quantum physics is expected to revolutionize the global semiconductor industry. Yang Zhenning, the first Chinese scientist to receive the Nobel Physics Prize (1957), had predicted that Zhang would be the next one.

Dec. 1, 2018: Prof. Zhang and Meng Wanzhou are expected to attend a dinner in Argentina, where the G20 summit is being held.

Dec. 1, 2018: On her way there, Meng is arrested in transit by the Canadian government.

Dec. 1, 2018: Prof. Zhang falls to his death from a building in the US, allegedly a suicide. Said to be suffering from depression, he was 55.

Dec. 1, 2018: A nighttime fire breaks out at a factory of Holland’s ASML, the world’s leading manufacturer of extreme ultraviolet (EUV) lithography technology. EUV is crucial to the production of the next generation of semi-conductors, which US and Chinese tech firms as well as Korea’s Samsung are competing to be first to bring to market. Leading Chinese semiconductor producer SMIC is known to have ordered EUV technology worth US$120 million from ASML, for scheduled delivery early in 2019. After the fire, ASML announced that it expected delays in shipments of its products, notably early 2019.

Prof. Zhang was also a venture capitalist. He was a founding partner of a Silicon Valley-based fund investing primarily in early-stage technologies. Danhua Capital, also known as Digital Horizon Capital, holds shares in Silicon’s Valley’s start-ups who work on artificial intelligence, cybersecurity, and drones. Danhua is backed by Zhongguancun Development Group, a state-owned entity funded by the Beijing municipal government. The company has come under scrutiny of the Committee on Foreign Investment in the United States (CFIUS) which suspects (pdf) that its purpose is to pilfer critical U.S. know how and to transfer it to China.

Zhang's family says that his death had nothing to do with U.S.-China tensions.

The U.S. spy services and military do not like Huawei. They can no longer easily hack the equipment it sells. Convincing Cisco or some other U.S. company to leave back doors in their equipment is quite simple. One can always threaten the management or board of these companies with some tax investigation or over other shady activities. That is not so easy when the company is hosted in China. It requires the NSA and others to use more expensive efforts to reach their aim:

The National Security Agency breached Huawei servers years ago in an effort to investigate its operations and its ties to Chinese security agencies and the military, and to create back doors so the National Security Agency could roam in networks around the globe wherever Huawei equipment was used.

The U.S. is lobbying various countries not to use Huawei equipment. It claims that the Chinese government could use it for spying. That thought was obviously born when the U.S. spies looked at what they are doing themselves. Australia, New Zealand and Japan already agreed to keep Huawei out. Today the EU tech commissioner Andrus Ansip also warned of using Huawei. Ansip was previously the prime minister of the U.S. protectorate of Estonia. He is known to be a U.S. mole and is not taken too seriously:

Germany, meanwhile, said it opposed excluding any manufacturers from the planned construction of 5G mobile networks.

Meng Wanzhou, the arrested Huawei CFO, will have her bail hearing in Canada today. It is likely that she will fight her extradition to the United States. Staying in full compliance with U.S. sanctions is difficult and Huawei may indeed have not always done so. Then again - U.S. allegations of sanction violations can always be made up from hot air.

They are certainly not the real reason why Meng Wanzhou has come under fire. The White House even admitted such.

Meng Wanzhou was taken hostage to be used as leverage in China trade talks. The 'leverage' could also be used to push Huawei into providing the NSA with back doors to its equipment. This is the policy style of Somali pirates or Saudi clown princes. The ruthlessness of this blackmail operation is breath taking. It is typical of neo-conservative behavior to use such extreme measures. Trump's foreign policy is run by neo-conservatives and they are again, like when they faked intelligence to lay the grounds to invade Iraq, creating huge damage:

Melania was right when she told an interviewer in Africa that her husband is surrounded by enemies within his administration. These are people who either opposed him during the 2016 campaign season or who signed up early in the campaign with an expectation that they could get jobs in a Trump Administration and in both cases understood that a president not accustomed to thinking seriously about other than business hustle could be manipulated or deceived in pursuit of their own agenda rather than his or that of the "deplorables." These people are the neocon incubi and succubi who seek an even more dominant hegemonic role in the world for the US. They are out and out imperialists of a kind not seen since the time of McKinley and the US-Filipino War.

...

Bolton, Pompeo, his new helpmate Mary Kissel, dozens and dozens of Obama globalist holdovers, and people who find Trump's boorish ways repulsive, they all are undermining the administration from within and Trump does nothing about it.

...

Is Trump competent in such matters as tax policy, regulatory reform and trade negotiations? I think he is, but he is allowing the neocons to destroy the possibility of rational political relations in Europe and the Middle East.

... and with China.

William Barr was just nominated as the new Attorney General. He already had that position during the G.W. Bush administration and believes in the 'unitary executive', the dictatorship of executive power. Kelly is leaving. Bolton and Pompeo have Trump's ear and will manipulate him into selecting one of their friends as Kelly's replacement. Secretary of Defense Mattis is the next one to get kicked out. When all of Bolton's selected persons are in place, U.S. foreign policy will become even more radical than it already is.

Taking the CFO of one of China's premier companies hostage to gain control over its technology and as leverage in trade talks is already an extreme measure which will have long term damaging effects on U.S.-China relations. Imagine what else can be done when the little that is left of lawful behavior and decency in U.S. foreign policy gets completely thrown out.

Posted by b on December 7, 2018 at 19:00 UTC | Permalink

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