The arrangement, in effect a modern-day version of a Cold War prisoner swap, brought an abrupt end to a saga that has severely poisoned relations between Canada and China, cast an unwelcome spotlight on one of China’s trophy tech companies, Huawei, and complicated Beijing’s public relations efforts to project a happy face with the Winter Olympics less than five months away.
What dragged on at a glacial pace for about three years came to a quick end Thursday when Huawei’s Chief Financial Officer, Meng Wanzhou, entered into a deferred prosecution agreement with the Biden administration’s Department of Justice. In return for pleading not guilty — but admitting to misleading HSBC Bank about the company’s relationship with an Iranian subsidiary, Skycom — the US would suspend an extradition request with Canada. This allowed her to be released from house arrest in Canada and return home. The charges could be dropped completely in late 2022.
At around the same time the groundwork was being prepared for the release of Meng — the daughter of Huawei founder Ren Zhengfei — behind-the-scenes diplomacy was at work to have two Canadians — businessman Michael Spavor and former diplomat Michael Kovrig — released from Chinese prisons and flown back home. The two were charged with espionage just nine days after Meng was arrested. Their detention by China is being widely and bitterly described in Canada as an act of “hostage diplomacy.”
Although China had steadfastly insisted the Canadians’ incarceration was not linked to the Meng arrest, the timing of their release removes all pretenses. In 2018, the long legal saga was politicized by former US President Donald Trump who said Meng could be used as a bargaining chip in China trade talks.
In paving the way for Meng’s departure from Canada, the Biden administration, which has come under fire from allies for lack of consultation on the abrupt withdrawal from Afghanistan, may have been wanting to repair relations with Ottawa after it was excluded from a secretly negotiated security pact between the US, United Kingdom and Australia which gives the latter access to American nuclear submarine technology.
For Canada and the recently re-elected government of Prime Minister Justin Trudeau, a tense situation has been diffused, possibly opening the way for Ottawa to re-set relations with Beijing. (When it comes to future relations with China, Foreign Affairs Minister Marc Garneau told CBC News on Sunday that Canada’s “eyes are wide open”).
However any reset in China-Canadian bilateral relations is complicated by a pending decision from Ottawa on whether Huawei will be allowed to participate in the buildout of the country’s 5G network (Canada is the only member of the so-called “five eyes” intelligence community to not have made public its intentions). All the others have banned Huawei outright or severely restricted its participation.
Now that the Canadian government need not tiptoe around Beijing for fear of compromising the case of the “two Michaels,” Ottawa has to decide its public stance on issues such as China’s treatment of Muslim minorities in the western region of Xinjiang. Last year, the Canadian House of Commons overwhelmingly approved a resolution accusing Beijing of genocide, with the Trudeau cabinet abstaining — ostensibly not to further strain relations with China.
Although it is impossible to know for sure, in making the decision to release the two Canadians, Beijing could have been aiming to whitewash its stage prior to hosting the Winter Olympics in 2022. The fewer chances of boycotts, distractions and negative publicity, the better for a Chinese Communist Party keen on burnishing its image as a sophisticated member of the international community.
In the end, what Meng received via the DOJ agreement to defer prosecution charges against her was a slap on the wrist. As much as the outcome represents a win for Canada, the question needs to be asked: Does it send the wrong signal to foreign companies, autocratic governments and strongmen keen to conduct business with countries under US sanctions?
At the moment, there are few signs of contrition emanating from China. The state-run Global Times is already heralding Meng’s release as nothing less than a diplomatic win for China. At a media briefing Monday in Beijing in response to a question from CNN, Foreign Ministry spokesperson Hua Chunying said the two Canadians were released on medical grounds. She described the detention of Meng as “a political frame-up and persecution against a Chinese citizen, an act designed to hobble Chinese high-tech companies” and “Canada should draw lessons and start from its own interests.”
As an emerging superpower, China can be expected to push its territorial ambitions in the South China Sea, continue to maintain its network of detention centers in Xinjiang, and push its anti-democratic agenda in Hong Kong with draconian legislation and persecution of pro-democracy elements. The top US commander in the Pacific says China is poised to supplant American military power in Asia via an increasingly expansive military.
For the time being, the three parties involved in the high-stakes diplomacy — the US, Canada and China — deserve to take a collective sigh of relief for resolving a major multi-lateral irritant. But in the longer term, there is little basis to expect Beijing to play nice with the rules-based international system. Now is not the time for the West to lift its guard.