Canada abetting Washington's 'new Cold War' with Huawei arrest, says economist

The arrest of a Chinese tech executive is yet another example that the U.S. is creating "a new Cold War" in international trade, says economist Jeffrey Sachs, who adds that Canada is abetting its southern neighbour.

Canadian officials arrested MengWanzhou, the chief financial officer of the Chinese telecommunications firm Huawei, in Vancouver on an extradition request from the U.S. She has been released on $10-million bail and must stay at her Vancouver home.

Sachs director of Columbia University'sCenter for Sustainable Development and the UN'sSustainable Development Solutions Network believes the arrest is an attempt by the U.S. to "stop China's rise" by creating a chilling effect on Chinese businesses.

"You have a neighbour to the south that is quite erratic ... a little bit unhinged at China's rise in power," Sachs told CBC from Warsaw, Poland.

"This is a pretty well-known American approach to use its power to try and break the economic momentum of a rival, and I think it's very, very bad behaviour and very dangerous, actually, for the worldto have a new Cold War," he added.

"This is the U.S. Cold War mentality being replayed ... the U.S. just doesn't want any rivals anywhere."

Sachsalso questioned the reason for the arrest, arguing the motive is inconsistent with previous U.S. behaviour.

"She's charged with as I understand it fraud, for a presentation she gave to HSBC about Iran dealings," said Sachs.

"It's interesting that HSBC was itself sanctioned for massive violations of U.S. sanctions to Iran, but not asingle executive faced any charges, much less an arrest in a foreign airport, and dragged through a process like [Meng]," he added.

"This is extraordinary, and I understand why China's reaction is as it is, because it's absolutely, completely out of the norm."

Watch:Jeffrey SachsonHuaweiexecutive's arrest

'Maybe Canada's being used and manipulated,' says American economist

6 years ago

Duration 1:13

Jeffrey Sachs says Canada is caught in the middle of a diplomatic spat between two superpowers.

Meng'sfather is founder of Huawei, a powerful Chinese telecommunications company that has sold equipment and consulting services around the world. The company is moving rapidly into 5G technology working with international researchers, but some critics have accused Huawei of spying on behalf of the Chinese government.

The fraud allegations against Meng centre around the relationship between Huawei and a Hong Kong company called Skycom, that did business in Iran.

According to U.S. prosecutors, Skycom was a "hidden" subsidiary of Huawei. Meng once served on Skycom'sboard of directors but she says Huaweisold its interest in Skycom and she stepped down from the board.

Iran is subject to U.S. sanctions and banks can be found criminally liable if they help move money out of a sanctioned country and into the broader global banking system.

'Canada's being used and manipulated'

Canadians Michael Spavor and Michael Kovrig were detained by China on Monday over what the Beijing News, a state-run Chinese newspaper, described as suspicion of engagement in activities that endanger China's state security.

Prime Minister Justin Trudeau on Friday criticized China's actions, calling them "not acceptable."

When asked if the detention of the two Canadian men was intended as retaliation, a spokesperson for China's Foreign Ministry said they were being handled according to Chinese law.

Watch:Huawei arrest and U.S. trade agenda

Canada caught between 2 superpowers over Huawei arrest | At Issue

6 years ago

Duration 10:47

Canada is caught in the middle between two superpowers over the Huawei CFO arrest. While Ottawa says this isn't political, China seems to feel very differently. So is Canada being used? And at what costs? At Issue is here to answer those questions and more.

Sachsbelieves the arrests are a consequence for Canada's recent involvement in Washington's campaign to levy heavy-handed punishment onMengover perceived Iran sanctions violations.

"I think Canada's doing the bidding ofUnited States policy that is not well-controlled or well-modulated," he said.

"Maybe Canada's being used and manipulated, not onlyvis--visChina, but for the United States to try to show anyone: 'Youdare cross us on any business with Iran, you're going to pay a price.'"

Canadian officials, includingTrudeau,have emphasized that Canada's arrest of Meng was not arbitrary, but done in accordance with the extradition treaty in place with the United States.

Sachsurges Canada to consider evaluating the situation by its own meritsrather than acquiescing to U.S. demands.

"To my view, Canada should reflect independently and realize that what it's being asked to do was completely outside international norm and very provocative," he said.