Hey there.
So the US relationship with China just took a nasty turn.
Meng Wanzhou the CFO of Hauwei one of China's most successful companies has been arrested,
in Canada, at US insistence supposedly because of actions related to Iran.
This incredibly stupid move is worth unpacking a bit, because it deals with one of the central
themes of this channel, the fact that the United States is a lot more powerful than
is commonly understood.
One of the central untruths that US media and government puts out there is that the
United States is just a country like any other, with its own priorities and policies, struggling
along.
This myth is central to the fantasy that we are seriously threatened by geopolitical pygmies
like Iran or Russia.
The truth is very different.
The US runs the world, in small part through military strength, but much more importantly
through a web of institutions, financial ties and legal relationships that dictate to the
world in surprising ways.
I have written at length about FATCA, the foreign account tax compliance act and how
it makes the whole world subject to the IRS, the US tax authority.
That’s just one small aspect of the powers that the US judicial systems claim over the
world.
The key thing about this vast US power is that it's usually carefully hidden by consent
and complexity.
Most of the world's countries have put up with this use of power because A: they used
to trust the US to use this power to work towards common goals, and B this legal and
financial stuff is usually so complex that nobody without a law degree and a spare six
months to study a given topic really understands how much power the United States has.
We have seen this year that most European leaders don't really understand how this works
either.
Meng Wanzhou is reportedly being held for her company's violations of Iran sanctions.
Earlier this year, the Trump administration unilaterally destroyed the Iran nuclear deal.
Macron of France, Merkel of Germany and some others angrily declared that this was impossible.
It was a multilateral agreement, and Germany and France were sticking by it.
German and French companies didn't agree with them on that.
What these European companies knew, and their leaders didn't, was that the US had too much
financial and legal power to be denied.
The US has the ability to ruin foreign companies, under multiple laws, for transactions that
have nothing to do with the United States.
It's Washington DC's world, the rest of us are just living in it.
We talk a lot about the importance of the rule of law in the United States, and the
ideal that the law is the law is something we should aspire to.
But every law enforcement functionary, from supreme court justices down to your local
police officer knows that the law is also always political.
GOOGLE SWITCH IN TIME SAVES NINE.
A legal institution that wants to preserve its power uses its power carefully.
The Supreme Court got out of FDR's way during the great depression when he threatened to
pack the court.
As another example, Police almost never arrest rich white people for drug crimes, and when
they do, those rich white people never face consequences.
If they did the laws would change.
And that's why this prosecution is so, so stupid.
Meng Wanzhou is the rich white guy of Iran sanctions prosecutions.
Other high profile proceedings have gone after much easier targets.
Reza Zarrab was a super shady guy who was picked up while partying in Miami.
The prosecution of the Standard Chartered bank didn't involve any embarrassing arrests,
and everybody's usually happy to see a big bank get fined.
Turkey and the United Kingdom weren't happy about these prosecutions, but they came in
the context of Iran sanctions that they had at least officially agreed to under Obama.
What the Trump administration has done here is arrest the one of the richer and more powerful
people in China, in a non US country, pursuant to an Iran policy that nobody else agrees
with.
That is not the way to preserve US power.
In the short term Trump is likely get away with this.
But China's leaders just got very interested in working with Europe to make sure this sort
of thing can't happen in the future.
As with most of what Trump does, it's future US presidents that will have to deal with
the wreckage here...
Oh and as a postscript…
I can already see some Trump defenders arguing that arresting this woman is savvy dealmaking
in Trump’s trade negotiations with China.
I have a clip from earlier this year, dealing with Turkey that I think responds to that argument pretty well
Two years later the turks have failed to make their case against Brunson, and the United States has lost its patience
To make matters worse, Erdogan made it clear in a speech last September that Brunson is being
held as a hostage for the extradition of somebody the Turkish government wants. Fetullah Gulen, a Muslim
cleric living in Pennsylvania is the alleged mastermind of the 2016 coup attempt. Last September
Erdogan explicity stated that he wanted to do a swap. This was really, really dumb.
Erdogan's statement took Turkey, a much abused US ally, and made it look like a criminal, hostage- taking
state.
Using judicial proceedings to take hostages for other negotiations is a game we really
shouldn’t be playing with China.
Actually It's a game we shouldn't be playing at all.
It's dangerous and sleazy.
The resolution of the ZTE case was corrupt enough, we shouldn't be putting people's freedom
on the line as well.
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