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Showing posts with label weaponizing the dollar. Show all posts
Showing posts with label weaponizing the dollar. Show all posts

Thursday, 6 January 2022

What Have We Learned from the Meng Extradition "Catastrofarce"?

The "Catastrofarce"

In his review of Mike Blanchfield and Fen Osler Hampson's book, The Two Michaels, David Moscrop characterizes the #Meng extradition case as a mix of catastrophe and buffoonery.  To describe the three-year-long "farce," Moscrop suggests the neologism "catastrofarce."  "When all was said and done," Moscrop points out, "nothing was achieved and everyone involved came out poorer than when they had started." True enough, but now we can reflect on all that we have learned from the affair, right?  No?


Sometimes you can judge a book by its cover

Moscrop assesses The Two Michaels as "a missed opportunity" as it failed to probe the context of a "Cold War between the United States and China."  The Two Michaels left much unsaid.  Obviously, a close focus on "The Two Michaels" as "Innocent Canadian Captives" was bound to exclude details of the broader issues.  Blanchfield and Osler Hampson's review of the Michaels' harsh conditions in contrast to the luxury of Meng's Vancouver mansions seemed the same insistence on the marginally relevant reiterated by Canada's legacy media for three years, the same pandering to imagined Canadian sensibilities--"pandas really aren't nice like beavers"--which I attempted to mock in The Panda and the Beaver.

What The Two Michaels leaves unsaid

Despite the subtitle, The Two Michaels has relatively little to say about "the US-China Cyber War."  In the dozen or so times "cyber war" is mentioned, the book's most interesting observation is left largely undeveloped:

Whatever the differences in their circumstances, Michael Kovrig, Michael Spavor, and Meng Wanzhou were now bound by one shared reality. All three were pawns in a full-blown technology war for control over global communications [. . . .]

 I noted the authors' excluding relevant  detail in the early going of The Two Michaels when I read this sentence:  "The US and Iran have been enemies since 1979, when a group of radical students in Tehran stormed the American embassy and took hostages in a siege that lasted 444 days."  Dating the beginning of US-Iranian enmity to 1979 and attributing the Iranian revolution to "a group of radical students" leaves unsaid that the USA arranged the overthrow of Mohammad Mosaddegh, the democratically-elected leader of Iran, then installed and maintained an "oppressive, brutal, corrupt," 26-year-long dictatorship under the playboy Shah Reza Pahlavi in order to protect Anglo-American oil interests.

What about Richard Donoghue?

Donoghue's name, of course, gets mentioned in the Blanchfield & Osler Hampson monograph, as he issued the warrant, conducted the grand jury trial, and argued that Meng Wanzhou should be kept behind bars while awaiting extradition.  The rapid rise and fall of Donoghue's career was directly aligned with the pursuit, arrest and attempted extradition of Meng Wanzhou.  Donoghue's position as a litigator for CA Technologies to becoming US Attorney for the Eastern District of New York in 2018 to being named Assistant Attorney General to his disappearance from the spotlight paralleled Meng's indictment, arrest and eventual release.  Blanchfield and Osler Hampson have virtually nothing to say about him, never question his background or motives, barely even mention his central role in the "catastrofarce."

And Jody Wilson-Raybould?

Jody Wilson-Raybould was the Minister of Justice responsible for Meng Wanzhou's arrest and the early stages of issuing an Order to Proceed with her extradition.  Wilson-Raybould had the ministerial authority, by law, to dismiss the American request and release Meng "at any time" and put an end to the "catastrofarce" which led to Michael Korvig and Michael Spavor's imprisonment.  Nonetheless, her name appears exactly once in The Two Michaels, in the context of her having been pressured by PM Trudeau and his minions to stop the criminal prosecution of SNC-Lavalin.  As I have written in previous posts, it mattered that the SNC-Lavalin scandal, the Meng extradition case and JWR's demotion out of justice were all happening at the same time.  (See "Comparing 'Remediation Agreements' and the Canadian Extradition Act, or Did the Liberal Obsession with SNC-Lavalin Prevent Jody Wilson-Raybould from Dealing with the Meng Extradition?")

In The Two Michaels, former Minister of Justice Allan Rock reaffirmed my speculations that fall-out from the SNC-Lavalin scandal made the government reluctant to act on the Meng extradition.  Supreme Court Justice Louise Arbour also confirmed that the government was getting the laws governing Remediation Agreements and those governing extradition upside down.  As I pointed out in "A Comparison of Scandals: SNC-Lavalin Versus the Extradition of the Huawei CFO," the government tried to interfere when the law clearly proscribes interference and refused to act when "the law clearly spells out that political (Minister of Justice) action is not just accepted but expected and required."

Oddly (or does this have something to do with ministerial privilege and secrecy?), in JWR's recent memoir, Indian in the Cabinet, there is not a single mention of the Meng extradition case.  Does Jody Wilson-Raybould recognize that her most consequential act over the course of her tenure as Minister of Justice/Attorney General was to authorize the arrest of Meng Wanzhou, or does her preoccupation with the SNC-Lavalin scandal and her demotion out of justice continue to cloud her judgment of the case and her role in it?

Canada Was being played

Was Canda being played?  For an answer look no further than Adrienne Arsenault's interview with John Bolton on CBC.  Arsenault pointed out (Blanchfield & Osler Hampson also note) that after the warrant for her arrest had been issued (22 August 2019),  Meng traveled to the UK and France.  Both countries have extradition treaties with the USA.  Why wait until she was traveling through Canada?  Was it because the Americans judged that only Canada would be "compliant" (and dumb?) enough to follow through on the extradition request?  In response to Arsenault's question, Bolton smiled and giggled slightly, then recovered himself enough to say "it was a matter of logistics" and Canada's being played was "a conspiracy theory."  As I have suggested elsewhere, just because it's a conspiracy theory doesn't mean it isn't true. (See "The Chaos Theory of International Trade, or How Canada Arrested a Chinese Executive on a US Warrant in Order to Protect Israel from Iran.")

The USMCA trade agreement and the "China clause"

Of course, Canada was being played, and the con job is still unfolding.  The same year we were asked to arrest Meng, Canada was negotiating the USMCA trade agreement (the replacement for NAFTA).  The Americans asked for and the Canadian negotiators agreed to the “China clause” requiring three months notice before Canada could sign a trade agreement with  “non-market countries.”  (The list of “non-market countries” includes China, Vietnam, North Korea and 11 others.)  What sovereign nation would give up its right to unfettered trade negotiations?

Just in case forewarning would not be enough to block Canada's trade with China, the USA requested and Canada acquiesced in arresting Meng thereby guaranteeing, entirely for US benefit, a breakdown in the collaboration between Canada and China which had been developing for 50 years under both Conservative and Liberal governments. We, Canadians, might imagine that the self-sacrificing gesture of arresting Meng at the US request would win some future gratitude and consideration from our American neighbours.  Exactly the opposite has been playing out.  With trade between Canada and China stymied, Canada had even less leverage than usual with the USA.  This period of animosity between China and Canada was/is exactly the right moment for the USA to put the squeeze on Canada--and that is what has been happening:

  • PEI potatoes: banned from export to the USA. In 2020, the USA signed a deal to export Idaho and Washington potatoes to China.
  • Softwood lumber: Canada's trade dispute with the USA has been going on since 1982. The WTO (World Trade Organization) has ruled several times that the US tariffs are unreasonable. In 2021, the USA doubled the duty on Canadian softwood lumber to 17.9%. China is the world's second-largest importer of softwood lumber
  • Trump's "Trade truce": As reported in The Two Michaels, "Trump’s subsequent 'trade truce' with China, signed on January 16, 2020, left Canada dangling in the wind. [. . . .] [It] committed China to buy an additional US$200 billion in American goods over the next two years, including US$40 billion to US$50 billion in agricultural products such as soybeans, canola, fresh and frozen pork, beef, wheat, corn, barley, and a range of machinery, all on preferential terms unavailable to Canadian producers."
  • Electric vehicles made in the USA: Canada's second-largest export to the USA (after oil and petroleum products) is vehicles. President Biden's new legislation requiring that electric vehicles be produced in the USA would effectively shut Canada out of the American market. 

Ironically, Canada is currently trying to negotiate a free-trade deal with ASEAN (the Association of Southeast Asian Nations) which includes Vietnam (a non-market country).  Presumably, according to the "China clause," Canada will have to officially inform the USA in advance of signing a deal.  For what purpose?  Why would the US negotiators demand advanced notice, if not to consider how the deal accommodates American interests and to scuttle it if it doesn't.  Since China is the ASEAN's largest trading partner and is planning to upgrade its relationship, Canada will have to kowtow to both China and the USA--neither of whom have reason to support Canada's free-trade aspirations--in order to sign an agreement.

What I Gleaned from The Two Michaels

In November 2019, a Canadian delegation led by Alan Rock met with Chinese officials in China to discuss the Meng arrest and the incarceration of the two Michaels.  The leader of the Chinese delegation, Wang Chow, insisted that there was no connection between the two cases--a claim we can now easily categorize as a lie.  But, at the same time, Wang quoted Section 23 of the Canadian Extradition Act,  demonstrating that Canadian claims that politicians could not get involved in an extradition case were patently false.  Canadians may not know the Canadian Extradition Act, but the Chinese delegation certainly did. 

Blanchfield & Osler Hampson describe the Chinese delegate's quoting of Section 23 of the Canadian Extradition as exploiting "an inherent loophole in the government’s argument." "Loophole" here appears a euphemism for a "lie."  Rock attempted to argue that Section 23 was "was not necessarily intended for this kind of case" and that it was "extremely rare" for the Minister to halt extradition proceedings.  Rock was quick to admit that it was a feeble argument and "a non-satisfactory response."  Ironically, returning to Canada, Rock, backed by extradition expert Brian Greenspan's investigation and report, presented the same Section 23 argument to Justin Trudeau that, by law, according to the Canadian Extradition Act, the Minister of Justice could release Meng at any time.

Who Is Greta Bossenmaier?

"Greta Bossenmaier" is a name I had never heard before.  Blanchfield and Osler Hampson identify her as Justin Trudeau's "national security advisor" and quote her briefing notes to the PM stating: “The minister has broad discretion to decide, but [. . . ] there are no examples of the Minister discharging a case for political or diplomatic reasons.”

While giving the impression that Bossenmaier was a key player in the decision to hold Meng, Blanchfield and Osler Hampson give no further information about her.  According to my internet search, Bossenmair began her career as a DND scientist, worked for several departments in the public service and was named head of CSIS (Canadian Security and Intelligence Service) on May 23, 2018--six months before Meng was arrested.  Bossenmaier was appointed to the position when her predecessor, Daniel Jean, retired, and retired herself in December 2019.

Bossenmaier's claim that "there are no examples of the Minister discharging a case [. . . .]" was clearly beside the point.  There are no equivalent cases, no precedents for Canada's arresting a Chinese executive on a questionable extradition request from the USA.  The Canadian Extradition Act wasn't the problem; it was the solution.  It laid out step by step exactly what should be done, what must be done, how and why.  It was "paint by numbers," if Canadian politicians could be convinced to follow the instructions.   The Minister of Justice could and should refuse the extradition request because [46 (1) (c)]  it was for "an offence of a political character."  The Minister could and should refuse:

 [ . . .] if the request for extradition is made for the purpose of prosecuting or punishing the person by reason of their race, religion, nationality, ethnic origin, language, colour, political opinion, sex, sexual orientation, age, mental or physical disability or status or that the person’s position may be prejudiced for any of those reasons

The US DoJ (Department of Justice) had cornered HSBC (Hong Kong Shanghai Banking Corporation) into providing evidence that they had been fooled by Meng Wanzhou into moving money in Iran.  HSBC had to go along with the claim that  Meng committed "bank fraud" or, for the second time, pay heavy fines in the USA for financial transactions in Iran.  Could there be any doubt that Meng was being pursued because she is Chinese, because China is a communist country in a Cold War with the USA?  Could there be any doubt that her position in the USA would be prejudiced for reasons of nationality and politics? Could there be any doubt that had she been German, British, French or Swiss and using Deutsche Bank, Standard Charter Bank, Societe Generale, or Credit Swiss (all of whom have been caught and paid fines for transactions in Iran) the USA would never have even considered a criminal proceeding against her for "bank fraud"?  The Canadian Ministers of Justice had only to judge the obvious and yet it appears that neither Jody Wilson-Raybould nor David Lametti ever did.

The Mystery of RCMP Staff-Sergeant Ben Chang

Not surprisingly, given how soon after the Meng and "two Michaels" saga the book was published, there are gaps in the narrative of Meng's arrest.  Blanchfield & Osler Hampson begin the story in medias res when RCMP "Const. Winston Yep’s cellphone rang."  Yep's supervisor was calling with instructions to arrange a warrant for Meng's arrest.  "Yep was successful in persuading British Columbia Supreme Court Justice Margot Fleming to issue a warrant."   But who was Yep's supervisor on the other end of the phone call? Who was giving orders to Yep's supervisor? When Yep finally informed Meng that she was under arrest, he said: "[. . . ] this is a warrant for provisional arrest under Section 13 of the Extradition Act.”  

Section 13 specifies: 

13 (1) A judge may, on ex parte application of the Attorney General, issue a warrant for the provisional arrest of a person, if satisfied that there are reasonable grounds to believe that

(a) it is necessary in the public interest to arrest the person [ . . .]

The authorization was supposed to come from the Attorney General of Canada (Jody Wilson-Raybould), but the narrative suggests orders and instructions were coming from the FBI.

Reading through the details of Meng's arrest brought back memories of my visit to the Canadian Museum of Human Rights in Winnipeg where a copy of the Magna Carta was on display.  
On instructions from the FBI passed on to the RCMP and from the RCMP to the CBSA (Canadian Border Security Agency), Meng was "arbitrarily detained" for three hours. The "Canadian Charter" is explicit: 
Only after three hours of detention, interrogation, and being required to give up the passwords for her cellphone and computer (which were passed on to the FBI) was Meng informed that she was being arrested for "bank fraud."  Canadian officials blithely overstepped the Canadian Charter (and the 800-year-old Magna Carta for god's sake), and the media response was to massage the Canadian national ego with reports that we were all "law-abiding" citizens in a "rule-of-law" country.

As reported in The Two Michaels, Canadian Border Security Agent Scott Kirkland immediately intuited that Meng's detention would be a contravention of the Canadian Charter, but still "had a job to do." The great mystery of the imbroglio remains Staff Sergeant Ben Chang, described in The Two Michaels as "a senior RCMP officer [ . . .] who had dealings with an FBI counterpart, John Sgroi, in the days following Meng’s arrest."

Chang retired from the RCMP and moved to China (!?), "where he now works in security at a casino" in Macau. Chang left behind an affidavit swearing that he did not share information with the FBI but refused to testify at the extradition hearing. 


"The Gang of 19"

In 2020, Allan Rock, former Liberal Minister of Justice, and Louise Arbour, former Supreme Court Justice and UN High Commissioner for Human Rights sent a letter to Justin Trudeau pointing out the justice of releasing Meng.  There was no response, not even an acknowledgment of receipt.  Blanchfield and Osler Hampson opine:  "The Trudeau government chose not to offer a basic courtesy to two Canadians who had served their country with great distinction."

As Blanchfield and Osler Hampson report, on June 23, 2020, 

a group of former government officials, senior diplomats (including two former Canadian ambassadors to Washington), and academics sent a confidential letter to the prime minister suggesting that it was time to release Meng in exchange for the Two Michaels.

Was there a conspiracy afoot?  Within twenty-four hours the letter

was leaked by an unknown source to a variety of Canadian news outlets. Both the letter and photos of the Gang of 19, as they were now called, were plastered on television screens across the nation in what looked like a police lineup. Rock and his co-signatories knew immediately that their enterprise was doomed.

Was there a campaign across Canadian media to discredit Rock and Arbour and seventeen other distinguished Canadians?  What editor or producer would willingly agree to describe this group of renowned Canadians as "a gang"?  Still worse, "Gang of 19" was an allusion to the "Gang of Four," a brutal, repressive, and regressive cadre prominent in the final years of Mao's "Cultural Revolution."

Justin Trudeau's Stubborn resistance

Twenty-four hours after receiving Rock and Arbour et al's appeal to release Meng and save the two Michaels, Justin Trudeau gave a press conference and, with uncharacteristic firmness, announced that the government would not engage in hostage diplomacy.  I had speculated that after having panicked when presented with the original extradition request, Trudeau had no choice but to continue promoting the falsehood that extradition was an independent judicial process. 

As I learned from The Two Michaels, Trudeau's decision was likely predetermined by his refusal, in 2015, to negotiate with Abu Sayyaf, a militant Islamist group in the Philipines, who were holding two Canadians, Robert Hall and John Ridsdel, and a Norweigan, for ransom.  The Norweigan, Kjartan Sekkingstan, was released after a ransom of $638,000 was paid (according to a spokesman for Abu Sayyaf).  The two Canadians were beheaded.

Robert Fowler, a former UN ambassador, who had himself been held hostage by Al-Qaeda, was adamant that the Trudeau government's refusal to negotiate the two Michaels' release was predetermined by Trudeau's refusal to negotiate for Hall and Ridsdel's release, and was "naive, simplistic, and in this case potentially murderous”  (qt in The Two Michaels).

Hostage Diplomacy

As I pointed out in December 2018, the Chinese arrest of the two Michaels made the optics of releasing Meng more difficult.  The Two Michaels offers extensive discussion of "hostage swap" situations.  The general pattern seems to be that, although official government policy is, typically, to refuse to negotiate for the return of hostages, Western democracies and the USA, in particular, frequently find a way around their own public policies. However, discussions of Meng's release in terms of "hostage diplomacy" or "prisoner swap" or "hostage exchange" consistently obscured the fact that in releasing Meng, Canada would be following the law, not breaking it.

Blanchfield & Osler Hampson claim that Canadians, according to an Angus Reid poll, massively supported Trudeau's decision not to release Meng.  The problem with the Angus Reid poll was that their question offered only two possible answers, and both answers were wrong:

Respondents to the survey had to choose between:  đŸŸ„ break the law (intervene) or 🟩follow the law (continue).  Of course, Canadians responded that we should follow the law.  If Canadians had been told and the question framed accordingly that to "intervene" would be following the law as specified in the Extradition Act and to "continue" was to ignore the law, I imagine Canadians would have responded in exactly the reverse of the numbers provided in the graph above.


What Did Meng confess to?


The two Michaels are home.  Meng returned to China to a hero's welcome.  Dare we consider a cost-benefit analysis?  Canada paid a heavy price for arresting Meng:   over 1000 days in prison for the two Michaels, blocked Canadian imports of beef, pork, and canola, the collapse of a plan for Covid vaccines to be produced in Canada.  The future costs of the breakdown of our trade and diplomatic relations with China are yet to be calculated.  

What did we gain?  Canada showed that we would not be bullied, that we were an independent nation of law-abiding citizens and politicians who followed the rule of law.  Except we weren't following the law and, therefore, we were not being law abiding and, by all appearance, we were being bullied by a cadre of anti-China super-hawks who had deliberately kept the American President out of the loop, and Canada succumbed to the bullying of a warrant without even questioning its provenance.

According to John Bolton, Meng was "a spy and a fraudster" (qt in The Two Michaels).  Meng accepted a deferred prosecution agreement.  There was no question of prison time.  She didn't even pay a fine.  What greater evidence could there be that we never should have arrested her in the first place? Now that the "Deferred Prosecution Agreement" and "The Statement of Facts" are available online we can finally know what crimes she committed and confessed to and for which Canada and Canadians were required to pay such a heavy price.

According to the "Statement of Facts," each of these quotations above was a half-truth, evasion, trick, or outright lie.  Did these eight quoted sentence fragments fool HSBC, which had already been informed via Reuters that Huawei through Skycom was doing business in Iran?  How did these eight sentence fragments constitute a crime which justice-seeking Canada would sacrifice its interests and citizens to see prosecuted?  To understand Meng's "crime," it is necessary to understand the USA's "weaponizing of the dollar."

"Weaponizing the dollar"

Meng's lawyer attempted to argue that a conversation in 2013 involving a relatively small series of transactions ("US$2 million over thirteen months") between a Chinese business person (Meng) and a banker (from HSBC) which took place in China should not be considered a crime in US jurisdiction.  Blanchfield & Osler Hampson make vague reference to "a practice known as 'dollar clearing'” to explain the debate.

A number of banks, all over the world, are licensed as "clearing houses," which means they can process extremely large transactions between corporations and countries. The issue is perhaps better understood in terms of the recently much-discussed notion of the USA's "weaponizing of the dollar." As Satyajit Das explains in Business Standard:


The USA has been using its incredible privilege of printing/digitalizing the global reserve currency and consequent control over the finances of the global economy to punish Iran.  As we have seen in the Meng case, anyone who asks a bank to transgress a regulation put in place by the USA risks criminal prosecution for bank fraud.  No-one can stop China or Europe from doing business in Iran, but the USA can prosecute the use of a US-licenced financial institution for transgressing US regulations. 

"Weaponizing of the dollar" is a hotly debated topic, and now we Canadians know what it feels like to be enforcers in a system most of us didn't even know existed.

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