JAMES KYNGE

Arrest of executive and warnings from western spymasters creates cold war atmosphere

The spies have come in from the cold and a chill new reality is stealing across the world. The events of this week, perhaps on a par with anything seen since the end of the cold war, could have leapt from the pages of a John le Carré thriller. A top executive at Huawei — a Chinese company connected to Beijing’s Communist party rulers — was seized on US sanctions-busting charges involving Iran as she tried to change planes in Canada. The UK and Japan publicly distanced themselves from Huawei’s plans to supply 5G telecoms , a breakthrough technology that will allow things — your fridge, your car, your smartphone — to “talk” to each other. In Beijing, an official Chinese newspaper accused the US of “hooliganism”. But behind such examples of superpower tensions has been a more basic shift. The top spies in the UK, Canada and Australia — all members of the Five Eyes intelligence alliance that also includes the US and New Zealand — have emerged from the shadows to sound the alarm, either explicitly or indirectly, over China. Their seemingly nonchalant choice of venues for the public bombshells they dropped might have pleased George Smiley, one of Mr Le Carré’s fictional characters. Only Mike Burgess, director-general of the Australian Signals Directorate, played it straight, making a speech at a dinner dedicated to national security. David Vigneault, director of the Canadian Security Intelligence Service, spoke at the Economic Club of Canada and Alex Younger, head of the UK’s MI6, chose an audience of students at St Andrews university in Scotland from which to take aim at Beijing. Each of the spy chiefs had a similar message. 5G telecoms will be so critical to the way people live their lives that networks should be operated only by firms that are trusted. Huawei increasingly falls outside that definition; the US and Australia have banned the Chinese company, New Zealand has limited its access and BT, the UK telecoms provider, is planning to exclude it from bidding for contracts to supply the core 5G network, though it could allow participation in peripheral functions. Canada has yet to announce its stance, while Germany, according to official sources, is considering limiting the company. But in spite of such differences, the unfolding narrative is bound by a single thread. Deep, bipartisan US animosity over Chinese espionage, its industrial policy and the competitive threat posed by its emerging technology giants has fundamentally changed Washington’s calculus toward Beijing. The policy of engagement with China that held sway for almost 40 years has dissolved and given way to a de facto strategy of confrontation. But what is particularly revealing about the case of Huawei is that Washington has shown that it has no intention of taking on China alone. It is insisting that its allies fall into line, particularly on issues of national security. Many now fret that a new cold war may be upon us. They wonder if the arrest in Vancouver of Meng Wanzhou, the Huawei executive, could prompt reprisals from Beijing. “China is highly unlikely to arbitrarily arrest foreign executives in response to the Canada arrest, but could well take a more aggressive approach to regulatory or criminal investigations involving foreign — particularly US and Canadian — companies,” says Andrew Gilholm of Control Risks, a consultancy.

Beijing is unlikely to let the Huawei arrest lie. Neither Huawei nor Ms Meng are anywhere close to ordinary in a Chinese context. The company is the embodiment of China’s best vision for itself; high-tech, hugely successful and loyal to the Communist party. Ms Meng is the daughter of Ren Zhengfei, Huawei’s founder and one of the country’s most admired industrialists.

But experts warn against going overboard on “ new cold war” scenarios. “The structure of the global order today is not as bipolar as it was in the cold war, so the new cold war analogy doesn’t hold up to even the most superficial scrutiny,” says Parag Khanna, author of a forthcoming book, The Future is Asian.

While it is clear that Washington holds considerable clout on security matters with its allies, its influence over corporate behaviour is far more constrained. And the attractions of China as a market are so strong that some of the largest US companies sell more in China than they do at home.

Beijing, for its part, knows its hopes for a resolution to the current trade war would be aided by the support of the big US corporations. It is therefore unlikely to exact arbitrary revenge. Nevertheless, the current US administration possesses a flair for the unexpected.

The arrest of Ms Meng, it has transpired, was already in train when US President Donald Trump sat down to dinner with Xi Jinping, the Chinese leader, at a summit in Argentina — raising speculation over whether the US president was trying to humiliate his Chinese counterpart. As Mr le Carré once said: “If you make your enemy look like a fool, you lose the justification for engaging him.”

Source; Financial Times