Monkey in the Middle: Canada Caught between Two Superpowers

Huawei executive Meng Wanzhou was released on September 24 after a prolonged period of house confinement in Vancouver, Canada. This marks a significant development in Chinese-Canadian diplomatic relations—after an extradition case that lasted 1028 days and sparked national conflict between China, Canada, and the U.S., short-term tensions seem to have been resolved. However, challenges still remain as further legal actions are being processed.

Meng is the executive of Huawei, an influential Chinese telecommunications company that provides Information and Communications Technology (ICT) devices. Besides Meng, there are other important individuals affiliated with this case. Michael Kovrig, a former Canadian diplomat working for the International Crisis Group, and Michael Spavor, a Canadian consultant working in North Korea, had been arrested by the Chinese government shortly after news of Meng’s detainment broke.

On December 1, 2018, Meng’s flight was connecting through Vancouver when she was detained by airport security. She was questioned by Canadian Border Services Agency officers due to a provisional extradition request by the United States. The U.S. claimed that she had committed fraud by funneling money to Skycom, a subsidiary of Huawei, to support Skycom’s work in Iran. Iran was under sanctions that banned any U.S.-based entity from doing any business with it. Nine days after her arrest, the Chinese national government accused Spavor and Kovrig of espionage and immediately detained them. Upon hearing this news, Canadian Prime Minister Justin Trudeau raised his diplomatic concerns regarding the indictment of two Canadian citizens under Chinese law. However, Chinese officials denied that the “two Michaels’” prosecution was in retaliation for Meng’s arrest. The U.S. formally requested Meng’s extradition in January 2021. A few days later, the U.S. government charged her with bank and wiring fraud and Huawei with the theft of trade secrets. 

These stand-offs, however, focused more on political leverage and commercial power than concerns over Iran. Chinese officials alleged that Meng’s arrest was “retaliation for China’s efforts to wire the world with Chinese-led 5G networks.” During the extradition courtroom proceedings, Meng’s lawyers made several allegations against the prosecution. For example, her lawyers cited George Bellinger, a former George W. Bush administration advisor, who stated that the U.S. had omitted crucial information. Bellinger alleged that Meng had informed her bank, HSBC, that Huawei was working with Skycom in Iran and had hence obeyed the relevant laws.

Meng initially refused to admit wrongdoing; however, she did eventually settle a deal with the U.S. Department of Justice through a deferred prosecution agreement that allowed for her release. As part of the arrangement, Meng agreed to a Statement of Facts that said she fabricated false statements to HSBC, thereby enabling transactions in the U.S. that were in violation of U.S. sanctions. In return, Meng was not required to pay a fine and could deny her key charges. 

This extradition case impacted the diplomacy between China, Canada, and the United States. China adopted a retributive strategy in response to Meng’s arrest, detaining two presumably innocent Canadians. China also restricted the export of Canadian agriculture into the country. Additionally, a Canadian drug trafficker was sentenced to death after a sudden retrial. Canada, struggling between two superpowers, gave in to neither Beijing’s pressure to release Meng nor the U.S. demand for Meng’s immediate extradition. Thus, Meng’s case strained diplomatic ties between China and Canada and harmed Canada’s relationship with the United States. 

The political and commercial, rather than legal, nature of the case was clear. During the investigation, former U.S. President Donald Trump said more than once that he might be willing to “release Ms. Meng in exchange for concessions on trade.” Meanwhile, Meng’s own father said he “would rather withstand attacks for a couple more years and [let his] daughter […] suffer more than let China concede something to the United States.”

Though Meng’s release, orchestrated by the Biden administration (consciously taking a less belligerent attitude than the Trump administration), did reduce tensions, challenges remain. The plea deal Meng signed allows the U.S. to pursue further legal action against Huawei, which “remains subject to harsh U.S. trade sanctions that have crippled its business operations.” It may turn out that this protracted battle was in fact a mere skirmish in a longer war.  

By: Melissa Chang