Clash of the Titans + 1: Canada, US, China and the Release of the Two Michaels

The opinions expressed by authors in these commentaries do not necessarily represent the views of the China Institute or the University of Alberta.

Three months after the return of the “two Michaels” to Canada from three years of incarceration in China, Dominic Barton, Canada’s Ambassador to China throughout the Michaels’ saga, announced his resignation from the post; Barton had been appointed to navigate the troubled relations between Canada and China during the period and secure the releases of the Michaels. With “Mission Accomplished” and all the high-fives in the halls of the PMO and Global Affairs, it is as good a time as any to try and understand the role played by each of Canada, the US and China through the ordeal, particularly how Canada was effectively relegated to the sidelines in what amounted to a power game between a reigning and an aspiring superpower.

Canada

There is no question that Canada suffered the most in this “Saga of the Three Kingdoms”:  it watched helplessly as two of its citizens were arbitrarily arrested and subjected to the harsh conditions of Chinese prisons; numerous Canadian businesses and exchange projects with China were adversely affected; senior Canadian officials were ignored and even humiliated on international stages; and the potential impotence of Canada in this type of situation was exposed.  Canada’s role during the saga of the Two Michaels was, with very few exceptions, by and large passive, with very limited control of its destiny throughout. Canadian overtures to the Chinese leadership for any form of dialogue fell on deaf ears and pleas to allies to act as go-betweens yielded unknown and unverifiable results; it is not known what kinds of intercessions, if any at all, were conducted by Canada’s allies.

To make up for Ottawa’s inability to engage meaningfully with Beijing, Ambassador Barton and his team on the ground shouldered the load and did what they could for the two Michaels. They supported the detainees in every possible way, organized international support from other foreign missions, calmed and kept the ex-pat Canadian community informed to the extent possible, and raised the issue at every possible chance and at every level, ensuring that the plight of the two imprisoned hostages stayed at the forefront to all. The Canadian embassy in Beijing had an extremely challenging role, not only in having to work in the middle of hostile territory, but also having a former Prime Minister, a retired Supreme Court Justice, and Ambassador Barton’s predecessor, essentially tell the world that Canada’s actions were misguided, untenable and incorrect. The Canadian government, from the PMO down, sounded contrived and hypocritical when defending its decision to not release Ms. Meng on the basis of rule of law and judicial independence, having freshly done the very opposite in its attempt to persuade the Minister of Justice to order the prosecutor’s office to refrain from prosecuting SNC Lavalin, and, in the opposite direction, successfully pushing the same offices to pursue a case against Admiral Mark Norman. This gave the Chinese government and people no shortage of ammunition to fire at our diplomats every time they tried to explain Canada’s position and reasons for doing what it did.

There is no question that Canada was bound by both its extradition treaty with the US and its own laws to arrest, detain and, upon determining that the request was legitimate and the conditions for an extradition were met, deliver Ms. Meng to the US. There was very little flexibility to do otherwise. Even her actual “release” – which entailed a stay of the extradition hearing and the cancellation of sureties – though undertaken in Canada, was really not a “decision”. Once the US halted its proceedings against Ms. Meng, she was no longer wanted in the US and the raison d’être to keep her in the country immediately ceased to exist. Canada had no choice but to let her go, and there was no decision to be made by anyone on the matter. Canada therefore did not back down from the standoff, was not in a position to do so anyway, and played by the rules all the way. Once again, credit must go to the Canadian embassy in maintaining contacts at the appropriate levels and ensuring the simultaneous release of the two Michaels. China, at least theoretically, had every reason and right to continue holding the two “convicted criminals”, one of whom was awaiting sentencing and the other serving out a prison term, while Canada no longer had any claim on Meng who was no longer wanted in the US.

Had the US decided to proceed with its charges against Ms. Meng, all indications would have had her ultimately delivered to the US, as none of the substantive arguments against an extradition made during the hearing had been accepted by the court; only less consequential procedural applications (by and large unopposed by the Crown) were successful. Meng’s defense team was nevertheless effective and instrumental in prolonging the legal process to give time for a political resolution to be reached. The eventuality of Ms. Meng’s extradition to the US would have certainly led to more negative implications for Canada, not the least of which being a swift sentence for Mr. Kovrig that would have been much more severe than that given to Mr. Spavor.

The US

Ms. Meng’s release, and thus that of the two Michaels, was made possible by a watered-down deferred prosecution agreement (DPA) offered by the US that was acceptable to her (along with Huawei and the Chinese Government); the DPA required only an admission of wrongdoing in the slightest degree and had no tangible penalty attached. The leniency of the American offer to Ms. Meng defies any comparison to either the DPA entered into by HSBC for money laundering that had led to the investigation of Huawei and Meng in the first place, or the agreement which the Canadian government was prepared to offer to SNC Lavalin. Both agreements were attached with an array of admissions and conditions, not to mention significant fines. As the DPA was being finalized between the U.S Department of Justice and Meng’s legal team, the ball rolled very quickly in both China and Canada, with news releases being crafted, speeches being drafted, travel arrangements being made, COVID-19 protocols being facilitated, etc. Careful measures were taken to ensure the appearance of a tripartite victory, to the extent that each country could at least claim as such for the benefit of its citizens.

No one is so naïve to believe that the Biden administration made the concession of offering about as weak a DPA as could be out of the goodness of its heart; American interests, which include “world peace”, were the primary motivator. The US President did not, and could not, pretend that it was a reversal of another ill-advised decision made by his capricious predecessor, as was the case with the embargo against Iran. Along with the investigation of HSBC, the Huawei and Meng case was initiated when Biden was vice-president.

By taking the calculated risk of “appearing weak”, the US government averted potentially disastrous outcome; had the US proceeded with the charges against Meng in lieu of a DPA, hence allowing the extradition proceedings in Canada to run their course, Ms. Meng would ultimately end up in US custody, where it would be infinitely more difficult to secure pretrial release. Meng would have been considered a much higher flight risk for the following reasons: she would have been an accused in a criminal trial rather than an applicant in an administrative hearing; she had just waged a protracted and costly battle against the extradition, suggesting that Meng  would go to great lengths to avoid a trial; she maintained far few ties to the US than  Canada, where she had permanent resident status along with over US$20 Million worth of real estate to put up as surety (an assumption though). This is without factoring in the much stronger anti-China and anti-Huawei sentiment in the US, which could be easily riled up politically. Meng would likely have been held in custody for extended periods, much longer than  in Canada; conceivably, Meng might have been held throughout the entire process until the matter was resolved. Such an extended detention would have undoubtedly further infuriated China and the Chinese people. The Chinese government would have responded proportionately against the US, with retaliations much more drastic and pronounced than those hurled at Canada, lest the Xi Administration be criticized and ridiculed for being a bully who kicked sand at skinny Canada but shied away from the muscular US. We can be sure anything done by China would have been far more severe than simply arresting a couple of US citizens off the streets on espionage charges.

How the US might have turned up the thermostat even further in response to a retaliation by China is anybody’s guess. However, one can be certain that an American response that was infinitely stronger, more decisive, and more impactful than anything Canada did would have been warranted and expected. With more options than any other country in the world in its arsenal, the US would be in a much better position to carry out a response to Chinese retaliation, making an already turbulent relationship between China and the US even more volatile, and leading them and the world into uncharted territory.  Tensions and levels of antagonism between China and the US are already at an all-time high on many fronts, including militarily. The US has orchestrated air and maritime incursions into the South and East China Seas, including the Formosa Strait, conducted joint exercises with allies in the region, repivoted into the “Indo-Pacific” and sent signals from the White House, the Pentagon, NSA; all of these actions have had the tips of their spear heads aimed squarely at China. It is hard to imagine how much more room there is to escalate before we start seeing sparks flying. Fresh off a humiliating withdrawal after a twenty-year campaign in Afghanistan and with outstanding issues vis-à-vis Russia, North Korea, Syria, Iraq, and Iran, few can blame the US for wanting to avoid igniting another powder keg.

On the trade front, the US and most of its allies have in many ways already shown their hand against China, including blocking Huawei from its 5G infrastructure, initiating investment protectionist measures, raising duties, imposing embargos and sanctions, blacklisting officials and executives, closing consulates, etc. One would wonder in what other ways and degrees could further meaningful actions be taken on trade before it would hurt US industries, investors, consumers, and economy more than it would hurt China. The Biden administration would no doubt hear from its taxpayers, contributors, and voters well before China would admit to whatever pains it was feeling.

While the US is still resolved and committed to its competition and rivalry against China, it is not prepared to elevate the conflict to the next level, given what little room there remains before we start seeing a dramatic escalation to a confrontation. Any attempt to form another “Coalition of the Willing” against China might also backfire into an awkward situation, as there is no guarantee that all or even most of its treaty partners and traditional allies would be willing to participate in anything to the detriment of their own interests vis-à-vis China.

China (& Huawei)

China had the leading and most active role throughout this episode, having arrested, imprisoned, tried, convicted, sentenced, and released the two Michaels, and as importantly, giving the nod to Meng’s acceptance of the watered-down DPA with the US government. With its interests aligned with and protected by its government, Huawei had a passive role at the table, not unlike that of Canada, as an observer ensuring that its needs were not overlooked: no concessions made, no wrongdoing admitted to, no fines paid, and no undertakings granted, in any form. Given that the company had already been blacklisted by the US government for some time and could expect to remain there regardless of the outcome, Huawei stood to not lose anything more on the business front.

In Canada, however, the Huawei brand will forever be associated with the mistreatment of the two Michaels, even though the company had no part whatsoever in the decision leading to it. If anything, Huawei took the “high road” throughout and refrained from levying any criticism against Canada, even going as far as expressing faith in our justice system. The fact that the telecommunication giant has made significant investments in Canada, created many quality and high-paying employment opportunities for Canadians, and been by all accounts more than a model corporate citizen, will not erase the memory of the two Michaels when it comes time for Canada to make its final decision on whether or not to allow Huawei to participate in the construction of its 5G infrastructure; the Canadian government will be under immense pressure from Canadians to make an unfavorable decision for Huawei.

In some ways, Huawei could also be seen as a victim, not only in losing its CFO for almost three years during the process, but also in being dragged into the limelight; both events beyond its control.  Furthermore, it also attracted unwanted attention to the personal lives of its chairman and his daughters, with an array of interesting but potentially awkward facts being unearthed; most of these, however, remain unreported in China.

However, whatever setback there might be for Huawei cannot take any luster away from the victory scored by China: an exhibition of its newly found strength and the right to boast to its people and the world that China has stared down the US and punished Canada before rescuing its citizen from a foreign land. More importantly but less apparently, it also met the US halfway by accepting the DPA, avoiding a confrontation and further escalation. Finally, China left the door ajar for the relationship between the two countries to be nudged back to some semblance of normalcy, or at least more as competitors and rivals, and less as belligerents.

This self-proclaimed victory will be hollow if the false confidence that comes with it prompts China to expect this type of upper hand in other comparable situations or behave even more recklessly in other standoffs in the future. This might, however, not be the case; China, not unlike the US must have also breathed a sigh of relief after averting a potential crisis situation, along with all the awkwardness and potential disasters that come with it. The fact that Ms. Meng was allowed to admit to at least some wrongdoings shows that everyone fully understood that concessions had to be made somewhere and somehow by all sides. China also witnessed and can learn that, even as the sole global superpower, a status China strives towards, the US made a conscious decision to step back- not out of weakness, but to put a cap on hostilities.

Closing Comments

The past three months have proven brilliant the decision made by the US to take a step back to avoid a confrontation with China while focusing on other fronts. The decision created more time for the two countries to try to patch up more of their differences and improve their relationship. There was hardly any criticism against the Biden administration for being weak or soft, as it continues to nip at China’s heel, often with its allies in tow, on age-old fronts and issues such as human rights, democracy, Tibet, Xinjiang, etc.; the US has also been stretching out and doubling down on Taiwan, the Olympics, etc., even as both governments express the need to improve cooperation.

To Canada, what matters the most is the return of its two citizens to the warm embrace of their homes and loved ones (and out of quarantine) in time for Christmas. While most if not all of the determining factors behind their release were beyond the control of the Trudeau administration, the saga of the Two Michaels nevertheless allowed politicians and the population to take a front row seat on how events like these unfold on the global stage. Hopefully, Canadians have gained a better appreciation of the nuances of our relationship with other countries, especially the US and China. Unfortunately, this experience will have also hardened the attitude of many, which could make the country even more polarized on its policies and interactions relating to China.

Politicians and businesses seeking a better relationship with China to promote Canada’s interests will be more handcuffed, or at least be less vocal, lest they be accused of cozying up to China or “sleeping with the enemy”. Anti-China elements, meanwhile, will have more bullets in their bandolier to fortify and further their positions. Either way, it is essential that Canadians be sensitive to any olive branch, whether directly or through diplomats, which China might extend to steer relations between the two countries back on track; we must understand that the decisions taken along each step of the way were not necessarily well understood by all.

As a final comment, the fact that Canada’s role in this three-year saga was limited after the arrest Meng and the commencing of her extradition process does not discount the gargantuan efforts and important role of our Embassy in Beijing. Under very challenging conditions and as the only functioning point of communication with China, the Canadian embassy not only ensured that the two Michaels remained on the forefront throughout, but also that the two men were returned to Canada at the very earliest possible moment after the US and China settled the matter on center court.