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Canada Chooses Sides

Canadians have a reputation for getting along with others, but even the friendliest among us must sometimes take sides.

On Dec. 1, Meng Wanzhou was arrested in Vancouver at the request of U.S. authorities. Meng is the chief financial officer and deputy chair of Chinese telecommunications company Huawei Technologies Co., as well as the daughter of its founder. She was taken into custody during a layover on a trip from Hong Kong to Mexico.

At a bail hearing earlier this week, Meng’s attorney engaged in typical pleading on his client’s behalf, arguing that the 46-year-old detainee is sickly and could not possibly withstand confinement. Nor, he claimed, would she ever dream of jumping bail. Meng was willing to put up the equity in her two Canadian homes as collateral, The Wall Street Journal reported, supplemented with a lump sum in cash. Bail was ultimately set at 10 million Canadian dollars ($7.4 million), with the requirement Meng undergo 24-hour surveillance.

Of course, as the Canadian prosecutor arguing on behalf of the U.S. pointed out, Meng has a family with billions in assets at her back – not to mention the support of an entire government. Facing multiple fraud charges, each of which carries a prison term of up to 30 years, Meng still has both the means and incentive to leave Canada if she is released. There are also no fewer than three Chinese consular locations in Vancouver, any of which might well provide Meng with refuge. Consider WikiLeaks founder Julian Assange’s current six-year stay in Ecuador’s London embassy, where Assange fled during his own extradition case. (He was wanted in Sweden on sex crime charges that have since been dropped, but he now faces British prosecution for breaching his bail conditions.)

If Meng really does intend to engage with the North American legal process in good faith, as her attorney claims, she could speed things along by agreeing to waive an extradition hearing and consenting to a transfer to the U.S., where she faces charges of defrauding banks by trading with Iran through a Hong Kong-based front company in violation of U.S. sanctions. While the U.S. has not formally made an extradition request so far, the seriousness of the allegations against Meng are such that the request is certainly forthcoming. American authorities claim that Meng lied to banks about Huawei’s ties to Skycom Tech Co., which worked on mobile operator contracts in Iran before it was dissolved last year. Meng’s attorney counters that both she and Huawei severed tied to Skycom as far back as 2009, and should not be held responsible for any of its actions after that date.

Meng is entitled to the presumption of innocence. She is also entitled to bail if her appearance in court can be assured – but the important court appearance will be in the United States, not in Canada.

The Canadians are now caught in a position that would be familiar to many children of divorced parents. They are stuck between their biggest single trading partner, the U.S., and their second-biggest trading partner, China (not counting the 28-member European Union). Although these countries are No. 1 and No. 2, they aren’t close; the U.S. alone takes three-quarters of Canadian exports and supplies 53 percent of Canada’s imports. China’s corresponding figures are 4.5 percent and 12 percent.

There has been a lot of friction between Canada and the U.S. in recent years, with trade high on the list of topics in dispute. But we are still close neighbors. We still operate with similarly reliable legal systems. And we still negotiate our differences – most recently with the revised trade deal that the U.S., Canada and Mexico signed just last month.

China puts on a friendlier face to the world than the prickly Trump administration, right up until it bares its fangs. When promises or money fail to achieve Chinese objectives, the threats arrive in short order. On Saturday, China delivered an ultimatum to Canada, saying that if it did not release Meng there would be “severe consequences” for which “Canada must bear the full responsibility.” This aggressive stance, while not unexpected, is not terribly helpful to Meng – or to Huawei, which already cannot sell its telecom and large-scale networking equipment in some Western countries including the U.S., Australia and New Zealand because of concerns that the company’s communication infrastructure will inevitably be co-opted by Chinese intelligence. Huawei’s protestations of independence ring hollow in the face of Beijing’s behavior.

Still, the Canadians have a choice to make. I am fairly confident they will choose law, logic and the simple reality that while China may aspire to someday be the leading global power projecting its influence around the world, Canada’s interests truly lie with the North American neighbor that happens to be a superpower right now and right here.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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