Deglobalization has taken on a new twist: the taking of economic hostages. In a return to a medieval form of warmaking, rival countries are arresting senior executives from overseas.
Japanese prosecutors, on the last day possible, have charged Renault CEO Carlos Ghosn with under-reporting his pay for five years. Presumably they should be paying a visit to the Renault-Nissan-Mitusbishi alliance's auditors, but they have instead made a political statement. Ghosn was masterminding a full merger between Renault and Nissan which was unpopular in Japan. Nissan and Mitsubishi both sacked Mr Ghosn last month after his arrest.
France, now in its fifth week of civil unrest aimed at an aloof and technocratic president, has not come to its adopted citizen?s aid over the arrest. Presumably President Macron sees no political advantage in coming to the aid of an international business man when international business itself is the target of rage in La France Périphérique.
In Vancouver, Meng Wanzhou of Huawei, who has a home in the city and was a Canadian permanent resident before moving back to China, is under arrest on an American extradition request founded on allegations of fraud against the bank HSBC. Meng allegedly misrepresented Huawei's dealings with a company doing business in Iran, contravening US sanctions.
Meng is no Chinese villain; her longstanding connections with North America are common among wealthy Chinese. Indeed, the neighbourhood in which Meng's home is built is more than 50 per cent owned by Asians, according to local academic Andy Yan.
Unlike France, China has come to the aid of its citizen. The US ambassador to Beijing was summoned to the Foreign Ministry to receive 'solemn representations and strong protests' against Meng's detention. The Chinese Vice Foreign Minister Le Yucheng said that the US action 'severely violated Chinese citizens' legitimate rights and interests and is vile in nature.'
Pundits have naturally connected Meng's arrest with the US-China trade talks currently underway. Stock markets have been destabilized (the algorithms clearly have no programming or no patience to cover events like this). Wall Street has taken a further turn to pessimism as the year ends with stock indices below their January levels. In these two arrests, nations have shown that they are prepared to act against individuals in support of their own corporations, the modern equivalent of expeditionary forces. Japan has demonstrated that important elements of Japan Inc cannot be allowed to fall into foreign ownership. The US has taken aim at its two perceived greatest rivals, China and Iran, while Canada, by implementing a technically correct extradition request, has been turned into Uncle Sam's accomplice. Will Vancouver's Asian born community feel as safe today as they did a month ago?
The Take Away
These arrests confirm that the commercial community is more vulnerable on an individual level to political manoeuvring than it has been for many years. Over the weekend, one US State Department official was heard to opine that any American C-suite level travellers to China this week should reconsider their travel plans. In one sentence, the apparent disruption becomes crystal clear. The two arrests may in particular signal that individuals who ?belong? to several nations may be more vulnerable to international political competition. I can?t think of an industry more characterised by expatriate executives than shipping. Should we be concerned? Maybe not yet, but we should probably be observant.