Yale's Stephen Roach questions why Huawei has been 'singled out' for sanctions violation

Key Points
  • Veteran economist Stephen Roach told CNBC on Friday that Huawei was being singled out for U.S. sanctions violations.
  • The Chinese tech giant's chief financial officer was arrested on Dec. 1 over allegations that she may have misled international banks over Iran-linked transactions that are in breach of U.S. sanctions.
  • Major banks have all been found guilty for violating sanctions in recent years but none of their executives went to jail, Roach pointed out.
A saleswoman serves customers at a Huawei shop in Beijing, China, December 12, 2018.
Jason Lee | Reuters

Washington's decision to arrest a Huawei executive over the Chinese telecoms giant's business dealings with Iran seems hypocritical, according to veteran economist Stephen Roach.

Meng Wanzhou, Huawei's chief financial officer, was arrested in Canada on Dec. 1 at the request of the U.S. government over allegations that she misled international banks about Iran-linked transactions that are in breach of American sanctions. She has since been released on bail and is due to appear in a Canadian court in February.

Huawei arrest looks 'entirely political,' says Stephen Roach

Canadian officials insist the arrest wasn't politically motivated, but it's widely seen as a means for President Donald Trump to gain leverage in the ongoing U.S.-China trade war.

"A number of financial institutions, including JP Morgan, Bank of America, Wells Fargo and international banks, were all judged guilty and paid enormous fines for violating sanctions in the last several years," Roach told CNBC's Eunice Yoon on Friday. "None of their executives, of course, went to jail — why is Huawei being singled out for the sanctions violations?"

Iran, in 2015, was removed from the United Nations' sanctions list when the country agreed to a deal on its nuclear program. Washington, however, withdrew from that accord earlier this year and re-imposed sanctions on Tehran.

The U.S. is the only one "trying to enforce something that the international community is going the other way on," Roach said.

Trump said Tuesday he may intervene in Meng's case if it would help his country obtain a trade deal with Chinese President Xi Jinping's government. His remarks drew rebuke from Canada, and raised concerns that Trump was using the Huawei case as a bargaining chip in the trade war.

Meng's arrest was "a political decision to force China to the bargaining table and let China know that America is going to be tough in using all means at its disposal" to pressure Beijing, said Roach, a senior fellow at Yale University. The bilateral relationship is increasingly becoming "one of mutual distrust," he continued.

The developments come as more countries exclude Huawei from participating in their respective super-speed 5G roll-outs amid national security concerns. Western countries are worried that China's government uses Huawei for espionage even though the Shenzhen-based firm has repeatedly insisted that isn't influenced by Beijing.

Recent allegations leveled at Beijing by the international community have been "rumor and innuendo" and it's important that these surveillance accusations are properly investigated, Roach said.