Monday, July 13, 2009

Beijing ramps up the humiliation

By Greg Sheridan, Foreign Editor
The Australian

IF Rio Tinto executive Stern Hu is not released from a Chinese prison soon, the pressure on Foreign Minister Stephen Smith and Kevin Rudd to intervene directly with their counterparts will become irresistible.

If it reaches that stage, their intervention will probably be ineffective, and that would be even more humiliating.

Trade Minister Simon Crean has made representations on Hu's behalf, but was given a mid-level official to deal with. The Chinese seem determined to continue to humiliate Canberra.

The bottom line is clear - if Hu is not released, our relationship with China is shattered and the Rudd government will be profoundly embarrassed and seen to have no influence in Beijing.

So far, there is nothing to criticise in the Rudd government's response. It is doing everything it can and understands the grotesque injustice done to Hu, the intimidation China is trying to exert on Australia and the high stakes involved.

Prime ministerial and foreign minister calls are cards Canberra will need to play eventually, but it is reasonable to extend some tactical flexibility to the Rudd government.

However, there is also nothing wrong in Malcolm Turnbull's energetic prosecution of the issue.
Only if the broad Australian civil society demonstrates its shock and anger at China's crude tactics of intimidation is there a chance that cooler heads in Beijing might see the damage these outrageous actions are doing to China's reputation internationally, as well as its interests in Australia.

Indeed, in its own way, and within only the limits of formal diplomatic constraints, the Rudd government was itself making maximum efforts yesterday to put pressure on the Chinese authorities along these lines.

Both Smith and Assistant Treasurer Chris Bowen tellingly said that China would harm its reputation among international companies, and discourage foreign businessmen from working there, through its actions in the Hu matter.

These comments can only be based on the presumption, which is shared by every reasonable observer, that the charges against Hu are completely ridiculous, and completely political.

It is important, analytically, not to get caught up in the proceduralism of the Chinese legal system. There is no rule of law in China. The Chinese have made it clear they can regard any commercial matter as a matter of their national interest, and any negotiation involving it therefore as involving Chinese state secrets.

Under this system, they can intervene legally in any business deal they do not like and imprison anyone they choose.

The decision to imprison Hu was a political decision and therefore the decision to release him must occur at the political level.

Eventually the Prime Minister and Smith must secure this result. It is extremely discouraging that Smith commented that "we may be in for the long haul".

There is always a bureaucratic temptation to sacrifice the individual for the sake of stability in any bilateral relationship.

To do so in this case would be to accept China's right to arbitrarily punish any Australian involved in a business deal that China Inc does not like. It would permanently and radically tilt the playing field against Australia in any future business negotiation if the Australian side is always to labour under the fear of arbitrary imprisonment in China.

If this is the case, then the Department of Foreign Affairs and Trade should issue a travel warning pointing out to Australian businessmen that they face the danger of arbitrary arrest and lengthy detention in China if they, their company or even the Australian government displease the Chinese.

Certainly that commentary in the press which has equated Hu's case with Schapelle Corby's is utterly inane, an example of the breathtaking naivety and provincialism of which Australians are capable. The airport police in Bali were pursuing no government agenda and consular access was granted to Corby straight away.

Apart from the fact there is nothing in Hu's character to suggest criminal espionage as a sideline, it is inconceivable that after Rio had earned China Inc's fury for rejecting the Chinalco partial takeover bid, and in the middle of the tense iron ore price negotiations, the No2 Rio man in China would choose this time to run a criminal operation courting a lengthy jail term at best.

One of the most important lessons to come out of this mess is the absolute shattering of the myth that Chinese government-owned commercial entities are not part of China Inc. In their actions against Hu, the Chinese authorities have explicitly said that commercial matters are matters of national security for China and that commercial information can be regarded as a state secret whenever China likes, and foreign executives can be imprisoned at will. The implications for Chinese conduct of investments in Australia is clear.

The Foreign Investment Review Board, perhaps at the direction of the Rudd government, needs to factor this information in to all future decisions about proposed Chinese strategic investments in Australia.

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