US government staff told to treat Huawei as blacklisted

In May, Huawei was added to the so-called Entity List, which bans American firms from selling to it without special permission. (AFP)
Updated 03 July 2019

US government staff told to treat Huawei as blacklisted

  • Donald Trump surprised markets by promising Chinese President Xi Jinping that he would allow US companies to sell products to Huawei
  • In May, the company was added to the so-called Entity List, which bans American firms from selling to it without special permission

WASHINGTON: A senior US official told the Commerce Department’s enforcement staff this week that China’s Huawei should still be treated as blacklisted, days after US President Donald Trump sowed confusion with a vow to ease a ban on sales to the firm.
Trump surprised markets on Saturday by promising Chinese President Xi Jinping on the sidelines of the G20 summit in Japan that he would allow US companies to sell products to Huawei Technologies Co. Ltd.
In May, the company was added to the so-called Entity List, which bans American firms from selling to it without special permission, as punishment for actions against US national security interests.
Trump’s announcement on Saturday — an olive branch to Beijing to revive stalled trade talks — was cheered by US chipmakers eager to maintain sales to Huawei, the world’s largest telecoms equipment maker and a key US customer.
But Trump’s comments also spawned confusion among industry players and government officials struggling to understand what Huawei policy he had unveiled.
In an email to enforcement staff on Monday that was seen by Reuters, John Sonderman, Deputy Director of the Office of Export Enforcement, in the Commerce Department’s Bureau of Industry and Security (BIS), sought to clarify how agents should approach license requests by firms seeking approval to sell to Huawei.
All such applications should be considered on merit and flagged with language noting that “This party is on the Entity List. Evaluate the associated license review policy under part 744,” he wrote, citing regulations that include the Entity List and the “presumption of denial” licensing policy that is applied to blacklisted companies.
He added that any further guidance from BIS should also be taken into account when evaluating Huawei-related license applications.
Huawei told Reuters earlier on Wednesday that founder and CEO Ren Zhengfei had said Trump’s statements over the weekend were “good for American companies.”
“Huawei is also willing to continue to buy products from American companies. But we don’t see much impact on what we are currently doing. We will still focus on doing our own job right,” a Huawei spokesman said in an email.
The Commerce Department did not immediately respond to a request for comment.
A person familiar with the matter said the letter was the only guidance that enforcement officials had received after Trump’s surprise announcement on Saturday. A presumption of denial implies strict review and most licenses reviewed under it are not approved.
It is unclear when the Commerce Department will provide its enforcement staff with additional guidance, based on Trump’s promises, and how that might alter the likelihood of obtaining licenses.
The internal memo, not previously reported, came as White House advisers also scrambled to shed light on Trump’s announcement.
White House trade adviser Peter Navarro noted on Tuesday that the government would allow “lower tech” chip sales to the company, which don’t impact national security.
The United States has accused Huawei of stealing American intellectual property and violating Iran sanctions.
It has launched a lobbying effort to convince US allies to keep Huawei out of next-generation 5G telecommunications infrastructure, citing concerns the company could spy on customers. Huawei has denied the allegations.


$8bn blow to Erdogan as investors flee Turkey

Updated 09 July 2020

$8bn blow to Erdogan as investors flee Turkey

  • Overseas holdings in Istanbul stock exchange are at lowest in 16 years

ANKARA: Foreign capital is flooding out of Turkey in a massive vote of no confidence in President Recep Tayyip Erdogan’s economic competence.
Overseas investors have withdrawn nearly $8 billion from Turkish stocks since January, according to Central Bank statistics, reducing foreign investment in the Istanbul stock exchange from $32.3 billion to $24.4 billion.
As recently as 2013, the figure was $82 billion, and foreign investors now own less than 50 percent of stocks for the first time in 16 years.
“Foreign investment has left Turkey for several reasons, both internal and external,” Win Thin, global head of currency strategy at Brown Brothers Harriman, told Arab News.
“Externally, investors fled riskier assets like emerging markets during the height of the coronavirus pandemic. Some of those flows are returning, but investors are being much more discerning and Turkey does not seem so attractive.”
In terms of internal factors, Thin said that Turkish policymakers had made it hard for foreign investors to transact in Turkey. “This includes real money clients, not just speculative.
“By implementing ad hoc measures to try and limit speculative activity, Turkey has made it hard for real money as well. Besides these problems, Turkey’s fundamentals remain poor compared to much of the emerging markets.”
Erdogan allies claim international players are manipulating the Istanbul stock exchange through automated trading, and have demanded action to make it difficult for them to trade in Turkish assets.
Goldman Sachs, JPMorgan, Merrill Lynch, Barclays and Credit Suisse were banned this month from short-selling stocks for up to three months, and this year local lenders were briefly banned by the banking regulator from trading in Turkish lira with Citigroup, BNP Paribas and UBS
JPMorgan was investigated by Turkish authorities last year after the bank published a report that advised its clients to short sell the Turkish lira.
MSCI, the provider of research-based indexes and analytics, warned last month that it may relegate Turkey from emerging market status to frontier-market status because of bans on short selling and stock lending.
With the market becoming less transparent, overseas fund managers, especially with short-term portfolios, are unenthusiastic about the Turkish market and are becoming more concerned about any forthcoming introduction of other liquidity restrictions.
The exodus of foreign capital is likely to undermine Turkey’s drive for economic growth, especially during the coronavirus pandemic when employment and investment levels have gone down, with the Turkish lira facing serious volatility.