Posts Tagged ‘Germany’

Zuckerberg Live From European Parliament — In the U.S. 12:15 p.m. ET (6:15 p.m. Brussels time).

May 22, 2018

Fresh off testifying before Congress last month, Facebook CEO Mark Zuckerberg will appear before European Parliament to address how the social network will respond to the massive data scandal involving Cambridge Analytica. Zuckerberg will appear at 12:15 p.m. ET (6:15 p.m. Brussels time).

The co-founder of the massive social network will appear before the European Parliament in Brussels, and he is expected to echo many of the same messages he delivered last month before U.S. Congress.

Many Europeans have used Facebook for good, Zuckerberg is expected to say, according to a copy of his prepared opening remarks provided by Facebook.

“After the recent terrorist attacks in Berlin, Paris, London and here in Brussels, tens of thousands of people have used Safety Check to let their friends and family know they’re safe,” Zuckerberg’s prepared remarks say. “Refugees arriving in Europe are using Facebook to stay in touch with their loved ones back home and find new communities here. There are 18 million small businesses in Europe that use Facebook today, mostly for free — almost half of whom say they have hired more people as a result.”

Antonio Tajani, president of European Parliament, confirmed that Zuckerberg has agreed to allow his address to be live-streamed, and USA Today has provided the European Parliament player above.


Zuckerberg Enters the Lion’s Den: Privacy-Focused Europe

May 22, 2018

Facebook CEO to be questioned by EU lawmakers days before new privacy regulation is introduced

Facebook CEO Mark Zuckerberg speaks at the company’s annual F8 developers conference in San Jose, Calif., on May 1.
Facebook CEO Mark Zuckerberg speaks at the company’s annual F8 developers conference in San Jose, Calif., on May 1. PHOTO: STEPHEN LAM/REUTERS

BRUSSELS—Top European lawmakers are set to interrogate Facebook Inc. FB -0.14% Chief Executive Mark Zuckerberg on Tuesday over the company’s handling of alleged data misuse and election interference on the platform, as the tech giant seeks to appease officials in a region where it is regulated strictly.

Roughly a dozen of the European Parliament’s most-senior members and its president are set to press the Facebook CEO on the scandal involving data-analytics firm Cambridge Analytica, which allegedly improperly obtained the personal information of as many as 87 million Facebook users.

Lawmakers say they will seek answers from Mr. Zuckerberg—who has already testified before U.S. senators on the issue—about how Facebook will prevent further scandals like it.

The hearing—in Brussels at 6:30 p.m. local time, or 12:30 p.m. ET—highlights the widening of the fallout to a region where Facebook and its Silicon Valley rivals have faced regulatory pressure for years.

In his opening remarks, Mr. Zuckerberg is likely to outline the actions the company has taken in response, according to a company spokeswoman.

GDPR: What Is It and How Might It Affect You?

The European Union’s General Data Protection Regulation on data privacy will come into force on May 25, 2018. This video explains how it could affect you, even if you don’t live in the EU.

He is expected to apologize for failing to do enough to combat fake news and foreign interference in elections, or to prevent developers from misusing user information, according to a copy of his remarks pre-released by Facebook.

“It’s also become clear over the last couple of years that we haven’t done enough to prevent the tools we’ve built from being used for harm as well,” Mr. Zuckerberg is expected to say. “That was a mistake, and I’m sorry.”

He is expected to stress Facebook’s commitment to Europe, announcing that it will hire 3,000 more employees in the region to reach a total of 10,000 by the end of the year.

Some lawmakers suggested questions could arise about whether the social-media giant should split off certain services if it doesn’t comply with the European Union’s rules. One said they intended to press Facebook over possible compensation for victims of data misuse.

Mr. Zuckerberg will likely face tough questions more specifically over how the social network will comply with the EU’s new privacy law, the General Data Protection Regulation, which enters into force Friday. Jan Philipp Albrecht, the German lawmaker who led the GDPR negotiations for the parliament, is among the questioners and said he would seek clarifications from the company about its privacy-policy updates.

“It’s clear that [the policies] won’t [meet the demands of the GDPR,] so it’s one of the points where Zuckerberg needs to elaborate on,” said Mr. Albrecht.

He said a particular focus is whether all the data Facebook collects on users is truly necessary for the service.

Brussels is the first stop for Mr. Zuckerberg as he seeks to calm tensions with European officials. On Wednesday, Mr. Zuckerberg will travel to Paris, where he will attend a government-organized lunch with executives from Uber Technologies Inc., Microsoft Corp.and other firms about using technology to promote the common good, and Thursday he will speak at a tech conference. While in town, Mr. Zuckerberg will have a private meeting with French President Emmanuel Macron.

“No subject will be avoided,” an official at the French presidential palace said of the meeting with Mr. Zuckerberg. “The president is very direct.”

EU and European national regulators for years have been among the most active world-wide in trying to rein in Facebook. A working group of several EU data-protection watchdogs brought sanctions against the company for prior changes to its privacy policies, though some of those decisions were thrown out in court. Some EU regulators are also investigating the company’s use of data about users of chat app WhatsApp, which it bought in 2014 for $22 billion.

The company has also faced criticism in Europe for its handling of hate speech and terrorist propaganda. The EU has pushed Facebook and other social-media companies to speed up their removal of extremist propaganda and hate speech under threat of new legislation. Germany last year passed a new law threatening social-media companies with fines of up to €50 million ($58.9 million) if they fail to quickly delete hate speech and other illegal content.

Convincing Mr. Zuckerberg to speak was a victory for the 751-member parliament, which is the EU’s most democratic institution but wields little power. Facebook has so far spurned a similar invitation from the U.K. parliament. Mr. Zuckerberg had initially agreed to answer questions in a closed-door meeting. That sparked outrage from many EU politicians and commentators, prompting the parliament to negotiate an agreement to webcast the event.

Write to Natalia Drozdiak at, Sam Schechner at and Valentina Pop at

Iran tells Europe to step up and save nuclear deal

May 22, 2018

Iran poured scorn on threatened U.S. sanctions on Tuesday and told European powers to step up and salvage its international nuclear deal – though Germany signaled there was only so much it could do to fend off Washington’s economic clout.

Image result for Zarif, photos

Iranian Foreign Minister Mohammad Javad Zarif

Senior Iranian military and political figures queued up to issue defiant statements a day after Washington threatened “the strongest sanctions in history” if Iran failed to make a series of sweeping changes.

Two weeks on from U.S. President Donald Trump’s decision to pull out of the nuclear pact, his administration told Iran to drop its nuclear program and pull out of the Syrian civil war among other demands, setting Washington and Tehran further on a course of confrontation.

“The people of Iran should stand united in the face of this and they will deliver a strong punch to the mouth of the American Secretary of State and anyone who backs them,” Ismail Kowsari, a senior commander with Iran’s Revolutionary Guards said, according to the Iranian Labour News Agency.

The 2015 nuclear agreement, worked out by the United States, France, Germany, Britain, Russia, China and Iran, lifted sanctions on Iran in exchange for Tehran limiting its atomic program.

Trump called it the worst deal ever negotiated but European powers see it as the best chance of stopping Iran developing a nuclear bomb.

After Trump pulled out, the other signatories said they would try to salvage the deal and keep Iran’s oil trade and investment flowing. But European companies say they are worried about getting caught up in the new U.S. sanctions, given the extent of Washington’s global reach, and some have already started pulling out.

The head of Iran’s National Security and Foreign Policy committee in parliament said that the only way to salvage the nuclear deal would be for the European signatories to stand up to the United States.

“Today they must show their strength in the face of American pressure,” Alaeddin Borujerdi said, according to the Iranian Students’ News Agency.


German Foreign Minister Heiko Maas on Monday told reporters in Argentina he would travel on from there to Washington to discuss the nuclear deal with U.S. Secretary of State Mike Pompeo. He gave no date for his meeting.

Germany’s economy minister earlier told a newspaper the Berlin government would help German firms with business in Iran where it could, but could not entirely shield them from the U.S. decision to quit the Iran nuclear deal and reimpose sanctions.

Asked how the German government could assist German firms feeling nervous in the wake of the U.S. decision, Peter Altmaier told the Passauer Neue Presse newspaper that Berlin would help them assess the situation and developments while also urging the U.S. to grant exemptions and deadline extensions.

“We will help where we can, but there is no way of completely averting the consequences of this unilateral withdrawal,” he said.

His statement was echoed by Luxembourg’s foreign minister Jean Asselborn who said there were limits to the European Union’s powers to persuade its larger firms to stay in Iran in the face of threatened U.S. sanctions.

“We know there are hardly any larger companies in Europe that do not also trade with the United States. The pressure on European companies from the U.S. is quite large,” he told reporters in Brussels. “We are in the situation that we’re in.”

“I believe we should not give up, we should try until the end, to show, with our heads held high, that we are right and Mr. Trump is wrong,” he added.

French President Emmanuel Macron last week acknowledged the dilemma faced by firms choosing between trading with the biggest economy in the world, the United States, and risking sanctions and massive fines by trading with Iran.

Reporting by Babak Dehghanpisheh in Beirut; Michelle Martin and Andrea Shalal in Berlin and Gabriela Baczynska in Brussels; Writing by Andrew Heavens


How China acquires ‘the crown jewels’ of U.S. technology and European companies

May 22, 2018

Chinese companies continue to be on a shopping spree in Europe and Germany in particular. A fresh study shows that takeovers are usually in line with Beijing’s new industrial strategy where nothing is left to chance.

Chopsticks piercing a €10 banknote (picture-alliance/dpa)

When looking to acquire stakes in German companies, Chinese investors more often than not act in line with their government’s economic agenda, a survey published by the Bertelsmann Foundation showed Tuesday.

Reflecting Beijing’s strategic ambitions of becoming the global leader in a number of key industries, Chinese investors are found to predominantly target German firms which have a lot of technological know-how in the very key sectors that are explicitly mentioned in the Chinese government’s strategic program called “Made in China 2015.”

The author of the study, Cora Jungbluth, said it was Beijing’s explicit policy to turn the world’s second-largest economy from a mere workshop into a global technology leader, with “the acquisition of stakes or complete takeovers of foreign firms being part and parcel of that strategy.”

No accidental choice

The analysis of 175 Chinese investments in German companies between 2014 and 2017 revealed that in two-thirds of all cases stakes were secured in the very key industrial sectors that Beijing said it wanted to boost over the next couple of years.

Most investments were made in German companies offering fuel-saving technology and alternative transmission know-how for the auto industry. Other areas attracting large investments included robotics, energy systems and biomedicine, the study showed.

Formally, most of the Chinese companies buying into German firms were in private hands. But the Bertelsmann Foundation’s Cora Jungbluth said it was unclear to what extent private entrepreneurs were instructed or guided by Beijing in their foreign acquisitions.

Unfair competition?

The survey concluded that Chinese takeovers had so far shown the buyers’ long-term interest in their new assets, but added that there was no level playing field with regard to investments as German and foreign companies in general were still largely barred from investing in key industries in China.

Jungbluth therefore argued that regulators should look harder at the potential long-term impact of Chinese takeovers in Germany, suggesting that authorities should even examine bids for stakes as low as 10-percent — to replace the current policy under which bids are only scrutinized, if they would lead to a Chinese stake in German companies of at least 25 percent.

hg/mm (AFP, dpa)


How China acquires ‘the crown jewels’ of U.S. technology

The U.S. fails to adequately police foreign deals for next-generation software that powers the military and American economic strength.

POLITICO Illustration/Getty Images/iStock

The U.S. government was well aware of China’s aggressive strategy of leveraging private investors to buy up the latest American technology when, early last year, a company called Avatar Integrated Systems showed up at a bankruptcy court in Delaware hoping to buy the California chip-designer ATop Tech.

ATop’s product was potentially groundbreaking — an automated designer capable of making microchips that could power anything from smartphones to high-tech weapons systems. It’s the type of product that a U.S. government report had recently cited as “critical to defense systems and U.S. military strength.” And the source of the money behind the buyer, Avatar, was an eye-opener: Its board chairman and sole officer was a Chinese steel magnate whose Hong Kong-based company was a major shareholder.

Despite those factors, the transaction went through without an assessment by the U.S. government committee that is charged with reviewing acquisitions of sensitive technology by foreign interests.

In fact, a six-month POLITICO investigation found that the Committee on Foreign Investment in the United States, the main vehicle for protecting American technology from foreign governments, rarely polices the various new avenues Chinese nationals use to secure access to American technology, such as bankruptcy courts or the foreign venture capital firms that bankroll U.S. tech startups.

The committee, known by its acronym CFIUS, isn’t required to review any deals, relying instead on outsiders or other government agencies to raise questions about the appropriateness of a proposed merger, acquisition or investment. And even if it had a more formal mandate, the committee lacks the resources to deal with increasingly complex cases, which revolve around lines of code and reams of personal data more than physical infrastructure.

“I knew what was critical in 1958 — tanks, airplanes, avionics. Now, truthfully, everything is information. The world is about information, not about things,” said Paul Rosenzweig, who worked with CFIUS while at the Department of Homeland Security during President George W. Bush’s second term. “And that means everything is critical infrastructure. That, in some sense, means CFIUS really should be managing all global trade.”

As a senior official at the Treasury Department, which oversees CFIUS, put it: “Any time we see a company that has lots of data on Americans — health care, personal financial data — that’s a vulnerability.”

When CFIUS was formed, in the 1970s, the companies safeguarding important technology were so large that any takeover attempt by foreigners would be certain to attract attention. Now, much of the cutting-edge technology in the United States is in the hands of much smaller firms, including Silicon Valley startups that are hungry for cash from investors.

The gap in oversight became a more urgent problem in 2015, when China unveiled its “Made in China 2025” strategy of working with private investors to buy overseas tech firms. A year earlier, Chinese investments in U.S. tech startups had totaled $2.3 billion, according to the economic research firm CB Insights. Such investments immediately skyrocketed to $9.9 billion in 2015. These amounts dipped the following year, as the Obama administration voided a high-profile deal, but analysts say China’s appetite to buy U.S. firms and technology is still strong. In 2017, there were 165 Chinese-backed deals closed with American startups, only 12 percent less than the 2015 peak.

Yet the failure to investigate some forms of Chinese investments in American technology has flown under the radar as President Donald Trump goes tit for tat with Beijing, imposing tariffs meant to punish China for unfair trade practices. Critics noted on Monday that Trump’s tentative agreement to drop his tariff threat in exchange for Chinese pledges to purchase billions of dollars more in American goods avoided any mention of the outdated foreign-investment policies that have alarmed lawmakers across the political spectrum.

On the Senate floor Monday, Minority Leader Chuck Schumer (D-N.Y.) lashed out at Trump’s approach.

“China’s trade negotiators must be laughing themselves all the way back to Beijing,” he said. “They’re playing us for fools — temporary purchase of some goods, while China continues to steal our family jewels, the things that have made America great: the intellectual property, the know-how in the highest end industries. It makes no sense.”

National security specialists insist that such a stealth transfer of technology through China’s investment practices in the United States is a far more serious problem than the tariff dispute — and a problem hiding in plain sight. A recent Pentagon report bluntly declared: “The U.S. does not have a comprehensive policy or the tools to address this massive technology transfer to China.” It went on to warn that Beijing’s acquisition of top-notch American technology is enabling a “strategic competitor to access the crown jewels of U.S. innovation.”

Some congressional leaders concur. Senate Majority Whip John Cornyn (R-Texas) regularly warns his colleagues that China is using private-sector investments to pilfer American technology. China has “weaponized” its investments in America “in order to vacuum up U.S. industrial capabilities from American companies,” Cornyn said at a January hearing. The goal, he added, is “to turn our own technology and know-how against us in an effort to erase our national security advantage.”

Legislation to expand the CFIUS budget and staff has been moving slowly through the halls of Congress amid pushback from Silicon Valley entrepreneurs and business groups. The legislation would give CFIUS new resources to scrutinize bankruptcy purchases and establish stricter scrutiny of start-up investments.

As months passed without any action, and the issue of Chinese investments got overshadowed by tariff fights and feuds between Beijing and the Trump administration, national security experts grew more concerned, fearing that Congress lacked a sense of urgency to police transfers of sensitive technology.

The White House began exploring what more it could do on its own, asking the Treasury Department in late March to offer a list of potential Chinese investment restrictions within 60 days.

Finally, earlier this month, Senate and House leaders announced plans to mark up the bill, starting a process that could lead to passage later this year.

Still, the failure to act more quickly may itself be jeopardizing national security. At a hearing in January, Heath Tarbert, the Treasury Department assistant secretary overseeing CFIUS, testified that allowing foreign countries to invest in U.S. technology without making sufficient background checks “will have a real cost in American lives in any conflict.”

“That is simply unacceptable,” he said.

‘Made in China 2025’

Last October, Chinese President Xi Jinping took the podium before 2,300 Communist Party delegates to deliver his expansive vision for China’s future.

Xi was speaking at the party’s 19th Congress, a summit held every five years to choose the nation’s leaders in the Great Hall of the People in Beijing, the expansive theater right off Tiananmen Square. Speaking in front of a giant gold hammer and sickle framed by bright red drapes, Xi held forth for 3½ hours, declaring that China would look outward to solve its problems.

“China will not close its door to the world — we will only become more and more open,” Xi declared to his rapt audience of party leaders, many of them having close ties to the billionaire investors who represent China in the global market. “We will deepen reform of the investment and financing systems, and enable investment to play a crucial role in improving the supply structure.”

China watchers said Xi was alluding to the government’s relatively new economic plan, dubbed “Made in China 2025,” which leaders had unveiled in 2015. The detailed vision shifted the focus on domestic research investments to the need to pump money into — and better understand — foreign markets.

“We will,” the document proclaimed, “guide enterprises to integrate into local culture.”

“We will,” the document continued, “support enterprises to perform mergers, equity investment and venture capital investment overseas.”

At the top of the investment wish list were high-tech industries like artificial intelligence, robotics and space travel.

For the increasingly powerful Chinese leader, it was the culmination of years of efforts to guide how China spends its blossoming wealth. In addition to luring foreign companies to China, Xi wanted the country — which is sitting on several trillion dollars in foreign exchange reserves — to start investing abroad.

The plan had “much more money behind it” and “much more coordination” between Beijing and Chinese industrialists than previous economic strategies, according to Scott Kennedy, an expert on Chinese economic policy at the Center for Strategic and International Studies, a Washington think tank that specializes in defense matters.

“And a big component of that is acquiring technology abroad,” he said.

From 2015 to 2017, Chinese venture capitalists pumped money into hot companies like Uber and Airbnb, but also dozens of burgeoning firms with little or no name recognition. The country didn’t just want “trophy assets,” Kennedy explained. China’s leaders wanted to “fill in some of the gaps they have” in China’s tech economy.

While the Asian power has piled up profits from its large manufacturing plants that churn out low-cost products, the Beijing government realized it would face declining productivity unless its economy, from agriculture to manufacturing, adopted high-tech methods. Essentially, China wanted to automate entire industries — including car manufacturing, food production and electronics — and bring the whole process in-house.

So Beijing’s leaders encouraged the country’s cash-rich investors to search for “emerging companies that have technologies that may be extremely important … but aren’t proven,” Kennedy said. The initiative has spawned investments in American startups that work on robotics, energy equipment and next-generation IT. Of particular concern to U.S. national security officials is the semiconductor industry, which makes the microchips that provide the “guts” of many advance technologies that China is seeking to leverage.

“A concerted push by China to reshape the market in its favor, using industrial policies backed by over one hundred billion dollars in government-directed funds, threatens the competitiveness of U.S. industry and the national and global benefits it brings,” declared a January 2017 report from the President’s Council of Advisors on Science and Technology, warning of the urgent threat to U.S. superiority in semiconductor technology.

Notably, many of China’s investments didn’t register on the CFIUS radar. They involved the early-seed funding of tech firms in Silicon Valley and low-profile purchases such as the one in Delaware bankruptcy court. They included joint ventures with microchip manufacturers, and the research and development centers created with international partners.

“They have diversified to look for smaller targets,” Kennedy said. “Those things typically do not generate a CFIUS reaction. That is part of it.”

An obscure research body

CFIUS was set up by Congress in 1975 amid growing concerns about oil-rich countries in the Middle East buying up American companies, from energy firms to armsmakers. Chaired by the Treasury Department, the committee brought together representatives from all the major Cabinet agencies to assess the financial, technological and national security threats posed by such investments. For its first decade, however, CFIUS existed mostly as an obscure research body. From 1975 to 1980, the committee met only 10 times, according to congressional reports.

Japan’s economic ascendance in the 1980s changed that. The Defense Department asked CFIUS to step in and investigate potential Japanese purchases of a U.S. steel producer and a company that made ball bearings for the military. In 1988, Congress gave the committee the authority to recommend that the president nix a deal altogether. Still, the committee remained mostly an ad hoc operation into the 1990s.

“Bureaucratically it was not a very smooth, functioning operation,” recalled Steve Grundman, who worked as part of the committee during the Clinton administration. “We had to pick up some intelligence here, some technology assessment there, some industrial analysis hither.”

After the Sept. 11, 2001, terrorist attacks, Congress renewed its interest in CFIUS, passing legislation that instructed the committee to consider a deal’s effect on “homeland security” and “critical industries,” a notable change, according to Rosenzweig, the DHS official who worked with CFIUS during the George W. Bush administration. The directive gave the committee a mandate to keep an eye on a wider array of industries, such as hospitals and banks, that DHS considered “critical” to keeping American society operating.

Rosenzweig called it a “singular shift.” Over time, he said, the committee went from reviewing acquisitions of steel companies — involving just two parties and a tangible product — to investigating technically complex purchases of microchip companies and other software or data-rich firms.

“When I first came to CFIUS, the filings from the other side would be a few-page letter about why this was a good deal,” Rosenzweig said. “Now it’s a stack of books that’s up to my knee.”

The committee’s staffing and resources have not kept pace with the growing workload, multiple people who work with CFIUS told POLITICO. While the Treasury Department has been hiring staffers and contractors to help handle the record workload, the committee’s overall resources are subject to the whims of the individual agencies involved in the process, said Stephen Heifetz, who oversaw the CFIUS work at DHS during the second Bush administration.

There is no single budget or staffing figure for CFIUS. Instead, each agency decides the level of personnel and funding it’s willing to commit to the committee. The Treasury Department and DHS have two of the larger CFIUS teams, Heifetz said. During his tenure, Heifetz’s DHS squad included roughly 10 people, split equally between government workers and outside contractors.

“Each agency decides more or less on their own how they’re going to staff it,” Heifetz said.

At Treasury, there are now between 20 and 30 people working for CFIUS, according to a senior department official. But even with the expanded team, the committee is stretched precariously thin. The official described 80-hour workweeks, regular weekend work and no ability to take time off.

“It’s enough to handle the current mandate, but not comfortably,” the official said.

Amid this uncertainty over resources, CFIUS investigations into foreign acquisitions nearly tripled from 2009 to 2015. The most common foreign investor that hits the CFIUS radar is now China. Nearly 20 percent of the committee’s reviews from 2013 to 2015, the most recent data available, involved the Asian power, easily ahead of second-place Canada at just under 13 percent.

Since 2015, the Treasury official said, those trends have only continued: Chinese deals now represent a large plurality of the committee’s work.

The attention appears to be well-founded. In recent years, China has been repeatedly accused of industrial espionage — using indirect means to obtain American software and military secrets, everything from the code that powerswind turbines to the designs that produce the Pentagon’s modern F-35 fighter jets. And several Chinese businessmen have pleaded guilty to participating in complex conspiracies to get their hands on sensitive technical data from U.S. firms and shuttle it back to Beijing. Again and again, high-tech products and military equipment have popped up in China that bear a too-striking resemblance to their American counterparts.

Spurred by these incidents, CFIUS has successfully advised the president to nix Chinese deals at a record clip. In December 2016, President Barack Obama stopped a Chinese investment fund from acquiring the U.S. subsidiary of a German semiconductor manufacturer — only the third time a president had taken such a step at that point. In September 2017, Trump halted a China-backed investor from buying the American semiconductor maker Lattice, citing national security concerns.

Three months later, a Chinese company’s plan to acquire the American money transfer company MoneyGram fell apart when the two sides realized they would likely not get CFIUS approval because of concerns that the personal data of millions of Americans — including military personnel — could fall into the hands of the Chinese military.

Weeks after that, the committee essentially jettisoned a Chinese state-backed group’s attempt to buy Xcerra, a Massachusetts-based tech company that makes equipment to test computer chips and circuit boards. Then, in March, Trump blocked the purchase of the chipmaker Qualcomm by Singapore-based Broadcom Ltd. CFIUS said such a move could weaken Qualcomm, and thereby the United States, as it vies with foreign rivals such as China’s Huawei Technologies to develop the next generation of wireless technology known as 5G.

To national security leaders, though, CFIUS is still only scratching the surface of China’s ambitions to acquire U.S. technology, noting that traditional sale-and-purchase agreements to obtain a U.S. company aren’t the only ways to gain access to cutting-edge technology.

“You can buy a [partial] interest in a company and gain access to the same type of technology,” Attorney General Jeff Sessions told Congress in October, adding that Justice Department investigators “are really worried about our loss of technology” in instances where Chinese investors buy small stakes in American tech companies.

The U.S. military has raised similar concerns. Defense Secretary Jim Mattis warned last summer that America is failing to restrict foreign investments in certain types of critical industries, testifying during another hearing that CFIUS is “outdated” and “needs to be updated to deal with today’s situation.”

A mysterious takeover

The case that occurred last summer in an obscure courtroom in Delaware seemed innocuous enough: one relatively small tech firm buying out a bankrupt competitor, a transaction that elicited about as much drama as mailing a letter.

The bankrupt semiconductor maker ATop Tech had only 86 employees when it was declared insolvent. But it had a more than a $1 billion market share of the electronic-design automation and integrated circuits markets, the company told the bankruptcy court, giving it potential value to any player seeking to enter the highly specialized semiconductor industry.

Avatar Integrated Systems, the company seeking to purchase ATop, was apparently such a player. But it was not well known to others in the semiconductor industry, and its precise ownership was a bit of a mystery. The sole director listed on its incorporation papers was a Hong Kong-based businessman named Jingyuan Han, and it issued shares to King Mark International Limited, a Hong Kong company in which Han was an investor. Avatar was set up in March 2017, according to the company.

The transaction went ahead despite concerns raised to the court by other players in the semiconductor industry, as well as those of a former senior Pentagon official who specifically suggested the Chinese government may be backing Avatar.

The former Pentagon official, Joseph Benkert, was enlisted by another American semiconductor company, Synopsys, to help recoup money it was owed by ATop. He warned the court that the deal might have national security risks.

“CFIUS has identified businesses engaged in design and production of semiconductors as presenting possible national security vulnerabilities because they may be useful in defending, or seeking to impair, U.S. national security, as semiconductor design or production may have both commercial or military applications,” Benkert, the former assistant secretary of defense for global affairs under the second Bush administration, wrote to the court.

Benkert argued that the question of Avatar’s ownership needed more review given that the company appeared to be “under the control of Han, a Chinese national.”

“In my opinion,” Benkert wrote, “the proposed transaction is likely to receive thorough CFIUS scrutiny and there is a material risk that it will not receive CFIUS approval.”

But despite those concerns, the deal to buy ATop Tech was not given a formal review by CFIUS, according to a senior administration official with direct knowledge of the process. A Treasury Department official, speaking on behalf of CFIUS, declined to comment on the merger.

An Avatar official, reached at the company office in Santa Clara, California, did not respond to questions or a request for an interview with Han. The company did not respond to multiple requests to discuss its relationship — if any — with the Chinese government or the details of its business.

Han, who has been described in media reports as one of China’s wealthiest men, has spent his career almost entirely in the iron and steel industries. Avatar’s scant history seemed to suggest that it was created for the sole purpose of acquiring an established American semiconductor firm like ATop Tech, according to several former national security officials who still work on CFIUS cases.

Attempts to reach Han through China Oriental Group, the iron and steel company that he runs, were also unsuccessful.

Officials familiar with the CFIUS process say that bankruptcy deals such as the Atop-Avatar case sometimes fall off their radar because of difficulty in discerning whether Chinese investors are working with the government. In other bankruptcy cases, Chinese investment in a potential buyer may not be visible in official filings, especially when a web of holding companies is involved. Thus, say current and former officials working with CFIUS, a significant amount of detective work is necessary to discern both the identity and the intentions of the investors.

Traditionally, courts have defined control of a company as “the ability to direct management to make certain decisions.” But a former Treasury Department official said CFIUS needs to focus on “beneficial ownership,” defined as having the ability to obtain technology from the firm, rather than overall decision-making power.

“It is very hard to find beneficial ownership,” said the official. “Our concern is the capacity of the system to deal with these.”

The bills pending in Congress to strengthen the CFIUS review process include provisions designed to make scrutiny of bankruptcy cases easier. The bills would require CFIUS to “prescribe regulations to clarify that the term ‘covered transaction’ includes any transaction … that arises pursuant to a bankruptcy proceeding or other form of default on debt.”

A sharper focus on bankruptcy cases, particularly in making sure CFIUS scrutinizes investors to ties to foreign governments, is desperately needed, said a former Pentagon official who is still involved in CFIUS cases. “How do they find out about it now? They are reading The Wall Street Journal late at night,” the official said. “It is not a very systematic process.”

The former official also recalled that in the past, the Pentagon has hired an outside contractor to scour around for unreported transactions that might raise some national security flags, such as in the semiconductor or aerospace sectors. Such checks need to be performed in a more systematic way.

“There is no process for surfacing information out of the bankruptcy courts,” the official said.

China goes to Silicon Valley

In Silicon Valley, Chinese investment isn’t typically viewed as a threat, but rather more of a blessing.

Chris Nicholson, co-founder of Skymind, an artificial intelligence company that makes the type of cutting-edge software that both the United States and China covet, recalls the many long months he spent in 2014 trudging up and down Sand Hill Road, the heart of Silicon Valley’s leading venture capital firms, and all the doors that slammed shut.

“That was a long, dry year for us,” he told POLITICO.

Nicholson hadn’t sought Chinese money. But then Tencent, China’s internet and telecommunications giant and now one of the world’s largest companies, approached the firm, offering $200,000 in seed funding. The Chinese monetary infusion buoyed Skymind, which soon landed a coveted spot in Y Combinator, the powerful startup accelerator. American investors, who had only months earlier eschewed the firm’s overtures, quickly changed their tune. Chinese investment soon beget American investment.

“It was that crucial piece of Chinese capital that allowed us to survive,” Nicholson said. “That’s all it took. Now we’re a company with 35 employees.”

Reflecting a common feeling among his cohorts in Silicon Valley startups, Nicholson insisted that working with Chinese investors does not mean granting Beijing officials access to the coding process. “My American co-founder and I are in control,” Nicholson said, noting that Skymind has given up none of the rights to its intellectual property and has made its code “open sourced,” which means the code is freely available for cybersecurity experts to inspect, audit and offer suggestions.

But Bryan Ware, CEO of Haystax Technology, which works with law enforcement, defense and intelligence clients on securing their technologies, cast some doubt on the idea that the owners of tech startups would naturally refuse to share details of their technology with their investors: “If you’ve got a Chinese investor and that’s the lifeblood that’s going to allow you to get your product out the door, or allow you to hire your next developer, telling them, ‘No, you can’t do that,’ or, ‘No you shouldn’t do that,’ while you have no other alternatives for financing — that’s just the nature of the dilemma.”

“Every investment comes with a risk of some loss of intellectual property or foreign influence and control,” Ware said.

And too many Silicon Valley deals exist in a “netherworld” between passive investment and absolute takeover, “where there’s access to information, technical information, [and] there is the ability to influence and potentially coerce management,” according to the senior Treasury Department official.

One major concern among specialists like Ware is that Beijing officials could use early Chinese investments in next-generation technology to map the software the federal government and even the Defense Department may one day use — and perhaps even corrupt it in ways that would give China a window into sensitive U.S. information.

A POLITICO review of 185 tech startups with Chinese investors found just over 5 percent had received government contracts, loans or grants ranging from a few thousand dollars to several million dollars. Often, the contracts simply involved research — renewable energy for the Energy Department, electronics and communications equipment for the Pentagon, space technology for NASA. Others ordered lab equipment for the Commerce Department, or machine tools for the military.

“There’s a tremendous amount of intelligence value there,” Ware said. “All governments desire to know what other governments are doing. And knowing the technologies and how they work I think is a big part of that.”

While there’s no indication that the firms had U.S. government contracts at the time that Chinese investors became involved, that may be part of China’s strategy. Derek Scissors, who manages the American Enterprise Institute’s China Global Investment Tracker, an exhaustive database of China’s major global investments, said that as welcome as the surge of Chinese-funded deals may be in Silicon Valley, the engine behind them is the Chinese government. China’s Silicon Valley investment strategy “was shaped by the state and that shaping has gotten tighter,” he said.

Still, many Chinese investments in the United States are not directly backed by the Beijing government, but it can be hard to distinguish.

Some prominent Chinese VC firms in Silicon Valley have clear links to the government. Westlake Ventures, for example, received funding from the government in the coastal Chinese city of Hangzhou, according to media reportsand a Pentagon research paper. And Westlake has put money into other VC funds, such as the WI Harper Group, which has a stake in a wide slate of American tech companies, from a dating app to a three-dimensional imaging company to a maker of robot cooks. Westlake did not respond to a request for comment.

But it’s not always easy to trace the money back to a single source, let alone determine what connection that source has to Beijing’s Communist leadership. Haiyin Capital, a Beijing-based VC firm, is partially backed by a state-run Chinese company, according to a company release. Also complex is ZGC Capital Corporation — located in Silicon Valley and focused on providing startups with basic business help — is a subsidiary of a state-owned enterprise funded by the Beijing government, according to the organizations’ websites. Attempts to reach each organization were unsuccessful.

Security and economics experts say they are unsure how much financial or national security harm these Chinese investments are actually causing the United States — if any — simply because it may not be clear for years exactly how important the technology may be.

In the meantime, entrepreneurs in Silicon Valley are blunt: America actually needs Chinese money to maintain its global tech advantage.

“Here’s my warning shot,” Nicholson said. “If we make it difficult for foreign talent and foreign capital to find each other by over-regulating early-stage startup investing … we will lose our supremacy as the top tech economy in the world.”

Enter Congress

In Washington, Silicon Valley’s warning has been heard loudly enough to delay the passage of a bill to strengthen the CFIUS process, despite the support of such bipartisan figures as Cornyn, the second-ranking Senate Republican, and California’s own Democratic Sen. Dianne Feinstein, the ranking member of the Senate Judiciary Committee.

Last year, after a cascade of warnings from the Defense Department, Justice Department and other powerful sources, both the House and Senate seemed ready to take action to strengthen oversight of foreign investment in technology companies.

The bipartisan proposal would direct CFIUS to consider whether pending investments would erode America’s technological edge, enable a foreign government to utilize digital spying powers that might be used against the United States, or give sensitive data — even indirectly — to a foreign government. Similarly, it would expand the definition of “critical industries” — a reference to sectors like banking, defense or energy — to include “critical technologies,” a significant expansion of the committee’s current mandate.

Under the bill, CFIUS would have to create a system to monitor transactions that aren’t voluntarily brought to the committee’s attention.

The measure would also centralize some of the committee’s functions and allow the committee to charge filing fees up to 1 percent of the total value of the transaction up to $300,000, and let Treasury offer a single CFIUS budget request rather than relying on contributions from other departments.

The Trump administration offered a full-throated endorsement of the bill in January, saying it “would strengthen our ability to protect national security and enhance confidence in our longstanding open investment policy.”

And while the bill doesn’t explicitly cite China, the provisions are clearly aimed at limiting its access to the most sensitive areas.

“Any Chinese-related company that is part of our supply chain is a concern to me,” Rep. Robert Pittenger (R-N.C.), a lead House sponsor of the bill, told POLITICO.

Pittenger insisted that Congress’ inaction is allowing China to brazenly pilfer the technology that drives America’s military might, and sell that technology to adversaries like Iran and North Korea. He noted that a Treasury official told him getting the bill signed is the department’s No. 1 legislative priority for 2018.

“We can’t turn a blind eye to this,” Pittenger said.

But many technology entrepreneurs believe the bill would simply drive cutting-edge research overseas. In 2016, foreign investors injected $373 billion into the United States, a figure that has been mostly increasing since the early 2000s, according to government data. Lengthening the CFIUS review time — currently 30 days, but set to extend to 45 days under the new bill — could damage the “brittle process” of early-stage fundraising, said Nicholson, who encouraged lawmakers to focus on expanding CFIUS powers in other areas, such as bankruptcy courts.

“I worry that they’re driving a bulldozer towards a rose garden,” said Nicholson, echoing his claim that training the CFIUS lens on Silicon Valley could scare off the very financing that keeps America growing.

IBM’s vice president for regulatory affairs, Christopher Padilla, agreed, warning at a January hearing that the bill “could constitute the most economically harmful imposition of unilateral trade restrictions by the United States in many decades.”

He raised particular concerns about expanding CFIUS authority to cover foreign investments in “critical technologies,” a phrase tech leaders say is worryingly opaque and that could force companies peddling sensitive technology to have every single sale reviewed.

Padilla called it a “we’ll know it when we see it” approach to regulating that “would be deeply damaging to U.S. competitiveness, and, more important, could lead to a false sense of security.”

Some industry groups have suggested that the bill should delineate these technologies — robotics or artificial intelligence, for instance — to avoid having every deal scrutinized from top to bottom.

“We would be well served to define those issues from the outset,” said Dean Garfield, CEO of the Information Technology Industry Council, a trade group representing industry heavyweights such as Amazon, Apple, Facebook, Google, Microsoft and Twitter. Garfield said getting the bill revised is a top-five issue for ITI in 2018.

He cautioned that the bill, as written, could spike the number of annual CFIUS reviews from “a few hundred deals” to “a few thousand.”

Proponents, however, feel that specifying specific technologies might be impossible. The software powering the country — from waterways to missile systems — is constantly changing and evolving, they say. Instead, they suggest, new CFIUS funds and a streamlined reporting process would help keep the growing stream of deal reviews moving.

“For the price of a single B-21 bomber, we can fund an updated CFIUS process and protect our key capabilities for several years,” Cornyn said at a hearing. “That is a down payment on long-term national security.”

Nonetheless, lawmakers have been working to address industry complaints, making tweaks to the legislation. And just last week, lawmakers made a breakthrough, agreeing to slightly narrow the bill’s scope, raising the chances the measure will make it to the president’s desk.

The House and Senate are scheduled to mark up their respective CFIUS bills on Tuesday, and lawmakers now are angling to attach the legislation to the annual, must-pass defense authorization bill as a way to guarantee it gets through. But lingering disputes could still derail the process.

National security leaders and lawmakers warn that these squabbles, while reflecting sincerely held positions, are simply delaying necessary action. At that January hearing, Cornyn described a changing reality if CFIUS is left in its current iteration.

“Just imagine if China’s military was stronger, faster and more lethal,” Cornyn said.

“That is what the future likely holds,” he added, “unless we act.”

Catalonia: German prosecutors push for Carles Puigdemont’s extradition

May 22, 2018

The Schleswig-Holstein state prosecutor is advancing his case for the extradition of former Catalan President Carles Puigdemont. However, the state’s top court has ruled that Puigdemont cannot yet be rearrested.

Puigdemont in Berlin

The public prosecutor in the state of Schleswig-Holstein is preparing the paperwork to extradite former Catalan President Carles Puigdemont to Spain, where he would face charges of rebellion and disturbing the public order following a referendum last autumn in which a majority of voters expressed a clear preference for the semiautonomous region’s secession.

On Tuesday, however, a court ruled that Puigdemont, who was taken into custody by German authorities in March at the request of Spain, could not be rearrested because he doesn’t pose a “flight risk.”

Puigdemont, who on April 6 was ordered released pending a decision, is currently in Berlin. A court had already ruled earlier this spring that he could not be extradited on charges of rebellion.

mkg/kms (Reuters, dpa, AP)

Vigilance needed on fallout from US-China trade pact, says France

May 22, 2018

Jean-Baptiste Lemoyne fears accord might spur ‘competitive distortions’ for Europe

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Jean-Baptiste Lemoyne, the French trade minister: ‘The good news is that the two parties are refraining from engaging in a trade war’ © AFP

Anne-Sylvaine Chassany in Paris

France has warned that a trade deal between the US and China must not harm the EU, as the bloc seeks exemption from Washington’s planned tariffs on aluminium and steel next month.

Jean-Baptiste Lemoyne, the French trade minister, said Paris welcomed signs of easing tension between Washington and Beijing, after Donald Trump’s administration announced a suspension of tariffs on Chinese steel and aluminium on Saturday.

But in an interview he warned that joint statements on reducing China’s trade deficit with the US remained “vague” and suggested a “face-saving” exercise that ought to make European leaders “vigilant”.

“The good news is that the two parties are refraining from engaging in a trade war,” Mr Lemoyne told the Financial Times. “Now we will have to see the effects and we will be attentive that this does not translate into competitive distortions against products from other countries.”

Beijing’s pledge to increase imports of US agricultural goods were “not massive concessions”, as demographics were likely to achieve that goal, Mr Lemoyne said.

The comments underline how Mr Trump’s administration has unsettled its western allies by threatening them with duties in an attempt to narrow the US trade deficit. EU leaders have maintained a defiant attitude towards the US, saying Washington must permanently and unconditionally lift the threat of steel tariffs — which are due to take effect on June 1 — before the EU will start any wider talks on bilateral trade.

Only after securing a permanent carve-out from US tariffs would the EU address Mr Trump’s trade concerns and offer to work on an overhaul of the World Trade Organization, Mr Lemoyne said.

Emmanuel Macron, the French president, said in March that the EU would not be bullied into trade discussions “with a gun pointed at our head”. But EU unity has been tested, with France advocating a tougher stance towards the US than Germany, which has been keen to avoid a trade spat that would harm its vehicle exports.

Mr Lemoyne said the EU needed to assert its “sovereignty” as the world’s largest trade bloc by “working hard to achieve a harmonised approach” and overcoming “nuances stemming from different economic structures”.

EU foreign affairs and trade ministers meet in Brussels on Tuesday and Mr Lemoyne warned that the EU had to decide whether it wanted to “remained somebody’s doormat or be respected”.

Allies do not mean vassals

Jean-Baptiste Lemoyne on the EU’s historical friendship with the US

Mr Lemoyne suggested it was especially important for the EU to make its case a year before European parliamentary elections and amid mounting Euroscepticism.

The bloc would invoke its status of historical “ally” to the US, the minister said. But he cautioned: “Allies do not mean vassals.”

The EU has had reason to feel bruised by Washington in the past year. The US move on steel and aluminium follows Mr Trump’s decision to withdraw from the 2015 Iranian nuclear deal and reimpose economic sanctions on companies doing business with Tehran. The US president also pulled out of the UN’s 2015 Paris accord on climate change last year.

Mr Lemoyne said that on trade the EU was aiming to replicate Mr Macron’s strategy over Iran, in which the French president offered to work with Mr Trump on a more comprehensive agreement with Iran to salvage the initial nuclear deal.

The WTO no longer functioned well, Mr Lemoyne said, citing its paralysis because decisions had to be unanimous. He said the EU would also be ready to discuss “voluntary co-operation” with the US within the WTO framework.

“We have a positive agenda for the US to tackle imbalances whose roots are not in Europe,” he said. “We think that more multilateralism is the answer, but a more efficient kind of multilateralism.”

U.S. Lays Out Demands for New Iran Deal

May 21, 2018

Mike Pompeo calls on Iran to stop enriching all uranium, halt support for militant groups

WASHINGTON—The Trump administration escalated its demands on Iran on Monday, putting Tehran on notice that any new nuclear deal would require it to stop enriching all uranium and halt its support for militant groups in the region.

The administration’s demands were outlined in a speech by Secretary of State Mike Pompeo, which for the first time spelled out all of the administration’s requirements for a new agreement.


Pompeo Says U.S. To Impose ‘Strongest Sanctions In History’ Against Iran

U.S. Secretary of State Mike Pompeo speaks about Iran sanctions at the Heritage Foundation in Washington on May 21.
U.S. Secretary of State Mike Pompeo speaks about Iran sanctions at the Heritage Foundation in Washington on May 21.

U.S. Secretary of State Mike Pompeo says Washington will impose “the strongest sanctions in history [on Iran] once they come into full force” and that the “sting of sanctions will only grow more painful if the regime does not change its course.”

Pompeo set 12 conditions for Iran to follow in order for the United States to agree to a new nuclear deal with Tehran in a speech in Washington on May 21 at the Heritage Foundation think tank.

His speech comes almost two weeks after U.S. President Donald Trump said Washington was withdrawing from the 2015 nuclear deal between Iran and six world powers.

Pompeo said the deal was a “loser” that had huge negative repercussions,” adding that Iran had “advanced its march across the Middle East” since the signing of the 2015 deal.

He said the sanctions will apply “unprecedented financial pressure” on Iran, which he called the world’s leading sponsor of terrorism.

Pompeo said Iran will be “battling to keep its economy alive” under the sanctions and will have to choose between maintaining its economy or sponsoring terrorist and insurgent groups in countries like Lebanon, Syria, Iraq, and Yemen.

He blamed the money that the Iranian government received after sanctions ended as a “newfound treasure” that it used to sponsor those groups.

Pompeo said if Iran makes “major changes,” the U.S. would be willing to lift all sanctions.

He did not give a timetable for when the sanctions would be imposed.

The landmark nuclear deal gave the Islamic republic relief from economic sanctions in exchange for curbs on its nuclear program. Aside from the United States and Iran, the agreement involved Germany, Britain, France, China, and Russia.

The U.S. decision to pull out of the deal was criticized by Washington’s European allies, which have been talking to Tehran about how to salvage the accord without the United States. China and Russia have also pledged to stay in the agreement.

Brian Hook, a senior adviser to Pompeo, has said the new U.S. approach will seek to create “a framework that will address the totality of Iran’s threats.”

“We see an opportunity to counter and address Iran’s nuclear and proliferation threats and to create a better nonproliferation and deterrence architecture for Iran and the region,” Hook told reporters in a conference call on May 18.

He did not provide details on Pompeo’s speech, but said it aimed to achieve a “better deal” than the agreement signed during the administration of Trump’s predecessor, Barack Obama.

The State Department said Pompeo held consultations with the foreign ministers of Germany, France, and Britain ahead of his address.

Trump insists the accord should have dealt with Tehran’s ballistic-missile program and its aggressive activities in the Middle East, instead of focusing solely on nuclear matters. He also criticized the fact that some provisions in the agreement expire over time.

He announced on May 8 that, in quitting the deal, he will reimpose sanctions lifted as part of the agreement — despite the European powers’ sustained efforts to convince Washington to continue to adhere to it.

The U.S. Treasury has put European businesses on notice that they have 90 days to wrap up most business with Iran before the renewed U.S. sanctions take effect.

European leaders are now mulling ways to avoid renewed U.S. sanctions on Iran and soften their impact on European firms doing business with the country.

On May 18, the European Commission proposed to let EU members make payments for oil directly to the Iranian Central Bank to bypass U.S. sanctions.

With reporting by dpa, AP, and Politico

Iran calls EU efforts to save nuclear deal inadequate

May 21, 2018

Tehran has said Europe’s attempts to save the 2015 nuclear deal are insufficient. Iran sees a particular problem with European companies halting investment in the country.

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An Iranian made ballistic missile is launched from Yemen by Houti rebels into Saudi Arabia

Iranian Foreign Minister Javad Zarif said Europe’s attempts to salvage the nuclear deal were inadequate, in comments in Tehran on Sunday.

He said he was particularly concerned by the decisions of various European companies to halt their Iranian operations until the future of sanctions was clear.

Read more: European allies struggle to curb impact of US sanctions

What Zarif said

“With the exit of the United States from the nuclear deal, the expectations of the Iranian public towards the European Union have increased … and the EU’s political support for the nuclear agreement is not sufficient,” Zarif said in comments carried by state broadcaster IRIB.

“The cascade of decisions by EU companies to end their activities in Iran makes things much more complicated,” he told reporters.

“The EU must take concrete supplementary steps to increase its investments in Iran. The commitments of the EU to apply the nuclear deal are not compatible with the announcement of probable withdrawal by major European companies,” Zarif said.

He was speaking after meeting with EU Energy Commissioner Miguel Arias Canete, whose two-day visit to Iran was the first by a Western official since Washington announced its withdrawal from the 2015 nuclear deal earlier this month.

Read more: No clear benefit from Trump’s reimposing sanctions on Iran

Investments on hold

French oil major Total has said it will abandon its $4.8 billion (€4.1 billion) Iranian investment project unless Washington grants it a waiver from sanctions.

Fellow French energy giant, Engie, has said it will halt engineering work in the country before November, when US sanctions are due to be reimposed.

Germany tries to sell the deal

Meanwhile in Buenos Aires, German Foreign Minister Heiko Maas urged other signatories to uphold the 2015 nuclear deal.

At a meeting of G20 foreign ministers he said, “Giving it up means entering a completely uncertain future as far as the question of nuclear weapons in Iran is concerned.”

“It’s not really about Iran; it’s about our own original security interests, German as well as European.”

But it will be difficult to make progress with the deal in Buenos Aires with the absence of several key players on Monday, including Russia’s Sergey Lavrov, French Foreign Minister Jean-Yves Le Drian, EU foreign policy chief Federica Mogherini and, most notably, US Secretary of State Mike Pompeo.

Pompeo is scheduled to give a speech on Monday in Washington on the US’ hopes of reaching a new nuclear deal with Iran.

Read more: Iran deal: The European Union’s ugly options

The Vienna meeting

German newspaper Welt am Sonntag reported that Germany, France, Britain, Russia and China would be meeting in Vienna this week to discuss how to maintain the nuclear accord.

Read more: Germany to meet with France, Britain, Russia and China to save Iran nuclear deal: report

It said a potential deal would be largely the same as the 2015 deal, but with added stipulations on Iran’s ballistic missile program and Tehran’s support of armed groups in the Middle East.

But, according to Reuters news agency, unnamed EU sources denied they will discuss offering Iran financial aid in exchange for concessions.

“The Vienna meeting next Friday will address the implementation issues and details” of the deal, one EU source said. “The meeting will not cover any other issues.”

aw/sms (dpa, AFP, AP, Reuters)

China To The Rescue on Iran Nuclear Deal

May 21, 2018

Iran has called on China to help safeguard the nuclear deal it reached with other major world powers, saying Tehran will resort to “other options” if its interests are threatened by US sanctions.

South China Morning Post
May 21, 2018

Iran has called on China to help safeguard the nuclear deal it reached with other major world powers, saying Tehran will resort to “other options” if its interests are threatened by US sanctions.

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The nation’s ambassador to China Ali Asghar Khaji said Beijing had a positive role to play in upholding the deal, and should boost economic cooperation with Tehran.

He also said the Iranian foreign minister chose Beijing as his first stop on a whirlwind diplomatic tour last week because of China’s “importance” to Iran.

“We expect other remaining members of the Joint Comprehensive Plan of Action, including China, to help implement and continue this deal, and fulfil their commitment and obligations according to this deal,” Khaji said, referring to the plan reached in 2015 that will see Iran significantly reducing its uranium stockpile by 2030 in exchange for the lifting of economic sanctions.

Iran's Foreign Minister Mohammad Javad Zarif (2nd R), France's Foreign Minister Jean-Yves Le Drian (2nd L), Germany Foreign Minister Heiko Maas (R), EU High Representative for Foreign Affairs Federica Mogherini and Britain's Foreign Secretary arrive for a meeting of EU/E3 with Iran at the EU headquarters in Brussels on May 15, 2018. (AFP PHOTO / POOL / Olivier Matthys)

Iran’s Foreign Minister Mohammad Javad Zarif (2nd R), France’s Foreign Minister Jean-Yves Le Drian (2nd L), Germany Foreign Minister Heiko Maas (R), EU High Representative for Foreign Affairs Federica Mogherini and Britain’s Foreign Secretary arrive for a meeting of EU/E3 with Iran at the EU headquarters in Brussels on May 15, 2018. (AFP PHOTO / POOL / Olivier Matthys)

“If we could gain these rights and benefits from this deal we will stay in it. If these Iranian rights were not satisfied, and our interests were not reached, we will think about other options,” he said in an interview with the South China Morning Post last week, without specifying what the other options were.

he US withdrawal from the deal leaves Iran vulnerable to a new wave of sanctions, and companies with business ties to Tehran may face US penalties. Photo: Shutterstock

The nuclear deal reached between Iran, Germany and the five permanent members of the United Nations Security Council – China, France, Russia, the United Kingdom and the United States – was once seen as a consequential accord that would reshape Middle East politics.

But US President Donald Trump called the agreement “a horrible, one-sided deal” and announced the US would withdraw, leaving Iran vulnerable to a new wave of sanctions, while companies with business ties to Tehran may face US penalties.

German newspaper Welt am Sonntag reported on Sunday that diplomats from Europe, China and Russia are discussing a new accord to offer Iran financial aid to curb its ballistic missile development, in the hope of salvaging the 2015 deal, according to Reuters. The officials will meet in Vienna in the coming week under the leadership of senior European Union diplomat Helga Schmid to discuss the next steps.

Last week, Iranian foreign minister Mohammad Javad Zarif met his counterparts from China and Russia, as well as Britain, France, Germany and the European Union, in a bid to rescue the deal. Despite Washington’s withdrawal, all the other signatory nations have vowed to keep the pact alive.

“So with this positive atmosphere, we believe that, and we hope that, we can continue the Joint Comprehensive Plan of Action without the United States,” Khaji said.

Khaji said Zarif “intentionally” made Beijing his first destination on the trip, before Moscow and Brussels, because China is Iran’s top trading partner and No 1 oil and non-oil buyer, as well as major investor. “This decision was made because of the importance of China for us,” he said. “We expect China, as a member of the 5+1, to continue to play its positive role to implement and safeguard the nuclear deal.”

China National Nuclear Corporation has been contracted to redesign Iran’s Arak heavy water reactor so that it will be unable to produce plutonium. Photo: AFP

Under a separate agreement signed last year, China National Nuclear Corporation was contracted to redesign Iran’s Arak heavy water reactor so that it will be unable to produce plutonium.

Khaji criticised the US pull-out as “totally illegal” and signalled to the international community that Washington was not trustworthy. “Not only Iranians, but also other nations and countries lose their trust in the United States because of this withdrawal,” he said.

The ambassador did not rule out the possibility of renegotiation with the US, or even a new deal, but said Iran would make decisions according to the current situation and would follow up on its legal rights.

During Zarif’s three-hour meeting with his counterpart Wang Yi in Beijing last Sunday, the Chinese side reaffirmed China’s commitment to safeguard the agreement and also agreed to expand economic cooperation between the two sides.

“Our Chinese friends again reaffirmed their stance against unilateral sanctions and actually pictured the framework of the future cooperation between the two countries on how to expand the relations,” Khaji said.

On Thursday, Iran’s oil minister Bijan Namdar Zanganeh also said state-owned China National Petroleum Corporation was ready to replace Total on a major gas field project in Iran if the French energy giant pulled out.

China has been Iran’s biggest trading partner and export market for the past 10 years. In 2017, their two-way trade jumped 21 per cent from a year earlier to reach US$37.3 billion, while more than 200,000 trips were made between the two countries.

Iran is also an important part of China’s “Belt and Road Initiative” – aiming to boost trade and infrastructure links from Asia to Africa and Europe – because of its strategic location between East and West, just as it was a centre of the ancient Silk Road. Iran signed a memorandum of understanding to join the initiative in 2016, when Chinese President Xi Jinping visited Tehran.

Iranian President Hassan Rowhani welcomes his Chinese counterpart Xi Jinping in Tehran in 2016. Photo: EPA

The bilateral relationship between the two countries has also improved in other areas such as security, Khaji said.

Iran is an observer at the China-led Shanghai Cooperation Organisation security bloc, and Xi has invited Iranian President  to this year’s SCO summit in Qingdao next month.

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“We are positively looking at this invitation,” the ambassador said.

Khaji also condemned Israel for causing the deaths last week of more than 60 Palestinians protesting at the Gaza-Israel border over the US moving its embassy from Tel Aviv to Jerusalem, saying US and Israeli actions were destabilising the region and it was like “putting oil on this fire and escalating tension in the region”. “One of the important causes of the instability in the Middle East region is the US decision and actions,” he said.

Many jihadis from Germany have German citizenship: Report

May 21, 2018

Over 1,000 Islamists have left Germany to aid terror groups in Syria and Iraq, a report cites the government as saying. And it says more than half of them hold German passports.

Militants of the 'Islamic State' group hold up their weapons and wave its flag on their vehicles in a convoy on a road leading to Iraq, while riding in Raqqa city in Syria

The German government knows of more than 1,000 Islamists who have left Germany for Syria or Iraq to support terrorist organizations there, media reported on Sunday.

The figure comes from an answer given by the government to a question from the parliamentary representatives of the Left Party, according to newspapers of the Funke media group.

The government also cited security authorities as saying that more than half of those who had left Germany for such conflict zones had German passports, the newspapers said in their report.

The figure given by the government shows a further increase in the number of those traveling abroad as jihadis, but indicates that the rate of departures has slowed considerably in comparison with two years ago.

According to the report, 243 supporters of the Kurdistan Workers’ Party (PKK) and the Kurdish Democratic Union Party (PYD) have also travelled abroad to support the coalition fighting the extremist group “Islamic State” (IS). Germany classes the PKK as a terrorist organization.

Read moreChildren of ‘Islamic State’ struggle to integrate in Germany

Unconstitutional proposal?

Although dozens of German Islamists are in prison in Syria, Iraq and Turkey, many others, including women and children, have since returned to Germany.

The report said that during coalition negotiations between Chancellor Angela Merkel’s conservatives and the Social Democratic Party (SPD), it was agreed that returning fighters with double citizenship should have their German nationality canceled if there is evidence of their having fought for a terrorist militia.

This plan was criticized by the Left Party’s expert for domestic affairs, Ulla Jelpke, who called it “unconstitutional.” She also told the Funke group newspapers that such a move would punish Germans who had fought alongside the Kurds against IS.

Read more: Can foreign ‘Islamic State’ fighters’ kids return to Europe?

Turning back jihadis

Her counterpart from the SPD, Uli Grötsch, also slammed the proposal, even though his party agreed to it in the coalition deal.

“It is more symbolic than politically useful,” he said, saying that prosecution and deradicalization were what was needed instead.

However, the domestic affairs expert of Merkel’s Christian Democrats (CDU), Armin Schuster, defended the measure, saying that a jihadi who was no longer German could be sent back at the border.

Read more: Is France’s deradicalization strategy missing the point?

tj/jlw (KNA, dpa)