U.S. Iran Strategy Announced by SecState Pompeo

This speech/policy sets the table for the North Korea talks with President Trump. Further, it advances the mission on countering militant Islam not only in the region but globally. Europe has to decide on corporate business relationship with Iran versus human rights along with worldwide terrorism at the hands of Hezbollah and the Iranian Revolutionary Guard Corps.

Since 2014, a broad range of organizations, from medical companies such as GE Healthcare to aerospace firms such as Lufthansa Technik, as well as educational institutions such as Harvard University, have obtained permission and waivers to operate in Iran.

Other U.S. institutions that were permitted to do business in Iran include: General Electric Medical and Aviation Divisions, Bausch & Lomb, Boston Scientific, Smithsonian Institute, HSBC, Philips North America, University of California San Diego, University of Wisconsin, Loyola University, New York University, BNP Paribas S.A., American Pulp and Paper and Intelsat Corporation to list a few. More here.

(Reuters) – The United States on Monday demanded Iran make sweeping changes — from dropping its nuclear program to pulling out of the Syrian civil war — or face severe economic sanctions as the Trump administration hardened its approach to Tehran.

Iran dismissed Washington’s ultimatum and one senior Iranian official said it showed the United States is seeking “regime change” in Iran.

Weeks after President Donald Trump pulled out of an international nuclear deal with Iran, his administration threatened to impose “the strongest sanctions in history,” and vowed to “crush” Iranian operatives abroad, setting Washington and Tehran further on a course of confrontation.

U.S. Secretary of State Mike Pompeo demanded sweeping changes that would force Iran effectively to reverse the recent spread of its military and political influence through the Middle East to the shores of the Mediterranean Sea.

If Washington sees tangible shifts in Iran’s policies, it is prepared to lift sanctions, Pompeo said.

“The sting of sanctions will only grow more painful if the regime does not change course from the unacceptable and unproductive path it has chosen for itself and the people of Iran,” Pompeo said in his first major speech since becoming secretary of state.

“These will be the strongest sanctions in history by the time we are done,” he added.

Pompeo took aim at Iran’s policy of expansion in the Middle East through support for armed groups in countries such as Syria, Lebanon and Yemen.

He warned that the United States would “crush” Iranian operatives and proxies abroad and told Tehran to pull out forces under its command from the Syrian civil war where they have helped President Bashar al-Assad gain the upper hand.

Iran’s president summarily dismissed Pompeo’s demands.

“Who are you to decide for Iran and the world?,” the semi-official ILNA news agency quoted Hassan Rouhani as saying.

“The world today does not accept America to decide for the world, as countries are independent … that era is over … We will continue our path with the support of our nation.”

Tension between the two countries has grown notably since Trump this month withdrew from the 2015 nuclear agreement aimed at preventing Tehran from obtaining a nuclear weapon.

A senior Iranian official said Pompeo’s remarks showed that the United States was pushing for “regime change,” a charged phrase often associated with the U.S. invasion of Iraq in 2003 and the overthrow of President Saddam Hussein.

Pompeo warned that if Iran fully resumed its nuclear program Washington would be ready to respond and said the administration would hold companies doing prohibited business in Iran to account.

“Our demands on Iran are not unreasonable: give up your program,” Pompeo said, “Should they choose to go back, should they begin to enrich, we are fully prepared to respond to that as well,” he said, declining to elaborate.

Pompeo said Washington would work with the Defense Department and allies to counter Iran in the cyberspace and maritime areas.

The Pentagon said it would take all necessary steps to confront Iranian behavior in the region and was assessing whether that could include new actions or doubling down on current ones.

Related reading: 2015 France Opened Trade Office in Iran for 150 French companies

Related reading: May 2018 UK Updated the Trade Policy with Iran

Related reading: ‘Made in Germany’ has a very good reputation in Iran

NAMING NAMES

Pompeo said if Iran made major changes, the United States was prepared to ease sanctions, re-establish full diplomatic and commercial relations and support the country’s re-integration into the international economic system.

Any new U.S. sanctions will raise the cost of trade for Iran and are expected to further deter Western companies from investing there, giving hardliners, including the Islamic Revolutionary Guard Corps, an opportunity to cement their grip on power.

Iran’s ruling elite are mindful of recent protests sparked by economic hardship, which is, in part, their calculation for working with the Europeans on ways to salvage the nuclear deal.

Pompeo’s speech did not explicitly call for regime change but he repeatedly urged the Iranian people not to put up with their leaders, specifically naming Rouhani and Foreign Minister Mohammad Javad Zarif.

“At the end of the day the Iranian people will get to make a choice about their leadership,” Pompeo said.

Suzanne Maloney, deputy director of the Brooking Institution think tank’s foreign policy program, said Pompeo’s speech did indeed amount to a strategy of regime change.

“There is only one way to read it and that is that Trump administration has wedded itself to a regime-change strategy to Iran, one that is likely to alienate our allies. One with dubious prospects for success,” she said.

The administration’s approach “explicitly puts the onus on the Iranian people to change their leadership or face cataclysmic financial pressure,” said Maloney who has advised the State Department on Iran in the Bush administration between 2005-2007.

Lebanese analyst Ghaleb Kandil, who has close ties to the pro-Iran Hezbollah group, said Washington’s demands have previously not worked.

“These are conditions that were tested in previous phases of American pressures, before the nuclear deal, when Iran was in more difficult circumstances than it is in these days, and it did not surrender to these conditions or accept them,” said Kandil.

Pompeo outlined 12 U.S. demands for Iran including to stop uranium enrichment, never to pursue plutonium reprocessing and to close its heavy water reactor.

It also had to declare all previous military dimensions of its nuclear program and to permanently and verifiably abandon such work, he said.

Pompeo’s demand that Tehran stop uranium enrichment goes even further than the nuclear deal. Iran says its nuclear work has medical uses and will produce energy to meet domestic demand and complement its oil reserves.

Washington’s regional allies, the Gulf and Israel, who were strong critics of the deal, praised the administration’s position on Monday.

European parties to the nuclear deal – France, Britain and Germany – are working to find a way to keep the nuclear pact in effect after Washington’s exit.

Speaking ahead of Pompeo’s speech, British Foreign Secretary Boris Johnson said it would be difficult for the United States and its allies to deal with all the issues they had with Iran at the same time.

“If you try to pull all of those into a giant negotiation, a new jumbo Iran negotiation, a new treaty…that seems to be what they envisage and I don’t see that being very easy to achieve in anything like a reasonable timescale, Johnson said in Argentina.

Gordon Chang is Right, Recall Chinese Diplomats

Today, May 20, Steve Mnuchin, Treasury Secretary announced the tariffs are on hold, pending some kind of a tentative agreement. Really Steve? This as the North Korea Kim/Trump talks are on shaky ground. China wants North Korea to have nuclear weapons, period.

China is a Leninist state. I spent a month on the mainland, I saw it.

A threat to the United States? Yes. To allies? Yes

China has overtly weaponized those pesky island with a H-6 bomber aircraft landing on Woody Island. Did President Xi share any of this with President Trump at that confab at Mar A Lago? The matter of the South China Sea and those disputed waters and island is hardly any new threat. It goes back to at least 2014 and President Obama was briefed often on the building Chinese aggression. There was a temporary Asia Pivot by Obama but it was merely a gesture in retrospect. That Asia Pivot hardly raised any eyebrows in Beijing.

The reason to recall diplomats and expel others from the United States? At least the first one, laser attack on our U.S. airmen.

8 May 2018 The two airmen reported symptoms of dizziness and seeing rings. Pointing lasers at aircraft is extremely dangerous. It can temporarily blind pilots, and in the United States it’s a federal offense. While the pilots are expected to make a full recovery, the incident raises questions about how far the United States will allow China to push it without pushing back.

But first let’s back up. What’s everyone doing in Djibouti, a tiny country in eastern Africa? America has a base in Djibouti because of its proximity to Yemen, a terrorist incubator. The 4,000 U.S. troops stationed there are tasked with conducting counter-terrorism operations in the region.

Djibouti - China Naval Base photo

What about China? Well, that’s a little more opaque. China opened its Djibouti base last August, claiming that its purpose is to help with anti-piracy patrols and other peacekeeping missions. It’s supposedly a logistics base, but here’s the thing: China doesn’t have foreign military bases anywhere in the world — except in Djibouti, eight miles from the U.S. base.

But is worse…anyone paying attention outside of Gordon Chang and Steven Mosher? Yes thankfully, Congress is. FINALLY

Suggest you watch this video, consider how much of it, if not all of it was stolen from the United States.

So, let us consider some of these items shall we?

  1. Why are we giving China access to our defense contractors? Additionally, there are cyber part operations and hacks of the F-22 and F-35.
  2. Who is challenging the BRI, Belt Road Initiative?
  3. The South China Sea is part of the Blue Water Territory. China is building a navy to be twice the size of that of the United States. That includes up to 12 nuclear powered carrier battle groups.
  4. No one challenged China on the Scarborough Shoal achievement, that is the new China model for hegemony.
  5. China wants all telecom advances developed by the United States for it’s fiber-liked command centers and is getting them. China wants to lead on 5G, then there is outer-space.
  6. China and Russia have an alliance on military, missile and hybrid tactics to alter the balance of global power.
  7. Then there was the China Argentina issue with the Falklands, again.
  8. China has instituted national re-education program. The program is a hallmark of China’s emboldened state security apparatus under the deeply nationalistic, hard-line rule of President Xi Jinping. It is partly rooted in the ancient Chinese belief in transformation through education – taken once before to terrifying extremes during the mass thought reform campaigns of Mao Zedong, the Chinese leader sometimes channeled by Xi.
  9. A significant Chinese operation is debt-trapping. Sri Lanka and the Philippines are already falling due to this.
  10. China forcing Venezuela to give up Blanquilla Island over debt.
  11. If you look at the Qing Dynasty, that is President Xi’s vision and Taiwan is an important key to that achievement. China Wants to Build a Massive Underwater Tunnel to Taiwan and to own/control Taiwan by 2020.
  12. OBOR, One Belt, One Road is a sophisticated trade strategy on a global scale and it threatens currency stability, port security, transportation channels and debt.

 

 

 

Jones Day Legal Counsel to European Corps, Iran Deal

Let’s begin with Ploughshares, shall we? Make sure you check the credits at the end of the video. Those that contributed money to the effort are listed here.

Meanwhile, there is a meeting scheduled in Vienna where Germany, France, Britain, Russia and China are to discuss saving the Iran nuclear deal. It is being chaired by Helga Schmid. Will it soon be called the Vienna nuclear deal?

Impact of U.S. Withdrawal from the Iran Nuclear Deal

May 2018

In Short

The Situation: On Tuesday, May 8, 2018, President Trump announced that the United States has withdrawn from the Iran Nuclear Deal and will fully reimpose its suspended sanctions targeting Iran.

The Result: All currently suspended U.S. sanctions in respect of Iran, including sanctions applicable to non-U.S. persons, will be reimposed by November 5, 2018.

Looking Ahead: The reimposition of U.S. sanctions will have limited impact on U.S. companies. However, foreign companies majority-owned or controlled by U.S. persons must now begin winding down any Iran-related activities. In contrast, the impact of the reimposition of U.S. sanctions on non-U.S. companies is less clear, and as the international response develops, non-U.S. companies will increasingly face a complex compliance landscape.


As reported earlier this week, on May 8, 2018, President Trump announced that the United States will reimpose, after specified wind-down periods, all nuclear-related sanctions lifted under the Joint Comprehensive Plan of Action (“JCPOA”) (commonly known as the “Iran Nuclear Deal”). As a result, the U.S. sanctions regime will revert to its pre-JCPOA scope by November 5, 2018.

In light of the comprehensive U.S. primary sanctions that remained in place after implementation of the JCPOA, President Trump’s announcement will have little impact on U.S. companies. In contrast, foreign subsidiaries of U.S. organizations and their non-U.S. counterparts face a dramatically changed compliance landscape. With the reimposition of U.S. extraterritorial, or secondary, sanctions, non-U.S. companies must navigate increasingly complex terrain as they assess continued engagement with Iran, compliance with U.S. sanctions, and the pending response of the other JCPOA signatories.

Immediate Impact

The background of the JCPOA, the resulting international sanctions relief, and President Trump’s criticism of the deal are, at this point, well-known (seeIran Nuclear Deal Reached; Sanctions Remain in Place,” “Implementation Day Triggers Significant Changes to International Sanctions Against Iran,” and “Potential Options for U.S. Sanctions on Iran Under the Trump Administration“). Although the policy implications of President’s Trump’s announcement may be subject to debate, the immediate impact is clear. In connection with the announcement, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued Frequently Asked Questions setting out a staged reimposition of U.S. sanctions over the next 90 to 180 days (subject to any extension that may be put in place by the United States at a later stage).

Following a 90-day wind-down period ending on August 6, 2018, the United States will reimpose its secondary sanctions targeting activities related to:

  • Iran’s automotive sector;
  • The sale, supply, or transfer, directly or indirectly, of graphite, raw or semi-finished metals (such as aluminum and steel), coal, and software for integrating industrial processes to or from Iran; and
  • Certain financial and banking transactions related to Iranian sovereign debt, the acquisition of U.S. dollar banknotes by the Government of Iran, the purchase or sale of Iranian rials, Iranian rial-denominated funds or accounts, and trade in gold or other precious metals.

During the same period, the United States will revoke the following authorizations:

  • The general license authorizing the importation into the United States of Iranian-origin carpets and foodstuffs (as well as certain related financial transactions);
  • All specific licenses (and subsequent wind-down authorizations) issued in connection with the Statement of Licensing Policy for Activities Related to the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services (“JCPOA SLP”); and
  • General License I, which authorized certain transactions related to negotiating and entering contingent contracts for activities covered by the JCPOA SLP.

Following a 180-day wind-down period ending on November 4, 2018, the United States will reimpose its secondary sanctions targeting activities related to:

  • Certain transactions by foreign financial institutions with, and provision of specialized financial messaging to, the Central Bank of Iran and/or designated Iranian financial institutions;
  • Certain categories of transactions related to Iran’s energy sector, including certain investments (such as participation in joint ventures); provision of goods, services, technology or technical support; the purchase, sale, transport, or marketing of petroleum, petrochemical products, and/or natural gas to or from Iran; and transactions with certain designated persons (such as the National Iranian Oil Company, Naftiran Intertrade Company, and National Iranian Tanker Company);
  • Certain transactions involving Iran’s port operators and/or related to Iran’s shipping and shipbuilding sectors, including activities involving the Islamic Republic of Iran Shipping Lines, South Line Iran, or their affiliates; and
  • The provision of certain insurance, reinsurance, and underwriting services.

Effective November 5, 2018, the United States will also revoke General License H (and any subsequent wind-down authorizations issued in connection with that general license), which previously authorized foreign entities majority-owned or controlled by U.S. persons to engage in most transactions involving Iran. It appears all other Iran-related general and specific licenses, including licenses issued under the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”), issued by OFAC will remain unaffected.

Finally, no later than November 5, 2018, the United States will redesignate all persons who had been removed, through the JCPOA, from the List of Specially Designated Nationals and Blocked Persons and/or other U.S. sanctioned parties lists.

Consequently, by November 5, 2018, the United States is currently expected to have reimposed all sanctions that had been lifted pursuant to the JCPOA.

Near- and Long-Term Implications

As a practical matter, the reimposition of U.S. sanctions suspended under the JCPOA will have limited impact on U.S. companies. As noted in our prior Alerts and Commentaries, substantial U.S. sanctions in relation to Iran have remained in place and continued to prohibit U.S. persons from engaging, directly or indirectly, in virtually all transactions or dealings with Iran without authorization.

The reimposition of U.S. sanctions will, however, have immediate impact on non-U.S. organizations that are majority-owned or controlled by U.S. persons and on U.S.-linked aviation companies. As noted above, the United States intends to revoke all specific and general licenses issued in connection with the JCPOA “as soon as administratively feasible,” including General License H and aviation-specific licenses issued under the JCPOA SLP and General License I. In their place, OFAC intends to issue authorizations that will likely narrowly authorize only activities necessary to wind down previously authorized activities. Companies that rely on these authorizations should immediately reassess their existing Iran-related activities, including in-process and pending transactions, in order to prepare to wind down Iran-related activities and ensure compliance with U.S. sanctions during the wind-down period.

The near- and long-term implications of President’s Trump announcement for non-U.S. companies are less clear. Non-U.S. persons are not, with limited exceptions, subject to U.S. primary sanctions. However, U.S. secondary sanctions provide for an array of penalties that, in effect, foreclose access to U.S. markets—a meaningful deterrent for non-U.S. companies. The United States appears poised to rigorously enforce the renewed sanctions and has advised non-U.S. companies to begin winding up soon-to-be sanctionable activities to avoid exposure to sanctions or an enforcement action when the applicable wind-down period ends.” Continued engagement with Iran will therefore become an increasingly fraught proposition for non-U.S. persons, and one that may be further complicated by the international community’s response to the United States’ withdrawal.

In that regard, following President Trump’s announcement, the European Union has reiterated its commitment to “the continued full and effective implementation of the JCPOA,” as long as Iran meets its nuclear-related obligations, adding that it “is determined to work with the international community” to preserve the deal. Although the European Union has not yet indicated any measures it may implement to preserve the JCPOA, it suggested earlier this year that it may expand its Blocking Regulation—Council Regulation (EC) No. 2271/96 of November 22, 1996—to protect EU-based organizations doing business in Iran following any U.S. withdrawal.

The Blocking Regulation was adopted in 1996 by the European Union (European Communities at the time) in response to the extraterritorial application of U.S. sanctions against Cuba, Iran, and Libya. It prohibits EU companies from complying with blocked sanctions “whether directly or through a subsidiary or other intermediary person, actively or by deliberate omission.” The importance of the Blocking Regulation in the last decade has been limited. This would change if the scope of its application is expanded to cover the U.S. secondary sanctions in relation to Iran, possibly protecting EU companies from enforcement of U.S. judgments or administrative decisions giving effect to the secondary sanctions.

Historically, enforcement of the Blocking Regulation has generally been very limited, but expanding its scope now has the potential to lead to increased enforcement actions across Europe. An expanded Blocking Regulation would, however, place EU companies squarely between the competing demands of U.S. sanctions and EU and national requirements. The European Union may also try to negotiate an exemption for EU companies from the reimposition of the U.S. sanctions. The prospects of relief for EU companies under either approach remains uncertain.

China and Russia have likewise consistently reaffirmed their commitment to the JCPOA, and in a joint statement last month confirmed their “unwavering support” for the deal. In light of current tensions between the United States and Russia and China, it seems unlikely that the U.S. withdrawal will lead Russia or China to alter its commitment to the JCPOA or have a substantial impact on Russian and Chinese business interests in Iran.

As the international response to the U.S. withdrawal from the JCPOA develops, non-U.S. companies should take steps to protect their interests in light of the pending reimposition of U.S. sanctions. In particular, non-U.S. companies should reassess their Iran-related activities to determine their potential liability under the soon-to-be imposed U.S. secondary sanctions and/or any potential blocking statutes; open dialogues with their financial institutions, insurers, and other service providers regarding any Iran-related activities; and, significantly, prepare to possibly wind down any potentially sanctionable Iran-related activities in order to move promptly to comply with U.S. secondary sanctions, if warranted.

Jones Day will continue to monitor developments and provide updates.


Three Key Takeaways

  1. The U.S. withdrawal from the Iran nuclear agreement will result in the reimposition of sanctions that had been lifted as part of JCPOA, or, the “Iran Nuclear Deal.”
  2. Because the comprehensive U.S. primary sanctions remained in place after implementation of JCPOA, the withdrawal and reimposition of sanctions hold few consequences for U.S. companies.
  3. However, foreign subsidiaries of U.S. organizations and their non-U.S. counterparts face a markedly altered compliance situation, and those companies affected should take decisive and deliberate measures to protect their interests.

Results of OPCW Investigation in Syria

Remember, the anti-Assad forces otherwise known as rebels don’t have aircraft and don’t have bombs that would create craters in the ground. Oh yeah, notice that Russia has not produced their own investigations or conclusions as they pledged to do?

 

The exact same sort of wheel assembly we saw on the Douma chlorine bombs on the chlorine bomb used in Saraqib!  The details of samples taken are interesting in light of the Douma attack, soils samples and samples from the munitions confirm the presence of chlorine, although these were taken close to the time of attack.   Here’s samples from Khan Sheikhoun, showing the same three chemicals as detected in the Saraqib attack, all indicators of Sarin use.

THE HAGUE, Netherlands — 16 May 2018 —The Fact-Finding Mission (FFM) of the Organisation for the Prohibition of Chemical Weapons (OPCW), confirmed in a report released yesterday that chlorine was likely used as a chemical weapon on 4 February 2018 in Saraqib, Idlib Governorate, Syrian Arab Republic.

The FFM determined that chlorine was released from cylinders by mechanical impact in the Al Talil neighbourhood of Saraqib.

The conclusions are based inter alia on the presence of two cylinders, which were determined as previously containing chlorine; witness testimony; environmental samples that demonstrated the unusual presence of chlorine in the local environment; and the number of patients at medical facilities shortly after the incident who showed signs and symptoms consistent with exposure to chlorine and other toxic chemicals.

The Director-General stated: “I strongly condemn the continued use of toxic chemicals as weapons by anyone, for any reason, and in any circumstances. Such acts contradict the unequivocal prohibition against chemical weapons enshrined in the Chemical Weapons Convention.”

The FFM’s report on the Saraqib incident has been shared with States Parties to the Chemical Weapons Convention.  The report was also transmitted to the UN Security Council through the UN Secretary-General.

Background

In response to persistent allegations of chemical weapon attacks in Syria, the OPCW Fact-Finding Mission (FFM) was set up in 2014 with an on-going mandate “to establish facts surrounding allegations of the use of toxic chemicals, reportedly chlorine, for hostile purposes in the Syrian Arab Republic”. The FFM’s mandate is to determine whether chemical weapons or toxic chemicals as weapons have been used in Syria. It does not include identifying who is responsible for alleged attacks. Attribution was part of the mandate of the OPCW-UN Joint Investigative Mechanism, set up by the UN Security Council, which expired in November 2017.

The FFM has previously confirmed with a “high degree of confidence” the use of chlorine, sulfur mustard, and sarin as weapons.

The FFM is required to study available information relating to allegations of use of chemical weapons in Syria, including information provided by the Syrian Arab Republic and others. The FFM employs investigative methods to determine if chemical weapons have been used. It interviews witnesses and obtains environmental and bio-medical samples and physical evidence for analysis.

The Organisation for the Prohibition of Chemical Weapons operates according to a strict confidentiality regime, which governs the operations of the Organisation, protects the integrity of its investigations, ensures the security of its technical experts, and determines what information can be made public.

As the implementing body for the Chemical Weapons Convention, the OPCW oversees the global endeavour to permanently and verifiably eliminate chemical weapons. Since the Convention’s entry into force in 1997 – and with its 192 States Parties – it is the most successful disarmament treaty eliminating an entire class of weapons of mass destruction.

President Trump and ZTE

There has to be an explanation for President Trump’s interest in saving jobs at ZTE.

In Concession, Trump Will Help China's ZTE 'Get Back Into ... photo

Could it be part of a trade issue with China to ensure China continues pressure on North Korea? Could it be to keep American intellectual property protected in some obscure plot where China continues to steal intelligence to eventually control all 5G?

The 2019 NDAA includes a provision to prohibit ZTE and Huawei use in the United States.

Reuters: “I hope the administration does not move forward on this supposed deal I keep reading about,” Republican Senator Marco Rubio said. Bilateral talks between the world’s two biggest economies resume in Washington this week.

The Wall Street Journal has reported Beijing would back away from threats to slap tariffs on U.S. farm goods in exchange for easing the ban on selling components to ZTE.

“They are basically conducting an all-out assault to steal what we’ve already developed and use it as the baseline for their development so they can supplant us as the leader in the most important technologies of the 21st century,” Rubio said at a Foreign Relations Committee hearing on Asia policy.

Trump had taken to Twitter on Sunday with a pledge to help the company, which has suspended its main operations, because the penalties had cost too many jobs in China. It was a departure for a president who often touts “America First” policies.

The Commerce Department in April found ZTE had violated a 2017 settlement created after the company violated sanctions on Iran and North Korea, and banned U.S. companies from providing exports to ZTE for seven years.

U.S. companies are estimated to provide 25 percent to 30 percent of components used in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.

The suggestion outraged members of Congress who have been pressing for more restrictions on ZTE. Some U.S. lawmakers have alleged equipment made by ZTE and other Chinese companies could pose a cyber security threat.

“Who makes unilateral concessions on the eve of talks after you’ve spent all this time trying to say, correctly in my view, that the Chinese have ripped off our technology?” Senator Ron Wyden, the senior Democrat on the Senate Finance Committee, which oversees trade policy, told Reuters.

Wyden, who is also on the Intelligence Committee, was one of 32 Senate Democrats who signed a letter on Tuesday accusing Trump of putting China’s interests ahead of U.S. jobs and national security.

The company has denied wrongdoing.

Republican Representative Mac Thornberry, chairman of the House Armed Services Committee, said at a Bloomberg event on Tuesday he did not expect lawmakers would seek to remove a ban on ZTE technology from a must-pass annual defense policy bill making its way through Congress.

“I confess I don’t fully understand the administration’s take on this at this point,” Thornberry said. “It is not a question to me of economics, it is a question of security.”

Consider:

Axios: President Trump’s desire to help save ZTE could set the tone for the treatment of another Chinese telecom company that’s under investigation for sanctions violations, Axios’ Erica Pandey writes.

The backdrop:

  • ZTE has been found guilty of breaking U.S. law three times, including violating sanctions by selling equipment with American parts to Iran and North Korea.
  • The Pentagon has banned the sale of ZTE and Huawei phones at retail stores on military bases, citing concerns that the companies are using their devices to spy on military personnel.
  • ZTE and Huawei are both key players in China’s race to dominate 5G and the future of mobile communication. The Chinese Communist Party is painting U.S. moves against the Chinese phone makers as efforts to knock China out of the 5G race.

Between the lines: “Ross had a color wheel of approaches [on ZTE] ranging from a handslap to breaking them as a company,” says Chris Johnson, a former CIA China analyst who’s now at the Center for Strategic and International Studies.

  • The Chinese might have stomached a slap on the wrist, but by banning American companies from selling parts to ZTE, Ross served up a punishment harsh enough to halt operations. China in turn made ZTE a top trade priority and used its massive leverage to potentially sway the president.

Why it matters: China could use Trump’s apparent pivot on ZTE as a stepping stone to free Huawei. Or the ZTE case could be a lesson for the U.S. in negotiating with China.

How the ZTE deal could fare:

  • “The U.S. and China are closing in on a deal that would give China’s ZTE Corp. a reprieve from potentially crippling U.S. sanctions in exchange for Beijing removing tariffs on billions of dollars of U.S. agricultural products, said people in both countries briefed on the deal,” the Wall Street Journal’s Lingling Wei and Bob Davis report.
  • Steven Mnuchin is leading the U.S. in negotiating a deal that puts the brakes on actions against ZTE in exchange for China buying down its trade surplus, reports Axios’ Jonathan Swan.
  • China’s trade negotiator, Liu He, is in DC today. Axios contributor Bill Bishop hears that Liu will arrive “with an open checkbook to buy down the deficit but that progress on anything structural will be much harder.”

The bottom line: Taking the toughest possible approach to China might not be the smartest when the Asian power is stronger than ever and prepared to fight back.