RFL/RE – The White House is moving to defend U.S. President Donald Trump’s deal allowing Chinese telecom giant ZTE to stay in business despite violating sanctions against Iran and North Korea.
Critics of the deal included language to block it in a major defense bill pending in the U.S. Senate, but a Trump ally in Congress late on June 13 asked that it be stripped from the bill.
The deal lets ZTE continue purchasing parts for its mobile phones and other equipment from U.S. suppliers — which the company has said it must do if it is to stay in business — as along as it pays another $1 billion in fines for its sanctions violations and replaces its top managers.
White House spokesman Hogan Gidley pointed to the “massive penalties” imposed on ZTE and said they were part of what he described as “an historic enforcement action” under the U.S. sanctions laws targeting Iran and North Korea.
The deal, Gidley said, “will ensure ZTE pays for its violations and gives our government complete oversight of their future activity without undue harm to American suppliers and their workers.”
The huge fine imposed under the deal comes on top of $892 million ZTE has already paid for breaking U.S. sanctions by selling equipment to North Korea and Iran.
But Senator Chris Van Hollen, a co-sponsor of the measure to block the deal, said that the U.S backing away from the stiff penalties that threatened to put ZTE out of business will send the wrong message to other sanctions violators.
“We can’t let them off the hook with a slap on the wrist,” the Democratic senator said.
Senator Tom Cotton, the measure’s Republican co-sponsor, acknowledged the White House’s argument that its deal with ZTE and the Chinese government was “tough.”
But he said, “The senators in this chamber believe that the death penalty is the appropriate penalty” for ZTE.
The House of Representatives’ defense bill has no provision to block the ZTE deal but it would bar U.S. government agencies from using “risky” technology from ZTE or Huawei Technologies and describes the companies as “linked to the Chinese Communist Party’s intelligence apparatus.”
The battle over the Chinese cell-phone giant affected financial markets on June 13. In the first day of trading of ZTE shares after an almost-two-month halt on the Hong Kong and Shenzhen stock exchanges, investors wiped about 40 percent of the stock’s value, reducing the company’s market value by $3 billion.
With reporting by AP and Reuters