China Plays at Sanctions

In case you were wondering if anything was ever going to happen to ZTE for intentionally violating the Iran sanctions, it has.  It took years for anything to happen, and a change in the White House, but it has come to a $892 million fine.  If you read the Wall Street Journal editorial on this today, you would think this was the most terrible thing to ever happen to a company and likely to bankrupt ZTE.   The whole piece is slanted in such a way that I was pretty sure it was written by ZTE's public relations people and not the Wall Street Journal's editorial staff.  Shame on them for publishing this kind of propaganda.

We have to remember what this is all about to get the context for why ZTE was fined at all:

The Commerce Department which enforces these sanctions said ZTE acted "contrary to the national security and foreign policy interests of the United States”.

"Authorities allege ZTE broke export rules by supplying Iran with U.S.-made high-tech goods and said they uncovered plans by ZTE to use a series of shell companies 'to illicitly reexport controlled items to Iran in violation of U.S. export control laws.'"

The Commerce Department published internal documents of ZTE Corp marked "Top Secret, Highly Confidential" to substantiate its claim that ZTE knew what it was doing when it funneled hardware and software from Microsoft, Oracle, IBM, and Dell to Iran.  The first document is well worth reading.  It clearly shows ZTE knew what the export rules required, and knew there would be trouble if they were discovered trying to skirt them.  Group Z described in this document is North Korea, Vietnam and Cuba.  ZTE at the time of their writing, was exporting U.S. produced products to Iran, Sudan, North Korea, Syria and Cuba.  They outline the methods used to avoid detection in all of these countries.
http://www.bis.doc.gov/index.php/about-bis/newsroom

This is the kind of behavior that deserves more than a slap on the wrist.  Note that ZTE and another Chinese business were selling to North Korea during all of this.  While China whines about their poor neighbor being persecuted in the world, it helps North Korea at every turn, setting up front companies to deal with their business interests.  They do not want the North to stop doing missile tests and thumbing their nose at the international community.   They make sure it can go on, using the best equipment they can get.

We should do more than just fine these companies.  Commerce knows who the comapanies are and the methods they are using to circumvent the sanctions for various countries.  It is a joke told in the back rooms of the United Nations that the cuts announced in coal purchases from the North were a complete farce.  The Chinese participated in putting the announced sanctions together, then violated them.  They did the same thing with the Iran sanctions program that ZTE was violating.  China does not even play the game anymore.