Canada caught between 2 powers, feeling alone in the world
BY ROB GILLIES and PAUL WISEMAN
Friday, December 14
TORONTO (AP) — First U.S. President Donald Trump attacked Canada on trade. Then Saudi Arabia punished it for speaking up for human rights. Now China has the country in its cross-hairs, detaining two Canadians in apparent retaliation for the arrest of a top Chinese tech executive on behalf of the United States.
Canada is caught between two super powers and taking the punishment — and its ally to the south has been conspicuously absent in coming to its aid.
“We’ve never been this alone,” historian Robert Bothwell said. “We don’t have any serious allies. And I think that’s another factor in what the Chinese are doing. … Our means of retaliation are very few. China is a hostile power.”
The two Canadians, Michael Kovrig, a former diplomat in China, and Michael Spavor, an entrepreneur who lived in northeastern China near the North Korean border, were taken into custody Monday on suspicion of “engaging in activities that endanger the national security” of China, Chinese foreign ministry spokesman Lu Kang said. Canadian consular officials have had no access to them.
Their detentions ratchet up pressure on Canada, which arrested Meng Wanzhou, the chief financial officer of telecommunications giant Huawei, on Dec. 1 at the request of the United States. The U.S. wants her extradited to face charges that she and her company misled banks about the company’s business dealings in Iran. A Canadian judge released Meng on bail Tuesday.
The case has set off a diplomatic furor among the three nations in which Canada has been stuck in the middle.
Until now, Canada had a largely good relationship with China, forged by Canadian Prime Minister Justin Trudeau’s father, late Prime Minister Pierre Trudeau, who helped establish the one-China formula that enabled many other countries to recognize China in the 1970s. Canada acknowledged there is one government of China and does not officially recognize Taiwan.
China has since become Canada’s second-largest trading partner, after the United States. Chinese investment has powered real estate booms in Vancouver and Toronto. And one-third of foreign students in Canada are Chinese. Justin Trudeau has even talked about a possible free-trade agreement with China in a bid to diversify Canada’s trade, which relies on the U.S. for 75 percent of its exports.
But the Canadian prime minister has said little since news of this week’s arrests became public. Opposition Conservative leader Andrew Scheer said Trudeau isn’t being forceful enough with the Chinese.
“This situation demonstrates that Justin Trudeau’s naive approach to relations with China isn’t working,” Scheer said.
It’s Canada’s second dispute with a major power this year. In June, Trump vowed to make Canada pay after Trudeau said he wouldn’t be pushed around in talks to hammer out a new North American trade agreement, an unprecedented attack on America’s closest ally. Trump called Trudeau weak and dishonest, words that shocked Canadians.
Then Trump said this week that he might intervene in the Huawei case if it would help clinch a trade agreement with China, upending U.S. efforts to separate the court proceeding from U.S.-China trade talks and contradicting Canadian officials who said the arrest was not political.
Canadian Foreign Minister Chrystia Freeland took a swipe at Trump, saying it was “quite obvious” any foreign country requesting extradition should ensure “the process is not politicized.”
“Normally, Canada can count on the United States to back them up on such an issue,” said Laura Dawson, a former economic adviser at the U.S. Embassy in Ottawa and director of the Canada Institute at the Wilson Center think tank in Washington. Dawson said it’s unusual for Washington to “leave Canada hanging high and dry.”
“President Trump has made it clear that old alliances don’t matter so much anymore,” she said. “He has made no secret of his preference for a go-it-alone approach and his lack of regard for traditional alliances.”
In years past the U.S. might have defended Canada when came it under attack and other countries would know the U.S. had Canada’s back. Not now. In August, the Saudi government expelled Canada’s ambassador to the kingdom and withdrew its own ambassador after Canada’s foreign ministry tweeted support for an arrested Saudi activist. The Saudis also sold Canadian investments and ordered their citizens studying in Canada to leave. No country, including the U.S., spoke out publicly in support of Canada.
And now the stakes are much higher. Canada is one of the few countries in the world unabashedly speaking out in defense of human rights and the international rule of law. And Chinese trade with Canada is increasingly key as Canada looks to boost its exports in Asia as its trade with the U.S. is threatened by Trump’s tariffs on Canadian goods.
“At the beginning of Trump there was this idea that maybe the Chinese would replace the Americans” as Canada’s pre-eminent trade partner “but that’s just nuts,” said historian Bothwell, a University of Toronto professor. “Relations for any smaller country with China are really grave.”
Derek Scissors, a China specialist at the conservative American Enterprise Institute, called China’s actions toward Canada “thuggish.”
“You detain a Canadian because the Canadians can’t do anything. It’s bullying behavior,” he said.
Noting Canada was just following a routine extradition process with the United States, Scissors said America should be saying: ”’Why are you picking up Canadians? You have a problem with us.’”
David Mulroney, a former Canadian ambassador to China, said not only the U.S. but other Western nations should be standing up for Canada.
“It would be nice if publicly and also behind the scenes if countries like the United States, the U.K., Australia and France would put in a word on our behalf and let the Chinese know how damaging this is to their reputation and to the notion that China is a safe place to work and pursue a career,” Mulroney said.
“I think a lot of foreigners in China are looking over their shoulder right now,” he added.
Christopher Sands of the School of Advanced International Studies in Washington said the world took note of how Trump treated Canada during trade negotiations and how the U.S. stayed silent when Saudi Arabia overreacted to Canada’s expression of human rights concerns over treatment of the Saudi dissident.
“In normal times, the U.S. sends a signal, usually discreetly, to allies to cut it out and play nice,” Sands said.
“What makes this worse is that China is lashing out at Canada not for Canada’s initiative, but for Canada’s honoring of a U.S. warrant. The damage done by our silence in terms of alliance relations is truly awful,” he said.
Associated Press writer Rob Gillies reported this story in Toronto and AP writer Paul Wiseman reported from Washington.
US, Canada hold high-stakes talks amid turmoil with China
By MATTHEW LEE and ROB GILLIES
Friday, December 14
WASHINGTON (AP) — The U.S. and Canada are holding high-stakes talks amid an escalating dispute with China that threatens to further complicate ties between the North American neighbors.
Secretary of State Mike Pompeo and Defense Secretary Jim Mattis were meeting their Canadian counterparts on Friday for discussions expected to be dominated by Canada’s arrest of a Chinese tech executive at Washington’s request. China has detained two Canadians in apparent retaliation.
The case has set off a three-way diplomatic furor in which Canada is stuck in the middle.
Canada arrested the chief financial officer of telecoms giant Huawei (WAH’-way) on Dec. 1. The U.S. wants her extradited on charges she and her company violated sanctions on Iran. But a Canadian judge released her on bail Tuesday.
China suspends tariff hikes on $126B of US cars, auto parts
By JOE McDONALD
AP Business Writer
Friday, December 14
BEIJING (AP) — China announced a 90-day suspension on Friday of tariff hikes on $126 billion of U.S. cars, trucks and auto parts following its cease-fire in a trade battle with Washington that threatens global economic growth.
The suspension is China’s first step in response to President Donald Trump’s Dec. 1 agreement to suspend U.S. tariff hikes for a similar 90-day period while the two sides negotiate over American complaints about Beijing’s technology policy and trade surplus.
China has indicated it plans to move ahead with the talks despite strains over the arrest of a Chinese technology executive in Canada to face possible U.S. charges related to a violation of trade sanctions on Iran.
Beijing will suspend a 25 percent import charge on $66 billion of cars and trucks and a 5 percent charge on $60 billion of auto parts, effective Jan. 1, the Finance Ministry announced.
The announcement helped give substance to Trump’s agreement with his Chinese counterpart, Xi Jinping, after prolonged uncertainty caused jittery global financial markets to swing wildly.
The Chinese penalties were imposed in response to Trump’s decision to slap 25 percent tariffs on $50 billion of Chinese goods and a 10 percent charge on another $200 billion. The second tariff was due to rise Jan. 1 until Trump agreed to the postponement.
The United States and other trading partners complain that Beijing steals or pressures companies to hand over technology in violation of its market-opening obligations. American officials also worry Chinese industry plans that call for state-led creation of global champions in robotics and other fields threaten U.S. industrial leadership.
A spokesman for China’s Commerce Ministry, Gao Feng, said Thursday the two sides were in “close contact” but gave no timetable for possible face-to-face negotiations.
GM says it has 2,700 jobs for workers slated to be laid off
By TOM KRISHER
AP Auto Writer
Friday, December 14
DETROIT (AP) — The General Motors’ massive 14,000-person layoff announced last month might not be as bad as originally projected.
The company said Friday that 2,700 out of the 3,300 factory jobs slated for elimination will now be saved by adding jobs at other U.S. factories. Blue-collar workers in many cities will still lose jobs when GM shutters four U.S. factories next year. But most could find employment at other GM plants. Some would have to relocate.
GM still plans to lay off about 8,000 white-collar workers and another 2,600 factory workers in Canada.
In November, GM announced plans to end production at the U.S. factories and one in Ontario as part of a restructuring.
Legislators and President Donald Trump have hammered GM over the layoffs. GM says the factory hires were in the works before its announcement.
Economists say 90 days probably is too little time to resolve conflicts that have bedeviled U.S.-Chinese relations for years. They say Beijing’s goal probably will be to show it is making progress so Trump extends his deadline.
Beijing officials expressed confidence China could withstand U.S. pressure but the fight battered consumer confidence and threatened export industries that support millions of jobs.
Friday’s announcement “shows the Chinese government is willing to solve trade disputes through consultation based on equality,” said Song Lifang, an economist at Renmin University in Beijing.
The tariff cut lowers the charge for U.S.-made cars and trucks to 15 percent, the same level as imports from other countries.
“If the United States cuts or remove tariffs on Chinese goods, China will surely follow up with further relevant measures,” Song said.
AP researcher Yu Bing in Beijing contributed to this report.
Chinese paper firm to receive $12M in tax credits for mill
OLD TOWN, Maine (AP) — A Chinese paper firm that bought a Maine mill is slated to receive $12 million in tax credits.
The Bangor Daily News reports the Finance Authority of Maine announced Thursday that it had chosen Nine Dragons Paper LLC for the credits over a seven-year period. Officials say the credits were made possible through the Maine New Markets Capital Investment Program.
The authority said in a release Thursday that ND Paper expects to create or retain about 130 direct jobs at the Old Town Mill. ND Paper bought the mill from OTM Holdings for an undisclosed amount in October.
Brian Boland, who serves as the firm’s Vice President of Government Affairs and Corporate Initiatives, said in a statement the tax credits will help the company restart the facility.
Information from: Bangor Daily News, http://www.bangordailynews.com
Republican drops recount request in Maine congressional race
AUGUSTA, Maine (AP) — A Republican incumbent dropped his request for a recount Friday in the first congressional race in U.S. history held under a system by which voters rank candidates in order of preference.
The announcement by Rep. Bruce Poliquin came a day after a federal judge tossed out his challenge of the candidate-ranking system.
Poliquin lost his re-election bid to Democratic State Rep. Jared Golden in November. He requested the recount, which had been taking place in Augusta.
But on Friday, Poliquin tweeted that he believes it’s important to end the recount, in part because of the coming holidays. He also said he’s still evaluating the possibility of appealing the judge’s decision on the constitutionality of the candidate-ranking system.
Poliquin said there are still “unanswered questions” on the use of the new method, which is often called ranked-choice voting.
“Maine people continue to write and approach me with grave concerns over rank voting,” he tweeted. “I understand their concerns, and the need for our elections to be transparent and fair.”
A spokeswoman for the Maine Secretary of State Matthew Dunlap confirmed on Friday that the recount is over.
But Poliquin wasn’t conceding defeat. The statement insisted that he had “the largest number of votes on Election Day.”
He was referring to his first-round lead of more than 2,000 votes over Golden, but that lead did not hold up after an additional round of vote tabulation.
Golden emerged as the victor with a slim majority after two independents were eliminated and the votes were reallocated under the ranking system.
Golden has called on Poliquin to help with a smooth transition for the district.
Maine voters approved the new voting method in 2016, and it was used for the first time in state primaries in June and in congressional races on Election Day. But it cannot be used in state general elections because of concerns it runs afoul of the Maine Constitution.
Poliquin’s challenge in federal court was that it violated the U.S. Constitution.
Republican Gov. Paul LePage, an opponent of ranked-choice voting, called the voting system “repugnant” and unconstitutional.
Democratic Gov.-elect Janet Mills, meanwhile, is a supporter. She said she’s open to amending the state Constitution to let the system be used in all elections in Maine.
In plea deal, Russian woman admits to being a secret agent
By MICHAEL BALSAMO
Friday, December 14
WASHINGTON (AP) — A Russian gun-rights activist admitted Thursday that she was a secret agent for the Kremlin who tried to infiltrate conservative U.S. political groups as Donald Trump rose to power.
Maria Butina, 30, agreed to plead guilty to a conspiracy charge as part of a deal with federal prosecutors.
“Guilty,” Butina said in a slight accent when asked how she wanted to plead. Dressed in a green jail uniform with her red hair pulled into a long ponytail, Butina spoke softly and mostly kept her eyes on the judge.
The Butina case has provided a vivid glimpse into Russia’s influence operations in the United States at a time when the U.S. intelligence community has determined that Russia was trying to help elect Trump by releasing emails stolen from Democrats and conducting a social media campaign in an attempt to sow political discord.
The case also lays bare how Russia tried to exploit one of the most sensitive social issues in the U.S. — gun control — to gain access to the political sphere.
Prosecutors say Butina and her Russian patron, Alexander Torshin, used their contacts in the National Rifle Association to pursue back channels to American conservatives during the 2016 campaign, when Trump, a Republican, defeated Democrat Hillary Clinton.
Court documents detail how Butina saw the Republican Party as prime for Russian influence and courted conservatives through networking and contacts with the NRA. She posed for photos with prominent Republicans, including former presidential candidates, and snagged a picture with Donald Trump Jr. at a 2016 NRA dinner.
As part of her deal, Butina pleaded guilty to a single charge of conspiracy to act as an unregistered foreign agent and she agreed to cooperate with investigators.
The case is separate from special counsel Robert Mueller’s investigation into Russian meddling in the 2016 U.S. presidential election.
Prosecutors say it is “very likely” Butina will be deported after her sentence is completed. The charge carries a maximum sentence of five years in prison, though the defense noted Thursday that federal sentencing guidelines recommend no time to six months. She has been jailed since her arrest in July.
According to her plea agreement, Butina’s work was directed by Torshin, a former longtime member of the Russian parliament who until recently was an official in Russia’s central bank. He is now under sanction by the Treasury Department for his ties to Russian President Vladimir Putin.
Butina acknowledged she “sought to establish unofficial lines of communication with Americans having power and influence over U.S. politics,” according to the plea agreement. She admitted that her boyfriend, conservative political operative Paul Erickson, helped her as she tried to use his ties with the NRA to set up the back channels. Erickson, who is referred to as “U.S. Person 1” in court papers, has not been charged. His attorney said he is a good American who “has done nothing to harm our country and never would.”
In a 2015 proposal she crafted with Erickson’s help, Butina argued it was unlikely Russia would be able to exert influence using official channels and, as an alternative, suggested using back channel communications to build relationships with Republicans, according to court papers.
Pushing her travel to the U.S. and her work with the NRA as selling points, Butina argued that she had already “laid the groundwork for an unofficial channel of communication with the next U.S. administration.” She asked for $125,000 from an unnamed Russian billionaire to attend conferences in the U.S. and meet with people who she thought may have influence with the Republican Party and sent the proposal to Torshin. He responded by telling her the proposal would “be supported, at least in part,” according to court documents.
Torshin also asked Butina to help justify him attending a national NRA meeting in 2016 and Butina encouraged his attendance “partly because of the opportunity to meet political candidates,” according to her plea agreement. In addition to attending numerous NRA events, Butina organized “friendship dinners” in Washington with influential political figures.
In their filings, prosecutors have said federal agents found Butina had contact information for people suspected of working for Russia’s Federal Security Services, or FSB, the successor intelligence agency to the KGB. Inside her home, they found notes referring to a potential job offer from the FSB, according to the documents.
A senior Russian lawmaker said he was convinced that Butina was pressured to confess.
“They broke her down,” Leonid Slutsky, chairman of the State Duma’s foreign affairs committee, told Russian news agencies. “Anyone would break down in circumstances like that.”
Butina’s time in prison has included solitary confinement.
Butina’s lawyer, Robert Driscoll, had previously decried the charges against her as “overblown” and said Butina was a student interested in American politics.
On Thursday, prosecutors also appeared to have backed off their assertion that Butina’s attendance at American University was little more than a cover to enter the U.S. In their filing, prosecutors said “all available evidence” indicated she had a genuine interest in a graduate school education.
Associated Press writer Chad Day contributed to this report.
Read the plea agreement: http://apne.ws/qHA37wM
The NRA’s financial weakness, explained
December 14, 2018
Author: Brian Mittendorf, Fisher Designated Professor of Accounting and Chair, Department of Accounting & Management Information Systems (MIS), The Ohio State University
Disclosure statement: Brian Mittendorf does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
Partners: The Ohio State University provides funding as a founding partner of The Conversation US.
The National Rifle Association’s political spending fell during the 2018 midterm elections. There’s talk of ending small perks like free coffee at its offices and even employee layoffs.
These and other trends indicate that at a time when the NRA’s clout may seem stronger than ever, its financial power may be faltering.
As a researcher who studies and tracks the finances of nonprofits, I have followed the NRA’s financial disclosures for years. Here’s what I’ve observed lately.
A negative nest egg
The best reflection of an organization’s financial cushion is its unrestricted net assets – an accounting measure of how much money it has available to spend.
The NRA had negative US $31.8 million on hand at the end of 2017, according to the form all nonprofits must file with the IRS. The group, which spent an average of $278.3 million a year, had a negative balance at the end of six of the previous 10 years.
In the 2017 financial statements, I’m seeing signs that the problem could be more serious.
This is very different from how two other prominent organizations operate. Consider the financial health of the American Civil Liberties Union, a civil rights group, and the AARP, which advocates on behalf of people who are 50 and older. Like the NRA’s main arm, they are 501(c)(4) social welfare groups that have a national reach and name recognition, and that engage in public policy advocacy.
The ACLU – although its budget is only a third of the NRA’s – had unrestricted net assets worth $140.2 million when 2017 came to a close, according to its tax form. And the AARP – whose annual budget is nearly five times that of the NRA – finished with a balance over $1.3 billion.
The NRA’s circumstances stand out by comparison not just with its peers but with all nonprofits. IRS data, including for fledgling startups, indicate fewer than 7 percent of American nonprofits ended 2017 with a negative balance.
How it happened
Despite years of thin finances, 2017’s negative $31.8 million balance in unrestricted net assets is notable as the organization’s 10-year low.
Given the growing push for gun control measures on the heels of more frequent and more deadly mass shootings, you might guess that declining membership dues could be to blame. But that’s not the full story.
The NRA does not release membership data. But it does by law have to make its cash flow a matter of public record. The group’s revenue has grown, but by about 0.7 percent a year over the past decade, not enough to keep up with annual inflation, which ranged between 1 and 2.3 percent over the past 10 years.
As a result, it looks like the organization got into this bind by spending beyond its means. Despite this relatively stagnant income, NRA expenditures have been growing by an average of 6.4 percent a year, maxing out at $412.7 million in 2016.
And all nonprofits, just like families and companies, run into trouble when they fail to live within their means.
No imminent demise
The financial struggles have even led the organization itself to to warn that it could possibly collapse in court filings.
Despite this drama, however, the organization has a robust revenue stream due to a large member base, loyal contributors and the revenue it still gets from ads that run in its print publications and commercials that air on its video channel, NRA TV – even amid a successful boycott led by gun control advocates.
That means cutting back on spending can work wonders. Early signs, such as reduced election spending and job cuts, indicate such parsimony is getting underway.
Though it owes more money to others than it has freely available to pay them back, the NRA isn’t in immediate danger.
Much of what the NRA owes won’t come due for a while. Its two prominent liabilities are services it owes to members who have prepaid their dues for multiple years and what it owes its retirees – its pension fund is underfunded by $49.7 million.
Getting out of trouble
Despite signs of a more frugal path forward, there are three reasons why the NRA’s financial situation could get worse instead of better.
1) It relies heavily on telemarketers
The use of for-profit telemarketing and donation processing companies to solicit from supporters is often an ineffective way for nonprofits to raise money.
But the NRA is a big fan of these contractors. It reportedly paid one company, Akron-based Infocision $24.3 million in 2017 in exchange for telemarketing and donation processing services. Infocision is no stranger to controversy itself – the company agreed to pay a $250,000 settlement in January 2018 after a federal agency accused it of lying to donors, although it said it did nothing wrong.
The NRA has become so fixated on bringing in new members that its Infocision contracts permit the company to keep 100 percent of credit card payments collected from new and lapsed members. As a result, increasing its membership may no longer boost the NRA’s bottom line, at least not right away since some of their new members’ initial dues will not make it to their coffers.
2) It borrows money from the NRA Foundation
The NRA is a 501(c)(4) membership organization but is also closely affiliated with a political action committee and several public charities. The affiliated charities, including the NRA Foundation, don’t face the financial issues that the NRA itself does.
Charity spending rules preclude the affiliated charities from just giving money to the NRA to shore up its funds. But, if the NRA runs out of options for cash, it can borrow from its affiliated foundation. This is precisely what the gun group did in 2017, suggesting that outside cash options were running thin and future options for getting cash may be even thinner.
3) It needs more cash for underfunded pension obligations
Despite the NRA’s pension fund already being underfunded, the organization indicated in 2017 that it had no plans to infuse it with cash that year. Instead, it promised to make a cash contribution of $7.8 million in 2018.
Providing the needed support for an underfunded pension may be wise, but it will force the NRA to scrape up an extra $7.8 million of cash in a time when cash is already in short supply.
Throwing away its shot?
Another revenue source – fees earned from insurance products NRA members buy – is being threatened due to efforts by New York state to block the group from marketing firearm liability coverage. These fees, which accounted for more than $14 million in revenue in 2017, would be hard to replace.
In sum, though the NRA’s financial situation does not strike me as immediately dire based on the information available, it is far from healthy.
And while details about the NRA’s wobbly balance sheet are surely less salacious than other news about the gun group, such as allegations and reports that it may have been a conduit for Russia to influence the Republican Party, a weak financial footing may ultimately be what saps its political power.
Jello Beyonce, logged in via Google: Perhaps now that former USMC Lt. Col Oliver North and GOP caddy is serving as new NRA President, things will start picking up.
Yes, that Oliver North.Iran-ContraCocaine Ollie.
He’s certainly got enough “Deep State” insider knowledge, and likely dirt on a number of high-ranking government Bureaucrats and Politicians (like perhaps William Barr) to make some important gains.