Chasing A Chinese Fire Truck

My favorite example of pointless activity is the dog that chases the fire truck. He has no idea what to do with a fire truck if he should catch one, and he may get hurt during the chase, so why does he bother?

Attorney General Eric Holder’s decision last week to announce the indictment of five Chinese Army officials for hacking the computers of U.S. companies and labor unions reminds me of that dog, desperately barking at the fire truck. I tried to think of some purpose, some benefit to America, in making this display of prosecutorial paperwork against a sovereign power. I could not come up with anything, beyond the Obama administration’s proclivity for “sending a message” against something of which it disapproves without actually taking concrete measures to change anything.

The five accused spies are highly unlikely to ever see the inside of a U.S. courtroom. China has no extradition treaty with us, and even if it did, it would not extradite its own spooks any more than we would hand over the staff of the Beijing desk at the CIA. In fact, unsealing the indictment merely ensured that the five men whose photos now appear on “Wanted” posters will never make the mistake of traveling to the United States for business or pleasure, thus unwittingly exposing themselves to arrest. Holder’s announcement does nothing to bring the alleged offenders to justice; it just warns them to stay away.

This self-destructing prosecution makes even less sense as a matter of foreign policy than it does as a law enforcement effort. As law enforcement, the indictment is merely a bust. But as foreign policy, it actually stands to hurt us in many places while benefitting us nowhere.

Start with China itself. I am no admirer of the Beijing government, and I have no reason to doubt that it systematically engages in cyber-misconduct to hurt its enemies and benefit itself. Beijing’s bosses do this, more or less openly, to their own citizens. Why would they not do it abroad? They will spy on rivals and try to silence critics wherever and whenever they believe they can get away with it, which for now appears to be most of the time in most places, because neither the U.S. nor other nations – even those facing Chinese bullying in the oceans east of Asia – want to push confrontation too far.

Despite this apparent impunity, the Chinese government reacted with rage at the indictment, which is not surprising. The indictment brands five underlings as criminals for activities aimed at maintaining their bosses’ power. If the underlings are criminals, what of the bosses? Bringing public charges against members of the People’s Liberation Army for following their orders is tantamount to declaring the PLA, and maybe the government itself, a criminal enterprise. That’s a very sensitive subject for a regime that holds power through a combination of force, intimidation and economic bribery of its population.

On top of this, the Chinese deeply resent American intelligence activities aimed at them. This is not a post-Snowden development. Chinese military aircraft have harassed American surveillance planes for years, which led to a midair collision that killed a Chinese pilot and forced an emergency landing by a U.S. spy plane on Hainan in 2001. The American crew was held for 11 days until the Bush administration said it was “very sorry” for the pilot’s death. The Chinese held the American spy plane for nearly three months before releasing it – in pieces, dismantled by Beijing’s intelligence services.

China’s leaders surely will not be impressed with the distinction drawn by American officials who claim that our espionage is strictly for national defense and security purposes, and not to help American companies gain commercial advantages. To China, this is a meaningless distinction. Many of China’s largest companies are arms of the state; commercial interests and state interests are identical. Also, China’s leadership understands, even if the Obama administration does not, that economic strength is the cornerstone of military and diplomatic advantage. China’s prominence as a world power over the past 35 years has risen in lock step with its financial clout. A strong economy does not ensure national security, but it makes it possible. Besides, Edward Snowden’s disclosures have demonstrated that we, too, have used espionage to help in trade negotiations.

The timing of Holder’s press conference was also bizarre, coming just as the administration needed Chinese support to isolate Russia diplomatically over its interference in Ukraine. China had been mostly on the fence, refraining from endorsing Russia’s seizure of Crimea and its support of militants in eastern Ukraine, but not joining in Western efforts to push Russian President Vladimir Putin to step back. Putin, as it happened, was on his way to China on Monday for a trade conference. Two days later – after Holder’s announcement – the Chinese gave him a big boost, announcing a long-term deal for Siberian gas exports that had been held up for a decade. This will help immunize Putin against the threat of reduced European purchases, giving him a freer hand to continue meddling in what he sees as his country’s post-Soviet sphere of influence.

Holder’s announcement won’t help bring the spies to justice; it won’t stop or slow Chinese spying; and it will hurt U.S. efforts to get China’s cooperation on everything from Russia to Iran, which also supplies gas to Beijing.

What did Holder gain by chasing the Chinese fire truck? All I can see is that it gave him another chance to bark.

About Larry M. Elkin 553 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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