5G

America’s war on Huawei nears its endgame

European politicians fear falling further behind if they delay 5G and the various wonders it is held to enable, such as an “internet of things”

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US PRESS GROUP

On May 15th the American government announced a startling escalation in its campaign against Huawei, a Chinese company which is the largest provider of telecoms equipment in the world.

American politicians and officials have long expressed concerns that mobile networks which rely on Huawei could allow snooping and sabotage by China. In May 2019, citing alleged violations of sanctions against Iran—charges Huawei denies—America used powers designed to stop the transfer of military technology to bar the company from receiving American components vital to the systems it sells.

Those measures had loopholes: suppliers could keep on selling Huawei many components as long as they were made in facilities outside America. So this year America targeted the whole supply chain: as of September it will be seeking to stop companies around the world from using software or hardware that originally comes from America to manufacture components based on Huawei’s designs.

The move was a serious blow to the company. It may well have brought a sigh of relief in Britain. In January Boris Johnson, the British prime minister, had approved a substantial if clearly demarcated role for Huawei in Britain’s 5g telecoms infrastructure.

Its promise of a faster, more commodious type of mobile broadband that allows completely new internet applications and might prove necessary for self-driving cars has made 5g a touchstone for seers scrying the next big thing and for politicians who pay heed to them.

Infrastructure spending stamped with such a hallmark of futurity is right up Mr Johnson’s alley. If Britain’s existing procedures for overseeing Huawei’s role in telecoms infrastructure were applied, the government argued at the time, Huawei’s equipment could be used in “non core” parts of the network, and Britain could get its 5g systems up and running considerably sooner, and cheaper, than would otherwise be possible.

This decision was unpopular both with the White House and with a significant faction within Mr Johnson’s Conservative Party, with the opposition happily backing the rebels. Dismay over China’s imposition of new security laws on Hong Kong, in breach of the agreement under which the territory was handed back to it, heightened feelings further.

America’s new salvo of sanctions provided a plausible reason for changing course. The inevitable dislocation to Huawei’s supply chains, the government said, would make relying on the company riskier. The new measures also meant that the vaunted system whereby British spooks vetted Huawei equipment would no longer be able to do its job: it would itself fall foul of the American sanctions.

On July 14th the government said it will ban mobile-network operators in Britain from buying Huawei equipment for their 5G networks, and told them to remove equipment already installed by 2027. Well before that—by the time of the next election, in 2024—the country would be on an “irreversible path” to expunging the Chinese firm from its networks, said Oliver Dowden, the culture secretary.

Mr Trump immediately took credit for having “convinced many countries” not to use Huawei. While some have been on board for a while—Australia banned Huawei 5G equipment in 2018—others have moved more recently.

In June telecoms companies in Canada and Singapore announced plans for 5G networks built around equipment provided by Huawei’s main rivals, Ericsson, a Swedish firm, and Nokia, a Finnish one. In both cases Huawei had previously been a possible provider. On July 6th the head of the French cyber-security agency advised network operators which do not currently use Huawei not to plump for it in future.

Now all eyes are on Germany, which has said it will decide on the matter in the autumn. If it follows America’s urging and Britain’s example then the rest of the EU will probably go the same way, and a significant corner will have been turned.

Western communications systems will be a bit less insecure. America will have used its sovereign might to humble one of China’s national champions, and China will doubtless be responding.

The technophilic imperative that has made 5G a totem of the fully networked future will have had its momentum checked, at least a little, by a mixture of countries not wanting to upset America and being willing to upset a China they find increasingly disturbing.

Perhaps most profoundly, such a change may leave behind it a world where governments are less willing to depend on companies from countries with divergent interests to supply capacities they deem strategic.

Germany’s decision is not a done deal. Deutsche Telekom (dt), a 32%-state-owned company, is the country’s largest mobile provider and already relies heavily on Huawei equipment. It has lobbied strongly against any action that would make it harder for it to roll out 5G. The Ministry of Economic Affairs, often eager to defend the interests of German industry, has backed the firm. Angela Merkel, the chancellor, has not wanted any trouble with China.

Mrs Merkel, who will make the final decision, has so far been circumspect. She says she does not want to exclude a company on the basis of its nationality and that any firm that complies with certain security standards should be allowed to sell its wares in Germany.

In late 2019 China’s ambassador in Berlin threatened retaliation against German companies should the government exclude Huawei from its 5G plans, and insiders say it is a threat the chancellor takes seriously.

Meanwhile, dt is busily creating the aura of a done deal. It intends to provide basic 5G services to 40m Germans by the end of this month using equipment from both Huawei and Ericsson, though users will see little benefit at this stage. The company has also decided to intensify its co-operation with the Chinese firm in cloud computing and other areas.

There are many reasons for Europeans to be uncomfortable siding with America. Having missed the boat on the rise of consumer tech — Europe still bemoans the lack of the home-grown Google or Amazon — European politicians fear falling further behind if they delay 5G and the various wonders it is held to enable, such as an “internet of things”.

Mobile-network operators play up these fears, with an eye to either keeping their ties to Huawei or receiving some form of compensation if it were to be proscribed. By combining direct costs with estimates of lost gdp they argue that ditching Huawei will cost the continent tens of billions of euros.

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