Chinese telecom major Huawei has run into still deeper trouble. For the past couple of years, the United States has been accusing the telecom giant- the largest private company in China, of espionage. Several countries have banned Huawei over security concerns. And now China is facing another setback from the United Kingdom that could lead to Huawei facing some major trouble in Germany and other European countries.
According to British media reports, the National Cyber Security Centre of GCHQ (Government Communications Headquarters), the top intelligence body of the UK, has revealed that the US sanctions barring the Chinese telecom giant from using technology relying on American intellectual property have had a “severe” impact on the technology firm.
The British intelligence believes that Huawei is now relying on “untrusted” equipment. The Trump administration had imposed restrictions on the US semiconductor (chip) exports in May. Semi-conductors are the most essential part of any consumer electronic commodity and Huawei was dependent on American semi-conductors. Beijing’s stock-pile of semi-conductors won’t last for more than 12 months and we can see the repercussions.
Huawei’s woes are no longer limited to security concerns, and now it is also facing the issue of diminishing quality. Within the United Kingdom, this is going to accelerate Huawei’s exit. Earlier it was reported that Huawei would be phased out in the next three years, but now the Daily Telegraph has reported the British Government is planning to ban Huawei’s role in 5G infrastructure within the next few months.
However, the GCHQ report is going to have consequences beyond the United Kingdom too. It is going to set an example for other European countries too that Huawei has been targeting. Huawei is already fraught with espionage and security risks. Why will any country want to risk its security interests for a telecom major that uses “untrusted” equipment?
Germany, for example, is at the centre of Huawei’s agenda in Europe. The Chinese telecom major has found favour with German Chancellor Angela Merkel and her close associate- the Minister of Economics Peter Altmaier. But this should certainly not be taken to mean that Germany is a cakewalk for Huawei, till now.
The fact remains that leaders from Merkel’s own party, the Christian Democrats (CDU) have been campaigning against Huawei. CDU intelligence expert Patrick Sensburg stated in July last year that he “neither trusts [5G] vendors from China, nor from the U.S,” because in both countries, “telecommunications companies need to cooperate closely with the security agencies.”
Defence Minister and CDU party leader Annegret Kramp-Karrenbauer too has been critical of Huawei. This has mounted pressure on Angela Merkel over the question of Huawei’s role in Germany’s 5G infrastructure.
Anyhow, Merkel decided that Huawei will not be banned. Towards the fag end of last year, the Chinese telecom giant also managed to win a contract for developing Germany’s 5G network. Telefonica Germany, the biggest telecom operator after Deutsche Telekom, announced that it was giving Huawei and Nokia an equal role in the 5G project. It even called Nokia and Huawei, “proven strategic partners”.
In order to sidestep the security and espionage issues involved with Huawei, Merkel has sought to conveniently distinguish between core and noncore parts of 5G networks. The idea was to make a clear distinction between access, transport and core networks in order to build consensus for the entry of Huawei and at the same time protect security interests.
Meanwhile, China has been threatening Germany against excluding Huawei. Last year, Wu Ken, China’s ambassador to Germany warned, “If Germany were to make a decision that led to Huawei’s exclusion from the German market, there will be consequences.” He added, “The Chinese government will not stand idly by.”
China itself being the largest market in the world, it has become the biggest driver in the growth of Germany’s automakers. The Chinese market has been a key factor behind Germany’s dominance in the luxury cars market and Beijing is weaponizing this position.
On the other hand, the US has been exercising its influence too. Earlier this year, the US President Donald Trump had issued a stern warning to Berlin. He threatened that Washington would cut off intelligence sharing if Germany does not ban the Chinese telecom giant.
The conversations in Germany regarding Huawei will no longer be dominated by the issues of security concerns and dependence. Mounting pressure from Washington and most recently the use of “untrusted” equipment by Huawei are new issues that have cropped up. Huawei is losing the competitive edge in lack of key equipment and the distinction between core and noncore parts of 5G networks is becoming somewhat obsolete.
France and Spain are going to face similar issues amidst British intelligence reports about Huawei using “untrusted” equipment. In fact, a significant shift against Huawei is already visible in France. Paris has decided to restrict licenses for telecom operators using 5G technology from Huawei.
However, France’s National Agency for Security of Computer Systems has said that local telecom companies- SFR and Bouygues Telecom that already use Huawei equipment will be given eight-year licenses to operate 5G technology.
Meanwhile, China has been left perplexed by restrictions on 5G technology in France. China’s foreign ministry spokesman Zhao Lijian said that Beijing hoped Paris “can uphold an objective and fair attitude”. He added that France should take “practical action to provide an open, fair, just and non-discriminatory business environment for enterprises of all countries, including Chinese enterprises.”
As for Spain, the Ministry of Defence banned all Huawei devices from its data serves last year. No reason was cited for the ban but it can be assumed that it was a consequence of the Trump-led allegations of espionage and security concerns against Huawei. However, Spain did not ban Huawei devices for its customers.
But all European countries find a reasonable excuse to kick Huawei out of their markets now. The British intelligence report about the Chinese telecom major’s diminishing standards arm them with reasons to exclude it and prefer better-equipped telecom operators instead.