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UK vetoes Huawei while Germany resists doing so

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The decision on what to do about the thorny issue of the security of Huawei’s 5G network equipment continues to divide different European governments. The Government of Boris Johnson has been the most forceful and has just sent to the House of Commons a bill that totally excludes the deployment of Huawei’s 5G networks on British soil. Angela Merkel’s government, for its part, resists any mention of Huawei in the telecommunications security law that it is preparing and that should be approved within a month.

While the United Kingdom and Germany have opposing positions, the French Government tiptoes over the issue, without taking any official decision, although it reserves to ban Huawei equipment in the future if it is confirmed that they are not safe and has implicitly vetoed their installation in strategic places. Sweden wanted to veto Huawei in the auction that it was going to carry out, but the Chinese company has appealed the decision of the Swedish regulator and has had to postpone the bidding until there is a trial. In Spain, it does not seem that the matter has been officially addressed, although the operators use Huawei’s equipment extensively, but the Administration insists that the 5G networks that will be installed will be completely secure.

Germany has been discussing for two years at the highest government level the level of security provided by Huawei and other manufacturers’ 5G network equipment, without being able to take a firm position on the matter. The point is that the German law on the security of telecommunications equipment and networks should specify the requirements that must be met to be considered safe. Chancellor Angela Merkel seems to be totally against making an explicit mention of Huawei and wants to limit herself to imposing very strict network security measures for all manufacturers. With this, the weight of the decision, in the event of doubts, would be transferred to a possible committee that would decide and probably demonstrate, on objective criteria, that the equipment is not safe and prohibit it accordingly.

The United Kingdom has approved a bill that totally vetoes Huawei and yesterday approved a “strategy of diversification of the 5G supply chain”, with a budget of 250 million pounds

The United States has been claiming for years that Chinese 5G network equipment, particularly Huawei but also ZTE, serves the interests of the Chinese Communist Party, which they use to spy on. Both Huawei and ZTE vehemently deny the claim that they spy and that they are private companies independent of their government, to which the US government replies that the companies cannot oppose facilitating espionage, because they argue that Chinese law obliges them if their Government requires it. Mike Pompeo, Secretary of State, and Donald Trump, President of the United States until next January 20, have repeatedly insisted that Huawei spies under the orders of the Chinese Communist Party and have approved a law, the Secure and Trusted Communications Networks Act of 2019, which totally excludes them from installing 5G equipment in the United States.

The telecommunications security law of the United States does not establish the criteria that must govern networks to be considered secure, but it is not necessary either because the Trump administration has already decided that they are not without providing any evidence. Furthermore, the United States government has been demanding that European countries do the same for months and exerting maximum diplomatic pressure. Last January, the United States achieved a small triumph, when Boris Johnson imposed a maximum quota of 35% on Huawei equipment and a ban on installing them on backbones. This July, it tightened the measure and prohibited British operators from equipping their 5G networks with Huawei equipment and gave them until the end of the year to resolve the commitments made.

Total ban on Huawei in the UK

On November 24, the British president completely bowed to the wishes of the United States and approved a telecommunications security bill, the Telecommunications (Security) Bill,  described as “one of the most restrictive security regimes in the world” and a step forward for network security standards “not defined by the industry but by the Government.” This British bill will be submitted to Parliament and there is no record of any opposition from Labor, so it will almost certainly be passed.

The reasons why Boris Johnson has now decided to completely ban Huawei 5G equipment in the country’s networks are not clear, when in summer the measure was already very restrictive and subject to a prior risk assessment by the operators. Apart from the high cost that it is already assuming for BT and Vodafone, which had installed Huawei equipment and now must withdraw in its entirety, the delay in the implementation of 5G in the United Kingdom has already been evaluated in two additional years due to the cut of the 35% and now it will probably be higher. Japan, however, is rubbing its hands, because it considers that it now has a golden opportunity to enter Britain and who knows if it will be the springboard to the European continent.

Takayuki Morita, who will be the president and CEO of NEC as of April 1, took advantage of the appointment that took place yesterday in Tokyo to ensure that he wants to take advantage of 5G networks to increase the foreign sales of the company’s telecommunications equipment, from 25% today to close to 50%, at an imprecise future “sometime”. Morita cited the recent successful demonstration in Britain with NEC Open RAN equipment as a way to break through abroad with this company technology. “There is a clear need to have a totally secure network,” he said, and Open RAN “represents a great opportunity for it.”

Germany is still debating the fine print of its telecommunications security law, although Huawei will likely not be mentioned and will require severe security measures from all suppliers in return

The British Secretary of State for Digital Affairs, Oliver Dowden, is aware of the pressing situation in which he has put his operators with the total veto of Huawei and yesterday approved a “strategy of diversification of the 5G supply chain”  and the allocation of a £ 250 million budget “to create a supply (of equipment) more diverse, competitive and innovative ”, with Open RAN as a support point. It goes without saying that most experts consider that Open RAN has a great future, but that its impact on the market will not be a very tangible reality until 2023.

The EU, caught between China and the United States

Germany, like France and other countries with significant foreign trade with China, do not want to risk retaliation that Chinese President Xi Jing Ping may order. Australia, which enthusiastically followed the veto of Huawei advocated by the United States and even allowed itself to criticize matters that China considers internal and taboo such as the measures adopted in Hong Kong, now finds that it can not sell anything to China, not meat or even came, when before it was its main client, nor is it expected that there will be more Chinese tourists even if the Covid passes completely. It is even said that a large consignment of shellfish had to be dumped because the customs authorities did not give the necessary permits for them to disembark at the port of Shanghai.

Aside from the commercial retaliation that China might take, Europe is also concerned that there would be only two large suppliers of telecom network equipment left, Ericsson and Nokia, the latter undergoing a major restructuring, and much of their equipment is made in China. Ericsson herself, although she is aware that in the short term a possible European veto of Huawei products would benefit her, she fears that in the long term it would be harmed. The Asian telecommunications market represents about 60% of the total and with the rise of India it will be even higher.

Apart from the commercial disputes that could arise between Europe and China, the problem is that technology has come to the fore at a geopolitical and strategic level, and that it not only extends to telecommunications networks, social networks and trading platforms but also to all kinds of devices, from computers and tablets to smartphones, where the Chinese supply is abundant and appreciated, as Tyson Barker, director of a German research center on international relations, tells Le Monde. The United States, say other experts, can and is taking on China, but it is far from clear that it will suit Europe as a whole, much less Germany.

The ideal, for both Germany and France, which constitute the backbone of the European Union, is to defend “European technological sovereignty”, a concept coined by the President of France, Emmanuel Macron, and with which Germany agrees. This means a certain distancing from Washington, while maintaining good relations with China, albeit with due skepticism and far from the optimistic pragmatism that existed a decade ago in Berlin. Europe fears the Chinese president’s expansionist policy at all levels, while Donald Trump’s demand to veto Huawei has done nothing and created resentment in Brussels circles. The question is whether the European Union will be able to maintain this unstable balance and to compromise with the two great powers.

The European Union is confident that US President-nominee John Biden will reestablish Atlantic ties and be much more pragmatic, while assuming that the conflict between China and the United States will not abate on key issues such as US technologies. information, semiconductor manufacturing and, of course, telecommunications networks. 5G networks are set to be one of the major stumbling blocks between the United States and China in the coming years, as well as the growing fragmentation of the Internet. And Europe, some experts think, has a lot to lose by over-supporting either of the two great trading powers.

On the subject of the telecommunications security law that Germany should approve shortly, everything indicates that in the end no specific mention will be made of any supplier and instead very strict security measures will be imposed and the creation of a committee made up of representatives of the Foreign Ministry and the Ministry of the Interior, Economy and Foreign Affairs who adopt the most controversial decisions by consensus, as a source told Reuters a few days ago.

The advantage of adopting such a tortuous procedure is that the approval of a very sanctioning measure for a supplier would require that there be clear evidence that the telecommunications security law has been violated and that the equipment or network in question effectively puts at risk security, as the United States maintains, but has not provided evidence that it has happened. Meanwhile, operators present in Germany, Telefónica among them, could continue to install Huawei equipment. The other possibility, also pointed out by Reuters, is that the approval of the law is delayed due to a lack of consensus among the coalition parties and it continues in limbo.