"There are two things I don’t believe in," Chancellor Angela Merkel said on Tuesday, referring to Germany's standoff with the United States over Huawei's inclusion in her country's 5G rollout. "First, to discuss these very sensitive security questions publicly, and, second, to exclude a company simply because it’s from a certain country."
Europe now seems likely to settle on 'careful and considered' inclusion of Huawei instead of any blanket bans. Chancellor Merkel stressed this week that a joined-up EU response would be "desirable", and Italy and the U.K. are also backing away from Washington's prohibition on Huawei's 5G technology. If they fold, it is likely the broader European Union will follow suit. And if those key European allies can't be carried, what chance Asia-Pacific, Africa, the Middle East?
There comes a tipping point in any battle, and with this one, we may be just about there. Even as the head of the U.S. European Command told the Armed Services Committee "we’re concerned about [Germany's] telecommunications’ backbone being compromised... If [Huawei] is inside of their defense communications, then we’re not going to communicate with them," the industry was delivering a very different message.
"We’ve not seen any evidence of backdoors into the network,”
said Vodafone’s most senior lawyer in the U.K. “If the Americans have evidence, please put it out on the table.”
What Vodafone and other industry leaders have to say carries serious weight. Governments will be swayed by the network operators, and so the telecoms industry will likely decide Huawei's fate. They control investments and 5G rollout schedules. They also have the technical expertise and talk glowingly about the Chinese manufacturer's innovation. The company filed more patents than anyone else last year: “An all-time record by anyone,”
the WIPO director general told reporters.
The turning point
Last month's Mobile World Congress in Barcelona has proven the turning point in the long-raging battle between the United States and Huawei. Ahead of the event, it looked very much like the world's leading telecoms equipment manufacturer was on the backfoot. The U.S. campaign ahead of MWC had been relentless. Vice President Mike Pence traveled across the Atlantic to call "on all our security partners to be vigilant and to reject any enterprise that would compromise the integrity of our communications technology or national security systems," and Secretary of State Mike Pompeo to make it clear that “if [Huawei] equipment is co-located where we have important American systems, it makes it more difficult for us to partner alongside them.”
Every Huawei interview and press briefing for month after month was a defense of their security record, an insistence that they don't spy for Beijing. But then Huawei pulled off a well-orchestrated PR masterstroke at MWC. And everything changed.
Huawei’s rotating chairman, Guo Ping, used a keynote speech at the event and media follow-ups to turn defense into attack. “The Snowden leaks,” he said, “shone a light on how the NSA’s leaders were seeking to ‘collect it all’ - every electronic communication sent, or phone call made, by everyone in the world, every day. The more Huawei gear is installed in the world’s networks, the harder it becomes for NSA to ‘collect it all’. Huawei hampers U.S. efforts to spy on whomever it wants.”
Guo was playing to the world’s gallery. In an instance Huawei provided a plausible reason to take U.S. warnings at less than face value. In reality, there was already a softening of the international stance but this hastened it. MWC is home turf for Huawei. They basically sponsor the event. Their logo is everywhere. The industry likes their technology and believes it can mitigate the risk. And, ultimately, their trump card is that the risk remains theoretical. There has not been any tangible evidence presented of data collection for Beijing.
Multiple fronts
But even as the PR battle swings in their favor and the commercial impact looks less damaging than was thought earlier this year, there remain company court battles to be fought in the U.S. and charges against their CFO. Huawei has pled not guilty to its U.S. indictment and launched its own litigation against the government. These battles will take months or even years to resolve, and in the interim, the real war for the world's 5G networks will be won or lost.
At MWC, Huawei announced 5G agreements with ten operators, including Switzerland's Sunrise, Iceland's Nova, Saudi Arabia's STC and Turkey's Turkcell - whose CEO
said of Washington's campaign against Huawei: "This is an insult to our industry. We do know how to run tests and protect our networks, we always have."
The real issue, though, relates to potential splits in the Five Eyes. For Washington to cut defense communications with Germany is one thing, but the U.K. is its closest intelligence-sharing partner. And the U.K. does not currently look on track for a prohibition of Huawei technology in its 5G networks. "It’s a hugely complex strategic challenge which will span the next few decades, probably our whole professional lives," Jeremy Fleming,
the head of U.K. intelligence agency GCHQ said recently. "How we deal with it will be crucial for prosperity and security way beyond 5G contracts.”
"Trust needs to be based on facts, facts must be verifiable, and verification must be based on common standards," said Ken Hu, Huawei's deputy-chairman as he opened a 'Cyber Security Transparency Center' in Brussels this month.
5G underway
Germany launched its 5G spectrum auction this week. Deutsche Telekom, Vodafone, Telefonica Deutschland and 1&1 Drillisch will participate in a three-week process that could raise as much as €5 billion for the federal government. Huawei isn't involved in the auction but would be a material supplier to the networks once deployments get underway.
With that in mind, Angela Merkel said that "so far, lots of countries have used Huawei technology. That’s why the federal government has not taken the approach of simply ruling out any contractor or stakeholder, but we have set standards for those bidding for 5G technology... We will give everyone a chance, but [we] shouldn’t be naive.”
Closer to home
The U.S. battle against Chinese tech shifted closer to home this week, with
defense chiefs taking aim at Google for its engagement in China. The chairman of the Joint Chiefs told U.S. senators that "we watch with great concern when industry partners work in China knowing that there is that indirect benefit. and frankly indirect may not be a correct characterization of how it really is, it's more of a direct benefit to the Chinese military."
And Google is just
one of many U.S. technology companies that engage in China and need to come to terms with the potential for that technology to be deployed in the country's surveillance state, including the
controversial subjugation of the Muslim population in Xinjiang.
Here (and more broadly) money talks, of course. The global 5G prize and the ongoing U.S.-China trade war are simply too large to fall to security rhetoric. With the tide now turned in Huawei's favor, it is arguably more likely that President Trump could recognize the value of that card in ongoing talks. There had been some talk of the president using Huawei as a bargaining chip, it might be that the sacrifice in doing so has become significantly less material.
NATO Secretary-General Jens Stoltenberg was markedly more measured this week than his U.S. colleagues when answering questions on the subject. "We are now consulting closely," he told reporters. "We will assess the issue and find out how NATO as an Alliance can, in the best possible way, address the challenges related to investments in 5G infrastructure."
Huawei is now on the front foot - whether it has fully won its war with Washington will be known in the coming weeks.
