By Arab News
By Hafed Al-Ghwell*
Chinese telecoms giant Huawei faces a deluge of headlines aimed at uncovering the litany of controversies that threaten to drown the company. Just this month, US President Donald Trump signed an executive order aimed at limiting foreign involvement in American communications networks. This ban, designed as a tool to address national security threats from telecommunications networks, is aimed squarely at one of Huawei’s core businesses – the manufacture of network infrastructure. It bolsters a 2012 House Intelligence Committee report that urged US companies not to use Huawei networking equipment.
In the UK, the company is under investigation by authorities for potential security concerns raised by its Government Communications Headquarters and the US government. Huawei’s defense will not be helped by revelations that Vodafone found “backdoors” in Huawei equipment that could potentially grant nefarious actors access to the mobile operator’s systems. Last August, Huawei and its Chinese rival, ZTE, were banned from supplying equipment for Australia’s fifth-generation (5G) mobile networks because of being likely “subject to extrajudicial directions from a foreign government.” By law, Chinese companies cannot refuse intelligence gathering requests made by the Chinese Communist Party. There is little separation between the state and enterprise because all Chinese companies are required to have Communist Party committees. Business leaders such as Huawei founder Ren Zhengfei dutifully participate in political conferences designed for businesses to show commitment to the party. It is these uncomfortably close ties to the Xi Jinping government that has some western governments concerned. In their view, Huawei and ZTE products could be co-opted into Beijing’s vast intelligence-gathering operations. Therefore, for those seeking to secure key telecommunications assets, any potential espionage concerns will be taken very seriously.
Huawei is one of the largest networking and telecoms equipment manufacturers, purportedly leading the 5G revolution. Mobile operators that launch 5G networks will be able to deliver data transfer speeds 10 to 20 times faster than current 4G (LTE) networks. This will undoubtedly boost the Internet of Things, where more network-ready equipment, devices, machines and even vehicles will be able to communicate with each other and their users over high-speed data networks. In other words, more sensitive data will be flowing through 5G and other high-speed telecommunications networks than ever before – not just for individuals but also for companies and governments. Back doors would give foreign adversaries the ability to shut down networks or listen in on sensitive transmissions that may expose trade secrets or national security vulnerabilities.
In 2017, it was discovered that computer systems at the African Union headquarters in Ethiopia had been transmitting vast amounts of data to servers in Shanghai between midnight and 2 a.m. for five years. Huawei was the main supplier of information and telecommunications technology. Although the company plausibly denied its involvement, the report confirmed the grave risks posed by the absence of vigilance when utilizing systems unable to securely store or transmit sensitive data. Huawei did not see much criticism or scrutiny after this incident. Trade between China and the continent has grown by roughly 20 percent per year for the past two decades. China is Africa’s largest trading partner. The AU’s Addis Ababa headquarters also benefitted from a generous $200-million donation in 2006 for its construction. No AU officials would confirm the breach nor the reports that a litany of listening devices were also found hidden in desks and walls of the building. Even though Huawei may not have been involved, for wary governments looking for the slightest hint of malfeasance, this incident would do more to rouse suspicions than ameliorate them.
The controversies do not end there. Company CFO Meng Wanzhou is detained in Canada, where she is fighting extradition to the US to face charges for bank and wire fraud in regards to evading sanctions via an Iranian subsidiary called Skycom. Huawei is also facing fresh charges for trade-secret violations after a series of emails revealed its involvement in the theft of a phone-testing system owned by T-Mobile. A civil court in Washington state has already forced the company to pay nearly $5 million in damages to T-Mobile for breaching confidentiality and non-disclosure contracts. The allegations of trade-secret theft are yet to be reviewed by a US court.
Huawei is not just battling fires in its telecommunications equipment manufacturing unit. Overseas, governments are either banning the company from supplying telecommunications equipment entirely or limiting it to non-core sections. Last year, US electronics retailer Best Buy stopped selling Huawei devices, and political pressure forced mobile operator AT&T to scuttle a deal to launch a Huawei device on its network. The ongoing trade war has prompted companies such as mobile chipmaker ARM and Google, the maker of Android, to sever ties with Huawei. Elsewhere, Amazon Japan reportedly ceased selling Huawei mobile devices. The Massachusetts Institute of Technology also cut ties with Huawei in light of the US Department of Justice investigations into the company’s trade-secret theft and sanctions dodging.
China and Huawei dismiss the onslaught of controversies as politically motivated or “economic terrorism” in light of Washington seeking to force Beijing to accept its terms in trade negotiations. Unfortunately, it does not refute the bevy of allegations and controversies that seem to pile up each day. Should Huawei lose market share or access, it would simply look to other nations. The company remains confident that it can ship more smartphones than Samsung, having overtaken Apple just last year. Huawei is also looking to release its own mobile operating system and expand its app store to ratchet up competition with Google and Apple.
This endless list of controversies has only urged more countries to seek ways to protect critical telecommunications networks. Some 30 nations have signed on to the non-binding Prague Proposals that warn against rolling out 5G technology that may be vulnerable to state influence. Mobile operators and governments will likely favor Huawei’s competitors such as Japan’s Fujitsu, France’s Alcatel or Sweden’s Ericsson, which could significantly impact Huawei’s share of a $400-billion telecommunications equipment industry.
- Hafed Al-Ghwell is a non-resident senior fellow with the Foreign Policy Institute at the John Hopkins University School of Advance International Studies. He is also senior adviser at the international economic consultancy Maxwell Stamp and at the geopolitical risk advisory firm Oxford Analytica, a member of the Strategic Advisory Solutions International Group in Washington DC and a former adviser to the board of the World Bank Group. Twitter: @HafedAlGhwell