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British Report Muddies European Waters On Huawei Ban – Analysis

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The British government is expected to complete its review of the issues relating to 5G over the next month or so and its spokespersons have said that no official determination has been made as yet.

By Manoj Joshi

American pressure on European allies to ban Chinese telecom giant Huawei suffered a setback this week amidst a report that the UK’s National Cyber Security Centre’s has determined that any risk posed in using Huawei’s technology in the UK telecom projects can be managed, possibly by restricting the areas in which Huawei 5G equipment could be used.

This arm of the UK intelligence agency, GCHQ, has been conducting an annual examination of Huawei’s equipment. This conclusion could carry great weight amidst the mounting pressure the company is facing from the US on account of its technology.

The NCSC said it had a “unique oversight and understanding” of Huawei and that the company would address engineering and other issues of concern that had been flagged by the Huawei Cyber Security Evaluation Oversight Board, a monitoring setup chaired by the NSSC head.

The fallout of the report seems to have taken place almost immediately. A spokesman for Germany’s Interior Ministry told a reporter that the nation was not planning to shut out any firm out of its 5G network. He said that the focus of the ministry was in ensuring the security of the German networks from even producers deemed untrustworthy.

In UK, Huawei has also funded a specialised lab to check its equipment and it has offered to set up such labs in other countries as well. The Huawei Cyber Security Evaluation Centre (HCSEC) has been working since 2014 and the workings there of the British nationals is monitored by the GCHQ, the Cabinet Office and the Home Office. To date the lab has not come up with any actionable information on Huawei’s transgressions. The British government is expected to complete its review of the issues relating to 5G over the next month or so and its spokespersons have said that no official determination has been made as yet.

The British report comes at an awkward time for the US which had stepped up its pressure on Europe to ban Huawei, and at the same time was readying to make an executive order that would bar US companies from using Huawei. The Americans argue that 5G is a revolutionary technology and will have military implications and that they think that the risk of using Chinese equipment for it is too high.

As part of the US effort, Vice-President Mike Pence told the 55th Munich Security Conference last week that the US has been “very clear with our security partners on the threat posed by Huawei and other Chinese telecom companies.” He said Chinese law required them to provide their intelligence system with any data which touched their network.

A week earlier, speaking in Budapest, Secretary of State Mike Pompeo warned US allies against deploying Chinese equipment, especially that made by Huawei, in their networks, warning that it would make it more difficult for Washington to partner them. The US Secretary of State repeated his warnings in the later legs of his visit to Central Europe that took him to Slovakia and Poland. Washington has been particularly concerned about the influence of the Chinese and the Russians in Central and Eastern Europe.

The Chinese government has predictably taken umbrage at the remarks of the American officials. On 18 February, the official spokesperson accused the US of trying to stop its industrial development, in response to Pence’s remarks in Munich. “The US government was trying to fabricate an excuse for suppressing the legitimate development of Chinese enterprises,” said Geng Shuang, the Chinese foreign ministry spokesman. He added that China “has not and will not require companies or individuals to collect or provide foreign countries information for the Chines government by installing backdoors.”

In December 2018, the company’s Chief Financial Officer, Meng Wanzhou, was arrested in Canada because the US is seeking her extradition. On 29 January 2019, the US Justice Department announced a 13-count criminal indictment against Huawei, two affiliates and CFO Meng. The charges go back ten years and are related to bank and wire fraud and also violating US sanctions on Iran. A formal demand for the extradition of Meng was made to the Canadian authorities. The Chinese foreign ministry accused the US of using “its government power to discredit and crack down on specific Chinese companies in an attempt to stifle their operations.”

As a result of the US campaign against Huawei, all of the “Five Eyes” countries — the US, the UK, Canada, Australia and New Zealand — are now committed to exclude Huawei from their 5G network plans, though the UK could now modify its restrictions. Japan too banned Huawei from getting government contracts. In the UK, BT is removing Huawei equipment from existing 3G and 4G networks and will not use any of the key parts from Huawei for its 5G network.

In early February, police in Denmark expelled two Huawei workers over work permits, though they clarified that the arrests were not linked to any espionage charges. Meanwhile, Norway’s intelligence service issued a warning on Huawei when its domestic intelligence head, Benedicte Bjornland, noted the need for caution with regard to Huawei because of its link to the Chinese government and cited China’s intelligence law “requiring private individuals, entities and companies to cooperate with China.” Huawei played a role in creating the country’s 3G and 4G network and now Norwegian companies are working on the rollout of 5G systems.

Germany and France have hesitated to follow the “Five Eyes” initially, but the US pressure was insistent. In early 2018, in talks with German officials, a US delegation had said that they were not particularly sanguine about the idea that cheaper Chinese telecom equipment connecting the switches of Europe’s giant fibre optic lines that intersect in Germany since this could pose a threat to NATO security.

Germany is now preparing to draft tougher security standards to restrict the use of Huawei equipment when the country’s premier telecom companies begin unrolling 5G networks. These measures could be drafted in the weeks ahead of the 5G auction which is scheduled for mid-March 2019.

The measures will require the company’s equipment to be certified by the Federal Officer for Information Security and disclose the source codes operating the system, something that could facilitate the discovery of any “back doors” and detect the monitoring other encrypted data flows. The main consideration for German officials is the legal obligation of Chinese companies to cooperate with their intelligence services.

In the Czech Republic, the intelligence service has warned against the activities of the company and the danger of using its software and a controversy developed over the Prime Minister seemingly apologising for this. In Poland the Prime Minister has recently spoken about the need to maintain “deterrence” against China and Russia and the foreign ministry issued a statement in December last year raising concerns about cases of cyber espionage “including those attributed by our partners to China.”

According to TheWall Street Journal, Poland has been Huawei’s biggest market in Central and Eastern Europe and last year the government had designated the company as the official partner of its 5G strategy. The prime minister’s office had also said that the company would build a science and technology centre in the capital, in addition to the R&D facility it already runs there.

The US has told Poland that future deployments of American troops and plans for a permanent base to be established there could depend on the Polish response. Earlier this year, Polish authorities arrested two people, including Wang Weijing, the Chinese employee of Huawei, for spying for Beijing. A court ordered them to be held for three months, though both have pleaded not guilty, and Wang has been sacked by his company.

Investigations into this case have led the Polish and US authorities to worry about the deeper nature of the Chinese penetration of the country. The other person arrested with Wang was Piotr Durbajlo, a former senior Polish counter-intelligence officer. The investigations have come up with troubling evidence that the Chinese penetration of Polish intelligence could be deeper, facilitated by the Huawei company.

Another country which is resisting the US pressure is Hungary. Its Prime Minister, Viktor Orban, says that even while it is a member of the NATO, it would like to maintain a sense of neutrality. Orban has invited Chinese investment in Hungary and is resisting approving a defence agreement with the US.

According to reports, the US actions have been catalysed by the cyber breach that led to personal details of 500 million guests of the Marriott hotel chain hacked late last year. Thereafter, the US initiated planning to target China’s trade, cyber and economic policies. The move is expected to culminate in an Executive Order making it harder for Chinese companies to obtain critical components for their telecom systems from the US.

Currently, the EU is considering proposals that will exclude Chinese firms from 5G networks. The talks are at an early stage, but could involve an amendment of a 2016 cyber security law that required companies involved in critical infrastructure to take appropriate security measures. The EU is not only responding to US pressure, but also to China’s own National Intelligence Law that requires organisations and citizens to cooperate with the Chinese government’s intelligence work. So, there need not be actual evidence of Chinese spying for the EU to act. But given the EU processes, such a law could take more than a year to come into effect.

The British intelligence report is likely to muddy the European waters. It seems likely now that the kind of outright ban sought by the US will not take place. Instead, the EU will create tough terms and conditions for the use of Huawei’s equipment in its networks. The British report will go a long way in shaping up the practical response of various countries to Huawei’s 5G ambitions.

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Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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