Trump’s Huawei executive order not much more than a power play

Rumours are swirling around Washington DC suggesting President Donald Trump is on the verge of signing another executive order, this one the final blow to Huawei’s US ambitions.

While the document itself will actually have very little impact on Huawei’s business, it is more of a symbolic blow to the kit vendor, as well as other Chinese businesses looking to exploit the riches of the Land of the Free. While the rumours were originally reported last week, by the time you get back to the office on Monday the order may well have been signed.

In a single signature, Huawei, a representation of China’s ambitions in the global technology and telecommunications industry, could be officially and explicitly shut out of the worlds’ largest economies.

Although details on the executive order are limited to rumour and hearsay for the moment, officials have stated this order will not impact electronics companies or products which incorporate Chinese components. This is a political move to demonstrate the power of the US. Trump is making a statement to China; look at what I can do to one of your flagbearers.

As it stands, Huawei’s involvement in US communications infrastructure is pretty minimal. T-Mobile US CEO John Legere has very publicly stated his business will very much avoid using Huawei equipment, while back in August Trump signed the Defense Authorization Act into law which effectively banned any meaningful work Huawei or ZTE could do in the US.

Huawei’s, and ZTE to a lesser extent, condemnation has become nothing more than a symbol of US dominance on the technology world. Trump is posturing, demonstrating what will happen to anyone who challenges the US leadership position. Over the last few months, US delegations have been visiting governments around the world to pitch the idea of a ban, admittedly with varied success, though there have been some willing to listen. Banning ZTE from using US components or IP brought the firm to the brink of extinction. The US forced Canada to arrest the Huawei CFO. A lot of this is a demonstration of power.

This is of course a complex and rich tapestry, and there are numerous intertwining and independent narratives going on. Some of it will be political, some economic, some espionage assumptions will be true and there will be validity to accusations of a government-influenced unfair playing field. This is an incredibly complex matter. But look at what the executive order actually is.

Huawei is already incredibly limited in the US, the damage to ambitions has already been dealt, this is chest beating from Trump.

China at the centre of US/Hungary passive aggressive spat

US Secretary of State Mike Pompeo has joined the European roadshow with the intention of lobbying other governments towards a China ban, but Hungary’s message is clear: mind your own business.

“We Hungarians, the Hungarian Government, has based our foreign policy on mutual respect, and we think that the world is not going to be a better place if some countries do spend their times by intervening in internal political affairs of other countries or lecturing other countries,” said Péter Szijjártó, the Hungarian Foreign Minister.

It’s a textbook example of political posturing and passive aggression. Szijjártó can’t get into an outright shouting match with Pompeo, but as so many politicians do Szijjártó is wearing a smile, talking calmly with very intellectual and soothing language. But don’t be fooled by the charm, Szijjártó is telling Pompeo to back off.

To understand why Szijjártó floating his passive aggressive skills, you must go back to Pompeo’s own comments.

“What’s imperative is that we share with them the things we know about the risks that Huawei’s presence in their networks presents: actual risks to their own people, to the loss of privacy protections for their own people, the risk that China will use this data in a way that is not the best interest of Hungary,” Pompeo stated.

“But second, we have seen this around the world, it also makes it more difficult for America to be present; that is, if that equipment is co-located in places where we have important American systems, it makes it more difficult for us to partner alongside them.”

In terms of getting their own way, US politicians are the experts at perfectly crafted passive aggressive rhetoric. Pompeo’s message is simple; you can of course make your own decision, but if you continue to do business with Huawei and China, you won’t find future success in the US. Pompeo is effectively using the economic attractiveness of the US as a partner as an indirect threat to bend Hungary to its will.

And China is once again at the centre of the spat.

To be fair, it should hardly come as a surprise the Hungarians are not particularly welcoming of the US politician. Yesterday, a US official described Eastern European governments as having a “higher propensity to corruption” than Western European counterparts. There are of course examples which prove this point but taking such a broad-brush approach to an incredibly diverse region of the world runs the risk of offending a few people. Hungary is clearly one of those nations which has taken exception to the remark.

The US has had some notable success in turning governments against Huawei specifically and China generally, Australia and Japan are two good examples, but in Europe there have been challenges. Various US delegations have been whispering in the ears of European politicians, warning of the dangers of doing business with Chinese companies, and while there might be some heightened security requirements, outright bans have been hard for the US to come by.

Hungary is now another which seems to be turning against the desires of the US.

“If you look at our cooperation with China, we represent 1.2” of the trade between the European Union and the People’s Republic of China,” said Szijjártó. “If you look at that Chinese company which is very often in the news nowadays regarding telecommunication, are they present in Hungary? Yes. Who are their major contractors? A German and a British company. So when it comes to China, I think hypocrisy should be left finally behind.

“We are usually accused, Central Europeans, that the so-called 16+1 format is so much breaking the European Union. Now out of the 16 countries involved in this cooperation, 11 are members of the European Union. Do you know how many percent of EU-China trade 11 of us represent? Less than 10 percent. So I think it’s not us that will be the game-changers in the relationship between, let’s say, the Western world and China.”

The US has certainly inflicted damage to Huawei as a business and China as a trading partner, but success in turning the European nations against the Asian superpower is looking limited right now. The US/China battle for international economic supremacy has certainly been an interesting one, though the current calming of tensions might just be rattling politicians into another outrightly aggressive move.

Europe sailing towards conflict over China 5G

Germany is drafting rules to allow Chinese companies to participate in the 5G bonanza, while the European Commission is thinking of banning them. Something’s got to give.

In terms of collective political influence and economic power, the European Union could consider itself more or less on par with the US and China. Considering the Union represents the societal, political and economic interests of 28 nations, more than 500 million people and roughly $23 trillion in GDP, it is certainly a powerful concept. But the China issue is just one example of how its neatly stitched patchwork could unravel very quickly.

China is a very tricky equation to balance right now. On side, you have an incredibly powerful economy, a massive and increasingly wealthy population and technological advancements which could benefit almost every society. However, to access these riches you have to deal with a government which ideologically conflicts with a lot of what Europe stands for.

But this is where a potentially significant conflict lies. The European Commission is reportedly looking at how it could create a de facto ban for Chinese technology and kit in communications infrastructure, conflicting with some of its member states positions. The Commission is supposed to represent the interests of all its member states, creating a common framework which sits above national policies, but if these policies are a contradiction of opinions of some member states the perfect storm could be brewing on the horizon.

Germany is not talking the anti-China rhetoric

The most recent reports echoing out of Berlin will not have the US government jumping for joy. Local newspaper Handelsblatt is suggesting the German government is doing everything it can to write security protections into new regulation, however, the rules will be written in a manner which will not exclude Chinese companies.

The reports have not been confirmed by any official government spokespeople as of yet, though this does follow on from the Federal Office for Information Security (BSI) made in December.

“For such serious decisions like a ban, you need proof,” said Arne Schoenbohm, President of BSI.

The US will not be happy about developments here, a delegation is currently undertaking a European lobby tour to turn officials against China, though neither will the European Commission. There are several instances which indicate the European Commission is taking a similar stance against China, suggesting a bloc-wide ban could be on the cards before too long.

Aside from recent reports the European Commission is rewriting cybersecurity rules to effectively ban Chinese companies from providing technology for communications infrastructure, one of its Commissioners has also fuelled the anti-China rhetoric.

“I think we have to be worried about these companies,” Commissioner for Digital Single Market Andrus Ansip told reporters in December. Ansip was referring to companies such as Huawei and ZTE, while this statement implies the Commission believes there are strong ties between multi-national corporations and the Chinese government.

The United States of Europe argument emerging again?

With Germany seemingly working to ensure collaboration with Chinese companies remains possible, the UK creating monitoring mechanisms to enable Huawei’s work and Italy denying reports it is considering its own ban, the European Commission appears to be working in direct contradiction to some of its largest member states.

To be fair, the role of the European Commission is to serve all the states not just the big ones, but the point of the bureaucracy is to create a common framework which all agree on, not rules which are forced onto member states. Cynics of the Commission and Union in general will suggest this is perhaps more evidence of Juncker and co. attempting to create a United States of Europe, where the desires of the member states are secondary to that of the ruling party.

Although many of these conspiracy theories are generally relegated to the comment boards of the Daily Mail, the Commission might well be heading towards a monumental conflict. Any rules which are written at European Commission level would potentially render national regulations redundant, a scenario those member states would not be happy with.

Considering the shoddy state of affairs Brexit has been creating, perhaps the European Commission should attempt to create an image of co-operation and collaboration. Antagonising leading member states is not a sensible idea, while a ‘state v. Europe’ conflict over security is not something which will reflect favourably on the agency.

Is politics anything more than arguing with shiny teeth?

Caught on the fringes of this conflict and the constant political seesawing are the telcos. Governments often tell the telco industry they are there to help and enable innovation, but it seems most of the time politicians are nothing but a hindrance attempting to score PR points by pandering to buzzwords and public opinion.

With governments aiming to ban Huawei and ZTE from connectivity plans, several telcos have stepped into the fray to give their own opinion. The message seems to be relatively consistent; heighten security requirements if you must but banning a vendor in an incredibly top-heavy market will not be a good idea.

“Clearly, if there were a complete ban at radio level, then it would be a huge issue for us, but it would be a huge issue for the whole European telco sector,” Vodafone CEO Nick Read said during the latest earnings call. “Huawei probably has 35% of the market share through the whole of Europe.”

Deutsche Telekom is another who foresees any Huawei ban being nothing but problematic. The German telco has previously stated a ban on Huawei would set its 5G ambitions back two years. Several telcos are considering scaling back work with Huawei, but this is perhaps directed more towards the uncertain political climate than any outright worry regarding the security credentials of Huawei equipment.

European telcos are not dependent on Huawei equipment to function effectively, but they are somewhat reliant on it. There aren’t enough suppliers, or good-enough suppliers, to strike Huawei out of the mix. US telcos are not having to deal with this headache as their operations adapted to a lack of Huawei and ZTE years ago, Europe is struggling with the political seesawing and story of uncertainty. Any business leader will tell you, a consolidated, cohesive and concrete regulatory landscape is critical for success.

Huawei stuck between a rock and a hard place

Huawei is a company which now has no control over its own fate.

With the US parading around political offices spreading its anti-China message without the burden of evidence, Huawei can’t do anything. Numerous governments are asking the vendor to prove its security credentials, but this will mean little is there is still suspicion. The case against Huawei is not based on evidence, but one which is based on a political and economic power struggle.

With a lack of evidence to substantiate any accusations against the firm, Huawei is being asked to do something which has been accepted as almost impossible; prove a negative. All of the questions and queries being directed at the firm have a single aim, to demonstrate there are no ties between the organization and the Chinese government, as well as its intelligence agencies.

It’s an almost impossible task, especially when you take into account the powerful influence of the US and the fact most of these decisions are being made on hearsay, circumstantial evidence and emotion. Whatever Huawei says, however much evidence is put on the table, we suspect opinions have already been made.

An issue of consistency and contradiction

In a single signature, the European Commission could throw the bloc into disarray. If the rumours evolve into reality, the European Commission could impose its own rules, contradicting the hopes and ambitions of some member states. Such a scenario would question how much control the member states have over their own society, undermining the concept of sovereignty.

Any fundamental changes would certainly have to be greenlit by all member states, but the European approach to China on the whole, and Huawei specifically, has not been entirely consistent. One question which might be worth considering is whether the European Commission is overstepping its remit.

We are almost certain Germany will not be happy being told to ban Huawei considering it seemingly wants to ensure Chinese participation in the upcoming 5G bonanza. Conflict is on the horizon, potentially pitting the European Commission against the biggest financial contributor to the bloc.

Signs not looking positive for Huawei and ZTE in Italy

Reports in local press suggest Italy could be the next country to bow to pressure from the US, banning Huawei and ZTE from contributing to communications infrastructure.

Although many telcos across the bloc have been taking precautionary measures against Huawei and ZTE, Telecom Italia (TIM) has previously stated it would continue to work with the vendors until the government told it otherwise. This is a market which looked relatively safe for the both parties, but things are starting to look quite wobbly.

This is a largely unconfirmed report however Italy’s La Stampa newspaper has claimed the Defense Ministry and Ministry of Foreign Affairs is ready to bring out the ‘Golder Powers’ to enforce the ban. The ‘Golden Powers’ effectively give the government the power to do whatever it wants, and in this case will be applied to contracts allowing the government and telcos to exit without financial penalties from the vendors.

Security concerns have of course been cited as the reasoning, with the paper suggesting strong pressure from the US government. Italy currently has several US military bases across the country.

The US government has been on somewhat of a European road-trip over the last month, with Foreign Office officials meeting with counterparts in European governments to pitch the case of paranoia. Although little concrete evidence has been presented to support the accusation companies like Huawei are supporting the Chinese government’s espionage campaigns, Europe does seem to be turning against the vendor.

Italy might be the next domino to fall, though it seems to be in a race with Poland. Following the arrest of a Huawei employee in recent weeks on the grounds of corporate espionage it does look like the vendor (or potentially Chinese companies on the whole) will be banned from the country. This would be a huge decision to make though as Poland acts as the HQ for Huawei’s Eastern European business, employing roughly 900 people.

While there are countries which are resisting the calls to ban Chinese involvement in 5G infrastructure, Germany is one drafting rules to heighten security requirements and Huawei has seemingly ticked all the boxes in the UK, the power of the US lobby is proving effective. Of course, these battles in the individual nations are only part of the problem, the US delegation has been whispering in the ear of the European Commission in recent weeks. We all know the Brussels brunch brigade love a free lunch…

GSMA set for crisis meeting at MWC over Huawei bans – report

GSMA Director General Mats Granryd has reportedly been writing to members to set up a meeting on the side-lines of Mobile World Congress to discuss what to do about further Huawei bans.

Huawei might be facing pressure from governments around the world, but if reports turn out to be true, diminished support from the operator industry’s own lobby group would be a significant dent in the confidence of the vendor. As Huawei is one of the firms which contribute financially to GSMA events with astronomically large stands and branding presence, it certainly would be a brave move from the association.

According to Reuters, Granryd has proposed the implications of further Huawei bans should be discussed as an item on the agenda at the next board meeting. The meeting will take place during Mobile World Congress in Barcelona at the end of the month.

The GSMA has been evasive in its response to the claims, confirming there will be a board meeting (there always is), though the agenda has not been set. The meeting will of course discuss all the most pressing points in the telco industry, of which the Huawei situation has to be one, but there is no confirmation of specifics.

That said, it would not be unusual for such a discussion to take place. The GSMA board is made up of representatives from 25 of the worlds largest operators, the majority of which must be twitchy about the relationship between Huawei and the Chinese government. The US, Japan and Australia have already banned Huawei from contributing to 5G infrastructure, while more are putting very stringent conditions around participation.

Germany is one which is considering upping the security requirements to protect itself, however, Chinese companies which meet the criteria would still be allowed to do business. However, these protections might well be superseded by broader sweeping rules from the European Commission banning any companies from ‘suspect’ countries from providing kit for critical infrastructure.

Another Reuters report quotes German leader Angela Merkel as calling for guarantees from Huawei that it won’t hand over data to the Chinese state. Everything about Huawei will make executives nervous at the moment. To make such vast investments the telcos need certainty and consistency with policies and regulations. Huawei is the polar opposite of these concepts.

The focal point of the anxiety is the National Intelligence Law, which kicked into effect during July 2017. The law gives Chinese intelligence agency an extraordinarily wide remit to monitor both domestic and international ‘threats’, as well as the power to coerce domestic Chinese companies to aide its ambitions.

Here are a couple of the relevant articles from the original text passed into law:

  • Article 12: National intelligence work institutions may, according to relevant state regulations, establish cooperative relationships with relevant individuals and organizations, and commission them to carry out related work.
  • Article 14: National intelligence work institutions, when carrying out intelligence work according to laws, may ask relevant institutions, organizations and citizens to provide necessary support, assistance and cooperation.

For such a complex and powerful document, the language and remit are worryingly broad and vague. The law itself only has 32 articles, compared to hundreds of articles and even more clauses of immensely precise text in other countries.

Considering the GSMA named Huawei as the winner of the associations ‘Outstanding Contribution to the Mobile Industry Award’ for 2018, everything that has taken place since the last event puts it in a difficult position. If the GSMA decides on a general policy of distancing its members from Huawei in anticipation of further bans, that would be a significant further blow to the Chinese vendor.

Vodafone puts the brakes on core Huawei spend

There aren’t many things that could rival Huawei’s headaches derived from government bans, but a snub from another one of the worlds’ largest telco groups might be up there.

With 275 million customers around the world, plus another 250-odd million through joint-ventures, this is one of the biggest telcos in the world. With networks spreading across Europe, Africa and Asia, the buying power and influence of Vodafone is considerable. This could a massive blow to the prospects of Huawei, both financially and in terms of credibility.

Speaking on the earnings call last week, CEO Nick Read stated the following:

“Specifically on Huawei, what I was really trying to make clear is, I think we need to move to more a fact-based conversation, I think at the moment is a simplistic political level and there is a big distinction between radio and core. We are predominately using Huawei in radio. We are continuing to use them in radio for 5G. However, in the core, we have put them on pause. They are not significant in the scale of our operations in the core and therefore it’s not a big financial implication.”

This is where Huawei finds itself in a difficult position. In numerous markets it is still fully free to compete for on-going 4G and up-coming 5G contracts, though these telcos will question the risk. Does the benefit of working with Huawei outweigh the risk? Why spend money on kit when you might have to strip it out in the near future?

As it stands, Vodafone does not have a huge level of exposure in terms of Huawei in the core, this is the case for most European telcos, though should the ban extend to radio or transmission this might become a significant issue. A full-scale ban is certainly not out of the question, very little is when you consider how aggressive and antagonistic the current political climate is, and this could send ripples throughout the ecosystem.

Vodafone confirmed to us Huawei equipment is in the core in some minor markets and Spain, and this is where the pause is relevant. Huawei will continue to supply Vodafone with equipment in other areas. In this sense, the fallout should be contained. Just to put things in perspective, Vodafone’s position is similar to that many telcos around Europe are taking.

However, as Read notes, should a ban extend to other areas of the network it could proves to be a sticky situation for everyone involved.

“Clearly, if there was a complete ban at the radio level then it would be a huge issue for us, but it would be a huge issue for the whole European telco sector,” said Read. “And what, Huawei have probably, what 35% market share through the whole of Europe, so I think that is a totally different consideration, but we now need to make a lot more fact-based conversation.”

The point which Read is making is a logical and incredibly important one. Too many people are getting swept up in the political rhetoric and not looking at the facts which are on the table. The negativity surrounding Huawei is starting to snowball, but little (if any) hard evidence has been put on the table. People are forgetting about the facts, instead contributing to the momentum.

What businesses like Vodafone need is certainty. The political see-sawing with Huawei is not providing much confidence for the telco to appropriately invest in networks. If this has a negative impact on the performance of the networks in the future, the politicians will be the first to point the finger of accusation at the infrastructure owners. The perfect storm of disaster and disorganisation is started to develop.

Huawei facing US trade secret theft indictment and ZTE-style ban

The US Department of Justice is rumoured to be pursuing charges relating to trade secrets theft against Huawei, while four politicians have tabled a bill for a ban similar to what ZTE faced last year.

Leaving the Department of Justice for the moment, a bi-partisan collection of politicians have tabled the so-called ‘Telecommunications Denial Order Enforcement Act’, a proposed bill which would compel the White House to ban Huawei from using US components and IP within its supply chain. The ban would be the same punishment ZTE faced early last year.

“Huawei and ZTE are two sides of the same coin,” said Democratic Senator Chris Van Hollen. “Both companies have repeatedly violated US laws, represent a significant risk to American national security interests, and need to be held accountable. Moving forward, we must combat China’s theft of advanced US technology and their brazen violation of US law.”

Aside from Van Hollen, Republican Senator Tom Cotton, as well as Representatives Mike Gallagher (Republican) and Ruben Gallego (Democrat) are also supporting the proposed bill. This should hardly come as a surprise as the ZTE ban was imposed for violating the exact same trade sanctions which Huawei has allegedly ignored.

The saga surrounding the ZTE ban was short-lived, incredibly volatile and almost fatal. After being found violating trade sanctions, US Department of Commerce’s Bureau of Industry and Security (BIS) imposed a denial of export privileges order against the firm, denying it access to any US suppliers. President Trump stepped in to save the firm, which looked doomed as a result of the ban, before Congress blocked his efforts. Eventually a resolution was reached, though ZTE has been skating on thin ice since.

If precedent is anything to go by, Huawei should face the same punishment should it be found guilty of the same activities. Last month, Huawei CFO Meng Wanzhou was arrested in Canada, accused of violating the same trade sanctions with Iran using a suspect firm known as Skycom. Meng has been released on bail and awaits trial, though it appears the four politicians are already presuming guilt. Or maybe they are just being prepared.

Perhaps this is a sign the politicians do not believe President Trump is committed to precedent and appropriate action. The actions against ZTE smelt suspiciously like one of Trump’s strategic moves in the on-going trade war with China, though perhaps he did not realise he would have to do the same 12 months later, potentially antagonising the Chinese government with a move which is not in the grand plan.

The politicians might be tabling this bill to make sure Trump can’t find a reason not to ban Huawei. Following the arrest, Trump seemed to suggest in an interview with Reuters that he would be willing to make the Canadian charges go away if it would help him the US in its dispute with China.

“If I think it’s good for the country, if I think it’s good for what will be certainly the largest trade deal ever made – which is a very important thing – what’s good for national security – I would certainly intervene if I thought it was necessary,” Trump stated.

Not only does this completely undermine the standing of the Canadian judicial system, but also suggests Trump is willing to bend (or break) rules to bring the Chinese government to its knees. Perhaps Congress does need to be proactive to make sure the President follows the rules, taking appropriate action instead of whatever ludicrous idea floats in the breadth between his ears.

What is worth noting is the stance of Huawei executives. Clearly, they do not agree with anything which is going on, but both Rotating Chairman Guo Ping and Rotating CEO Ken Hu put across messages stating the resilience of the business. Ping and Hu suggested a ban would not impact the Huawei supply chain in the same manner as it did ZTE.

Heading back to the Department of Justice, the Wall Street Journal has reported the agency is pursing charges against Huawei concerning theft of trade secrets.

An indictment should be heading over to the Huawei offices in the near future, focusing on allegations the firm stole robotic mobile-testing technology from T-Mobile. The technology, known as Tappy, mimics human fingers and is used to test smartphones. A civil case between T-Mobile and Huawei over the technology was filed in 2014, though after a criminal investigation the Department of Justice feels it is appropriate to step in and raise criminal charges.

This case is a separate concern from all the other chaos which has surrounded the firm in recent months, though it will be just as concerning as the punishments can be incredibly severe.

The primary federal law that prohibits trade secret theft is the Economic Espionage Act of 1996, which allows the US the U.S. Attorney General to prosecute a person, organization, or company that intentionally steals, copies, or receives trade secrets. If the case if brought against an individual, the punishment could be as much as 10 years in prison or a $500,000 fine. However, we suspect the government would want to punish the firm not an individual, as Huawei would simply claim that person did not represent the company culture, in-line with White House aggression against China.

If a conviction is made against a company the fine can be increased to $5 million. However, if the Attorney General can prove the theft was made on behalf of a foreign government, this would be considered the silver bullet for the White House, corporate fines can be doubled, imprisonment could be 15 years and proceeds derived from the theft can be seized.

In short, Huawei has found itself in another uncomfortable position in the US. It does not appear 2019 is going to be any better than 2018 on the US side of the pond for Huawei.

US starts whispering to Germany about China ban

The anti-China road-trip has finally made it to Europe as representatives of the US government have met with German counterparts to argue the case to ban Chinese vendors from the 5G deployment.

The Trump administration has quickly been working away around the world to spread anti-China propaganda, and it has been successful. Australia was the first domino to fall, but New Zealand has seemingly followed, as has Japan. South Korea will evade China’s grasp for other reasons, and it looks like Taiwan’s public sector is off limits as well. Now the parade has entered Europe and Germany.

According to Bloomberg, a US delegation has been meeting with officials from the Foreign Ministry to discuss a ban. These talks will of course be very hushed, but whether any concrete evidence is going to be presented remains to be seen. Earlier this week, Germany stepped forward and said it would need to see evidence before any actions would be taken against China.

“For such serious decisions like a ban, you need proof,” said Arne Schoenbohm, President of Germany’s Federal Office for Information Security (BSI).

This is the big question. Has the Trump administration masterminded a campaign of hate in the interest of national security, or does it believe crippling the prospects of Huawei and ZTE will protect the US position of dominance as the 5G dawn breaks. We are slightly pessimistic about the intentions of the Oval Office and believe the national security element is a thinly veiled disguise to push China’s tech leaderships challenge off-course.

What is worth noting is this meeting has taken almost immediately after Deutsche Telekom’s decision to re-examine its use of Huawei equipment in its network. DT has gone big on Huawei in previous years, therefore any ban against Chinese companies could have potentially impacted the speed of 5G rollout across Germany, perhaps explaining why the government is slightly resistant to joining the anti-China gang. That said, with DT potentially shunning Huawei in pursuit of White House favour (the Sprint/T-Mobile merger is reaching a critical point), the pressure might be lifted from the government.

This is also a government which might be swayed to the anti-China gang under the right conditions. The government has been discussing new legislation which would impact the role of Chinese service providers in the country, while reports of someone tapping Chancellor Angela Merkel in by-gone years are still fresh. Espionage is a sensitive subject.

While we will not defend the Chinese government, and we strongly suspect there are some nefarious activities going on behind the Great Firewall to extend the government’s eyes internationally, no proof has been tabled. The countries which are condemning China are acting without proof and assuming guilt without trial, betraying one of the base foundations of a democratic society; innocent until proven guilty.

In fact, ‘innocent until proven guilty’ it is an international human right under the UN’s Universal Declaration of Human Rights, Article 11. Admittedly this is directed towards criminal law, however the same principles apply. If there is evidence, this needs to be presented to the world. If there is no evidence, some needs to be found. We suspect the US government does not have the evidence yet, but it is out there somewhere.

Banning countries and presuming guilt on suspicions and paranoia is a dangerous path to walk, and you have to question whether we are any better than the freedom-crushing Chinese government. Supposed Democratic nations are betraying their own values in pursuit of punishing the ‘enemy’; two wrongs do not make a right.

Germany takes an innocent until proven guilty approach to Huawei

Germany’s Federal Office for Information Security (BSI) has made a bold statement, bucking global trends, saying it will not ban Huawei from its borders unless someone can table some evidence of espionage.

With the world turning against Huawei, and China on the whole for that matter, the statement is surprising, unsurprising and somewhat reassuring as well.

Western governments tend to follow each other in terms of regulation and legislation, therefore this stance from Germany might sound surprising. However, when you consider German telcos are somewhat dependent on Huawei kit, an explanation might be found. On the reassuring side, we appreciate this might be somewhat of a controversial statement, though it does make us feel a little bit better that at least one country is taking the ‘innocent until proven guilty’ approach to judgement.

This is not to say China is not up to no good, making use of its influence over industry to forward its own nefarious agenda. We suspect there are some very disturbing activities taking place in Beijing, which would validate the anti-China sentiment, but taking the guilty-first, find evidence later approach as many governments seem to be, undermines the reasoned foundations on which these countries are built. We’re yet to see any concrete evidence which justifies the reprehensible claims being made against Huawei.

“For such serious decisions like a ban, you need proof,” Arne Schoenbohm, President of BSI, told German daily Spiegel.

Having just opened a new research centre in Bonn, Germany looks to be a safe market for the battered and bruised Huawei. This lab will serve a number of different purposes in the country, including due diligence. Customers, or potential customers, will be able to check the source code of various products, just to make sure all is above board.

As it stands, Schoenbohm and his team are yet to see any credible evidence which would suggest working with Huawei or other Chinese companies would present a risk to industry or Germany as a nation. Until this evidence has been presented, Huawei will be allowed to operate as it has for years. What impact this statement will have on other countries assessing the risk of Chinese vendors remains to be seen.

The US is still taking the stick approach to dealing with China and the threat it poses to the US dominance in the global economy. It isn’t difficult to imagine US diplomats and representatives leaning in to whisper in the ears of powerful people conveying a message of fear and aggression. Numerous countries have already handed out their own bans, Japan and Australia are two who have made it official through legislation, though there does seem to be numerous other governments heading the same direction.

What is worth noting is that just because evidence has not been presented to the public does not mean it is there. It might of course be classified, though this would surely have been leaked by now, or it might not have been found yet. That said, Germany is taking the right approach to the saga. It is relying on the values which have served democratic nations well for centuries; innocent until proven guilty.

New Zealand joins the march against Huawei

Kiwi telco Spark has had an application to incorporate Huawei’s radio access network (RAN) equipment in its 5G infrastructure plans slapped down over security concerns.

The Government Communications Security Bureau (GCSB) has quoted the Telecommunications Interception Capability and Security Act (TICSA) as the grounds for rejecting Spark’s application to include Huawei equipment in its 5G infrastructure, suggesting this might be another country which will be shutting the door completely to Huawei.

“The Director-General has informed Spark today that he considers Spark’s proposal to use Huawei 5G equipment in Spark’s planned 5G RAN would, if implemented, raise significant national security risks,” Spark said in a statement. “Spark has not yet had an opportunity to review the detailed reasoning behind the Director-General’s decision. Following our review, Spark will consider what further steps, if any, it will take.”

“As per Spark New Zealand’s statement today, I can confirm the GCSB under its TICSA responsibilities, has recently undertaken an assessment of a notification from Spark,” said Director-General of GCSB, Andrew Hampton. “I have informed Spark that a significant network security risk was identified. As there is an ongoing regulatory process I will not be commenting further at this stage. The GCSB treats all notifications it receives as commercially sensitive.”

Details on the GCSB’s specific reasoning is absent for the moment, though this will emerge in the coming weeks. Either Spark will make a fuss over the situation, Huawei will hit back or someone will leak the documents on the internet. It’ll only be a matter of time, though Spark has reiterated the decision will not impact its plans to launch 5G services in New Zealand by mid-2020.

Unfortunately for Huawei, this looks like it will be another country where it will be banned from the 5G bonanza.

The anti-China rhetoric was of course started in the US, where both Huawei and ZTE has been effectively banned from any meaningful contracts, though Australia quickly followed suit. South Korea was the next domino to fall, though the operators simply omitted Huawei from the preferred suppliers list as opposed to a ban. New Zealand is the next country to join, though this is unlikely to be the last story we write of this nature.

With trade discussions between the US and China continuing, President Trump has been ramping up the pressure on his counterpart in Beijing. Not only have more tariffs been threatened, with potential collateral damage to Apple, it has been rumoured Trump has been whispering in the ears of allies, attempting to convince them to ban Huawei and ZTE from operating within their borders. It seems the repetitive whispers managed to convince the Kiwis.

There are of course a few countries which will resist the calls to ban Huawei, the UK is an example which seems overly invested in the vendor and would have too much to lose through any ban, though the dominos are lined up and beginning to fall. The political and economic power of the US does make it an influential voice in the global community, which will certainly be a worry for the Chinese vendor. On the other side, Nokia, Ericsson and Samsung will be pleased with the way the conversation is developing.