A Huawei Ban Makes Little Sense for Europe

(Bloomberg Opinion) -- U.S. Ambassador to the European Union Gordon Sondland has called on European countries to ban Chinese telecommunications equipment manufacturers such as Huawei Technologies Co. from their networks.

Germany, for one, is, however, unlikely to take his advice, and other EU member states will probably follow the example of the continent’s biggest telecom equipment market.

“This isn’t a decision about price or quality,” Sondland told a conference in Brussels. “This is a decision about whether or not to allow malign actors take control of your national telecommunications system.”

But the emerging outlines of Germany’s future policy toward Chinese manufacturers suggest Huawei will escape an outright ban on its 5G equipment like the one Australia has introduced.

According to a report in Handelsblatt, Germany’s top business daily, government officials met with the top telecom operators earlier this week and decided to toughen the security requirements for network equipment.

Informally, officials have told the telecoms operators that the use of Huawei and other Chinese equipment in their core networks, which account for about 20 percent of their equipment spending, is undesirable. One operator, Telefonica, has promised eventually to get rid of Huawei from its core network.

But instead of imposing a direct ban, the government will only require stricter testing, including the demand to submit source code for inspection. 

The industry has lobbied for this. Deutsche Telekom AG, which has a long-standing partnership with Huawei in developing 5G technology, has warned that if Germany banned the Chinese firm from new generation networks, it risked delaying its 5G rollout and falling behind the U.S. and China – a painful prospect for the government, which has sworn to make digitalization of the economy a policy priority.

Huawei, for its part, has prepared for tougher controls as the U.S. stepped up its pressure; when the company opened a security lab in Bonn late last year, Arne Schoenbohm, head of the Federal Information Security Office, attended the launch, saying the lab would deepen cooperation between the Chinese firm and his agency.

More rigorous testing is a fig leaf, though. In his 2018 book, “The Huawei and Snowden Questions,” Norwegian security researcher Olav Lysne argued that it isn’t feasible to exclude the existence of backdoors and implants. Nor can an equipment manufacturer prove conclusively that its products are backdoor-free. In the end, it is always a matter of trust. 

There are, however, good reasons why telecom operators should get over their mistrust and go on buying equipment from Huawei, whose 28 percent share of the market makes it the global leader.

The number one reason is that, despite numerous U.S. warnings since 2012, Chinese intelligence services have never been caught spying with the help of back doors or implants in Chinese-made gear. And if they had, most other equipment manufacturers, including big European players Nokia Oyj and Ericsson AB and U.S. ones such as Cisco Systems Inc., would be suspect, too. They have joint ventures in the country or use Chinese-manufactured components; people working on their products in China are vulnerable to recruitment by the country’s security services. 

Sondland and other U.S. officials pressing Europe to exclude Huawei say Chinese law requires companies to cooperate with the intelligence services; Huawei has always denied that includes building in back doors.

But this kind of practice exists in the U.S., too; there, carriers and manufacturers are required by the 1994 Communications Assistance for Law Enforcement Act to enable federal agencies to access traffic – and National Security Agency leaker Edward Snowden has revealed the NSA’s use of U.S.-made telecom equipment for spying.

There is a degree of cynicism in Germany about the U.S.’s motives in attacking Huawei in the midst of a trade war with China. The two U.S. indictments of the Chinese firm deal with, to European eyes, less serious charges. It’s hard for Europeans heavily invested in partnerships with Huawei to get excited about the alleged theft of a mobile phone testing device or, especially, U.S. sanctions violations.

When it comes to 5G deployment, Germany and the U.S. are competitors, and they both compete against China. So the approach that appears to be prevailing in Germany is to register awareness of the threats, step up testing and make sure no major network depends entirely on one equipment supplier – but refrain from outright bans and keep the market open so operators can better control their costs by maintaining competition between suppliers. Those European operators, like France’s Orange, that have promised to shut out Huawei typically have strong partnerships with rival manufacturers – Nokia in the French company’s case.

The danger of Chinese spying is there, but Europe’s need to push forward with mobile technology development outweighs the threat.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

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