Huawei’s terrible week

Tech 30-5-2020 TechCrunch 34

When news broke Friday morning that Britain is looking to propose an alliance of democracies to build a 5G alternative to Huawei, you might think that that was the worst thing to happen to the controversial Chinese telecoms giant this week. In fact, it just caps off a series of fast-moving events that surely makes this one of the most decisive weeks yet in the global fight over next-generation 5G networks.

So let’s go back a step. After all, readers who have been following the Huawei debate might recall that not long ago the UK had controversially agreed to allow Huawei to attain up to 35% market share in “non-core areas” of its 5G network. So what was behind London’s sudden about-face?

The answer is politics. There was always a loud group of China-skeptic dissenters in Parliament, but anger over China’s handling of the novel coronavirus pandemic pushed more MPs from Prime Minister Boris Johnson’s own Conservative Party into the anti-Huawei camp and made the government’s position untenable. Rather than face a large parliamentary rebellion and possible legislative defeat later this year, Johnson instead gave in and announced plans earlier this week to phase out Huawei’s participation in Britain’s 5G network by 2023.

UK government reverses course on Huawei’s involvement in 5G networks

Now, Johnson seems to be going a step further. Reports indicate that he is seeking to organize fellow G7 countries Canada, France, Germany, Japan, and the United States, as well as Australia, South Korea, and India on the issue. Skeptics of the U.S. campaign against Huawei have long lamented that Washington is asking governments to oppose Huawei without proposing a viable alternative. London’s so-called D10 alliance is the first attempt to explicitly try to answer that question.

Meanwhile on the legal front, British Columbia’s Supreme Court ruled on Wednesday that proceedings to extradite Huawei CFO Meng Wanzhou to the United States could go ahead. Instead of being released and on her way back to China, Meng, who is the daughter of Huawei founder Ren Zhengfei, is now one step closer to facing trial in the U.S. on fraud charges relating to Huawei’s circumvention of U.S. sanctions on Iran.

Canada court finds against Huawei CFO Meng Wanzhou on double criminality; extradition trial to continue

Huawei is used to geopolitical maneuvering, of course. After all, its plans to build an underseas cable last year connecting Papua New Guinea and the Solomon Islands with high speed internet were preempted when Australia, wary of growing Chinese influence in its South Pacific backyard, offered to pay for it instead.

When the Chinese ambassador to Denmark threatened to scuttle a trade deal with the Faroe Islands, a semi-autonomous Danish region, if Denmark didn’t choose it for its 5G network, Copenhagen responded by issuing tough new security requirements that Huawei has said would give it no choice but to leave the country entirely. And as I wrote in March, the question of Huawei has been increasingly debated at the highest levels of government around the world.

How Huawei is dividing Western nations

Yet, this week does seem to mark a dramatic turning point in the global 5G battle.

First, even limited access to the UK market had been a coup for Huawei. With its well-regarded Huawei Cyber Security Evaluation Centre, Britain’s seal of approval was a valuable signal to other governments on the fence about whether or not Huawei is worth the security risk. For Britain to not only reverse itself but then take the lead on coordinating an international alternative just a few days later marks a remarkable course correction.

A former British diplomat told me in March that the West’s lack of cooperation on the issue was “a striking failure” of political coordination. That’s certainly not the case anymore – and as other NATO, EU, and Five Eye intelligence allies consider whether or not to permit Huawei themselves, the existence of a democratic anti-Huawei consortium (should it truly develop) would make it that much harder for them to justify going against the U.S.

Second, the Meng case might be soundly based in international law, but to paraphrase Clausewitz: it’s international relations by other means. After all, U.S. investigators, concerned that Huawei was acting as an arm of the Chinese government, had been looking for an excuse to file charges against the company for years. Fittingly enough, the charges against Meng were linked to an unrelated geopolitical issue: violating U.S. sanctions on Iran.

A defeat for the U.S. in the British Columbia Supreme Court would have struck a blow to the U.S. government’s attempts to extend its legal reach around the globe. Instead, its victory solidifies an already escalating global sanctions regime that is proving devastating for any company caught in its dragnet. As if the Meng case weren’t enough, TSMC, one of the world’s largest semiconductors contractors, also announced that it would no longer sell to Huawei in order to comply with new US export controls.

TSMC reportedly stops taking orders from Huawei after new U.S. export controls

The question is thus: if this does mark a turning point in the US-China global tech rivalry, what will the next stage look like?

Given its history, there’s not much suspense in what the Trump administration will likely do next. Certainly it will keep pursuing Huawei’s Meng in court. And count on a new round of pressure in Europe as the EU deadline for members to stake out their 5G security protocols fast approaches this summer. But America’s 5G diplomatic push has been seen as tone deaf in European capitals – now that Britain is onside, Washington would be smart to let London take the lead.

How China responds is the more important question. Its continued strong and vocal support for Huawei should be assumed, but what form will it take? Huawei’s conciliatory approach in the UK has now clearly failed. But so too did its attempts to strong-arm Denmark. Will the gloves now come off? Or will Beijing be forced to distance itself from its national champion for Huawei’s own good?

Huawei has tried to have it both ways, benefiting from the support it draws from the Chinese government while assuring foreign governments of its independence at the same time. But as global public opinion harden against Beijing in the wake of the COVID-19 pandemic and Western nations take stronger actions against his company, Huawei CEO Ren might consider just how hazardous being yoked to a superpower can be.


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