Yesterday, Donald Trump signed an executive order that bars the government from doing business from telecom companies considered national security threats. To no one’s great surprise, the Commerce Department quickly added Chinese telecom giant Huawei to its new “entity list” of banned companies. That move left European allies and trading partners in a tough position, CNN reported last night:
The US claims Huawei, one of China’s most important companies, poses a spying risk to Western technology infrastructure. The latest move against the firm comes amid a worsening trade war between Beijing and Washington, after talks expected to bring a breakthrough fell apart, resulting in billions of dollars in further tariffs from both sides.
While some US allies — notably Australia and New Zealand — have followed Trump’s lead on Huawei, others have been more reticent. Europe in particular is split over whether to ban the company, a market leader on 5G technology which is expected to be the lifeblood of the new economy.
The Huawei issue cuts to the heart of tensions between security and economic interests when it comes to China and Chinese influence. While many countries around the world share Washington’s suspicion — even hostility — towards Beijing, they are unwilling to take the economic hit that openly standing apart from China would entail.
That certainly provides some context to the issue, but it doesn’t address the core point. Is Huawei a security risk that enables Beijing to spy and to steal technology? Reuters passes along a report this morning from Dutch newspaper De Volksrant that The Netherlands’ intelligence service has discovered a “backdoor” in Huawei’s networking technology that has penetrated a telecom in the country already:
Chinese telecoms equipment maker Huawei has a hidden “backdoor” on the network of a major Dutch telecoms firm, making it possible to access customer data, newspaper De Volkskrant said on Thursday, citing unidentified intelligence sources.
The newspaper said Dutch intelligence agency AIVD was looking into whether the situation had enabled spying by the Chinese government. …
In April, the agency said it was “undesirable for the Netherlands … to depend on the hardware or software of companies from countries running active cyber programs against Dutch interests,” naming China and Russia.
Of the three large Dutch telecommunications companies, KPN and VodafoneZiggo declined to comment on the report, while T-Mobile/Tele2 said it was not aware of any AIVD investigation.
Reuters reports on its own that a former British spymaster also confirms Trump’s assessment of Huawei. Former MI-6 chief Richard Dearlove wrote in a report released today that the UK needs to rethink its decision to partner with Huawei even in the limited manner proposed by Theresa May’s government. It’s less important to get to 5G quickly than it is to make sure that the UK gets there securely, Dearlove warned:
“I very much hope there is time for the UK government, and the probability as I write of a new prime minister, to reconsider the Huawei decision,” said Richard Dearlove, who was chief of the Secret Intelligence Service from 1996 to 2004.
“The ability to control communications and the data that flows through its channels will be the route to exercise power over societies and other nations,” Dearlove wrote in the foreword to a report on Huawei by the Henry Jackson Society. …
Dearlove, who spent 38 years in British intelligence, said it was deeply worrying that the British government “appears to have decided to place the development of some its most sensitive critical infrastructure” in the hands of a Chinese company.
“No part of the Communist Chinese state is ultimately able to operate free of the control exercised by its Communist Party leadership,” said Dearlove. “We should also not be influenced by the threat of the economic cost of either delaying 5G or having to settle for a less capable and more expensive provider,” he said.
Dearlove’s warning appears more of a risk assessment, while the AIVD report looks more like a smoking gun. Either way, the risk is real enough, especially with a government in Beijing that encourages theft of intellectual property as a strategy for modernization. The efforts to sideline Huawei could be part of Trump’s trade-war strategy, with a concession to be made later, but it looks more serious than that now. The Trump strategy might be to use Huawei to permanently shift trade to prevent and punish that strategy regardless of whether tariffs come off or not.
Don’t forget about the extradition fight over Huawei CFO Meng Wanzhou in Canada either. Meng was wanted in connection to Huawei’s alleged violations of sanctions on Iran and has been kept in Canada since December while she fights extradition to the US. China hasn’t forgotten about it, which is why they charged two Canadian businessmen this morning for espionage:
China on Thursday formally leveled grave espionage charges against two detained Canadians, raising the prospect of harsh punishment for the men caught in a spiraling three-way feud over the Trump administration’s treatment of the technology company Huawei.
China’s Foreign Ministry confirmed that prosecutors charged Michael Kovrig with “gathering state secrets and intelligence for overseas forces” and Michael Spavor with “stealing and providing state secrets to overseas forces.” The men were charged “recently,” ministry spokesman Lu Kang said without disclosing more specific timing.
After holding Kovrig and Spavor in undisclosed locations since December, China confirmed the formal charges just as the U.S. government all but banned American companies from doing business with Chinese tech giant Huawei, a move that could badly cripple a firm considered by China to be a national symbol of industrial prowess.
In the last six months, the timing of Chinese action against Canadian citizens has reinforced suspicions that Beijing is targeting a close American ally in retaliation for what China says is an unfair American effort to hobble Huawei and jail one of its executives — a campaign that it says is aided and abetted by the Canadian government.
With Huawei getting added to the “entity list” anyway, the US might not need to extradite Meng, or at least not bad enough to keep Canada enmeshed in a vendetta. With more exposure of Huawei’s operating practices coming from non-US sources, the company’s value to Beijing will decline rapidly. Western nations will need to keep their eyes peeled for the next Huawei now, too.