US Multi-Pronged Efforts to Persuade European Allies to Stay Away from Huawei 5G Tech Could Backfire

Concerns about Huawei

The rise of Huawei to global prominence, considered a major success story in China, has not come without controversy. The company has a documented history of industrial espionage, and benefits significantly from close connections to the Chinese government, which provides various subsidies generally unavailable to Huawei's foreign competitors. There has also long been suspicion, bordering on certainty in some sectors, that the company cooperates with Chinese intelligence services.

"I mean they are clearly malicious actors — I don't think there's any doubt about this," said Trae Stephens, a former U.S. intelligence officer, and a founder of Anduril Industries, which sells technology to the U.S. departments of Defense and Homeland Security. "The evidence has been presented over and over and over again. The intelligence community doesn't make spurious accusations that have no backing."

The certainty with which current and former U.S. officials accuse Huawei of being a pawn of Beijing makes the decision to wait until the last minute to try to block the firm from the 5G rollout hard to understand — especially given how long the company has been on the intelligence community's radar.

At least as early as the first years of the Obama administration, officials were expressing concern about allowing Huawei to provide sensitive infrastructure to the U.S. telecommunications industry. By 2012, that had hardened into specific warnings.

The House Permanent Select Committee on Intelligence in 2012 completed a year-long investigation into Huawei and ZTE, a smaller Chinese telecom firm, and left no doubt about its members concerns. Among other things, the investigation concluded that "the risks associated with Huawei's and ZTE's provision of equipment to U.S. critical infrastructure could undermine core U.S. national-security interests."

However, in the intervening years, one thing the U.S. never did was present clear and convincing evidence that Huawei was conspiring with the Chinese government in terms of ongoing espionage.

Even after the Chinese legislature passed a new law requiring companies operating in the country to cooperate, if asked, with intelligence-collecting agencies, warnings from the U.S. were all prospective — claims about what Huawei might do in the future, rather than evidence of actual espionage.

Fractured 5G future

While the late push by the U.S. to keep Huawei out of the rollout of 5G worldwide may have failed, years of warnings about doing business with the company have not gone unheeded in the United States. While Huawei equipment is not officially banned in the U.S., the 2012 report from the House Intelligence committee got the attention of domestic carriers, and Huawei has been all but shut out of the market.

A law signed by President Donald Trump last year blocking government agencies from purchasing any equipment from the company only made it more difficult for the firm to play in the U.S. market.

However, even without access to U.S. markets, Huawei remains the largest provider of telecommunications infrastructure equipment in the world. It also spends lavishly on research and development: It's R&D budget was nearly $14 billion in 2017, more than twice as much as either of the two other major 5G players, Ericsson and Nokia, spent that year.

The combination of these two factors means that Huawei products are not only being used worldwide, but that they are often the most advanced and innovative equipment available.

Huawei, according to Paul Triolo of the Eurasia Group, is the "most competitive, lowest-cost, high performance, high-service and, critically, high-innovation" company in the mobile telecommunications infrastructure market.

This has some experts concerned about a future in which the U.S. walls itself off from the technology that the rest of the world is adopting.

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Lester Ross, the partner-in-charge of the WilmerHale law firm's Beijing office, said he believes the U.S. effort to stymie Huawei in Europe and at home will only "intensify" the company's drive to expand to other countries around the world.

"So if the United States and perhaps a few other countries are just left then to be islands in an ocean of Chinese-led telecommunications infrastructure, what implications does that have for the world?" he asked. (VOA)