Former IFS officer Smita Purushottam's letter doesn't mention Huawei by name, but hits out at Chinese telecom equipment manufacturers | Photo: Bloomberg
Representational image | Photo: Bloomberg
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London/Paris: Huawei Technologies Co. has gone from a crucial component of U.K. and French mobile networks to potential outcast, after resistance and compromises began to give way to a relentless White House campaign.

Both countries indicated this week that they’re taking steps to reduce their reliance on the Chinese company — with the U.K. considering a phase out of Huawei’s role set to begin as soon as this year and French cybersecurity agency Anssi imposing a waiver system that’s likely to severely limit its use.

A year ago, things were looking far more optimistic for the Chinese company. Britain’s intelligence and security committee said last July that barring Huawei would make networks less resilient to malicious attacks. The committee’s reasoning was that it would reduce competition and leave the U.K. dependent on just two suppliers — Nokia Oyj and Ericsson AB.

U.K. Prime Minister Boris Johnson attempted a compromise in January, allowing carriers to use Huawei equipment to build out their 5G systems as long as they capped it at 35% and agreed not to use it in sensitive network cores.

Also read: UK to start phasing out of Huawei’s 5G equipment as soon as this year

But pressure from the U.S. has only increased and European governments and carriers have found themselves having to choose sides between two world powers. President Donald Trump’s administration has piled on sanctions, making it more and more difficult for European carriers to access products from the world’s biggest maker of telecommunications equipment.

“Huawei’s R&D spending growth has been accelerating recently,” said Neil Campling, an analyst at Mirabaud Securities. “Their advances relative to the Western peers are significant, and so the U.S. is using everything it can in its political power — whether that’s trade sanctions, official agreements, unofficial agreements – to try and slow China’s advances.”

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Huawei Vice President Victor Zhang urged the U.K. to assess the long-term impact of U.S. sanctions before deciding to exclude the company’s products.

“It is too early to assess their long-term impact. This means it is also premature to make a considered judgment on our ability to deliver next-generation connectivity across the U.K.,” Zhang said in a call with reporters on Wednesday. “Now is not the time to be hasty in making such a critical decision about Huawei.”

Huawei has consistently denied that it’s a security risk and that it operates independently of the Chinese government. Huawei spokesman Paul Harrison argued on Twitter that the U.S. is unfairly dictating U.K. policy with its sanctions and that they threaten the U.K.’s 5G rollout.

Like the U.K. France tried to find a middle ground. In May 2019, Macron told Bloomberg Television he didn’t intend to capitulate to U.S. pressure, though the government had already restricted the amount and location of Huawei equipment used in its networks. As wireless carriers prepare to roll out 5G, the country will likely add additional restrictions on Huawei’s access.

The Trump administration, which wanted Europe to ban Huawei outright because of concerns that the Shenzhen-based company’s equipment was vulnerable to infiltration by Chinese spies, hit back.

Trump berated Johnson in a call after the U.K.’s announcement, a person familiar with the matter said at the time, and Vice President Mike Pence didn’t rule out that the clash could affect trade talks for post-Brexit Britain in a CNBC interview in February.

Even U.S. House Speaker Nancy Pelosi weighed in, warning European allies in a security conference in Munich that month that it would be dangerous to rely on the company. And U.S. ambassador Richard Grenell tweeted that nations using an “untrustworthy vendor” for 5G risked intelligence sharing.

Now France has effectively shut out Huawei in all but name, by only allowing time-limited authorizations of between three and eight years for local telecoms providers to use Huawei equipment. The move poses a technical challenge for companies like Bouygues and SFR, which will now be forced to think twice before slotting Huawei 5G kit on top of their 4G systems if they face the risk of dismantling Chinese equipment in the near future.

There are still European markets to be fought over. The German government is struggling to settle on rules that would require security certification for vendors in the 5G network. Earlier senior Chinese officials highlighted German car companies – the crown jewel of Europe’s biggest economy – as a potential target for retaliation if Huawei is banned from their markets.

The fatal blow for Huawei’s relationship with Europe may have come in May when the U.S. banned the company from sourcing microchips that use American technology.

The prevalence of chips that are made with or incorporate U.S. technology caused New Street Research analyst Pierre Ferragu to declare in May that “Huawei has 12 months left to live.”

Those sanctions were so severe they prompted British security services to re-open their review of how secure and sustainable a supplier Huawei could be in national networks. That review has now been completed and sent to U.K. digital and culture secretary Oliver Dowden. He said they were “likely to have an impact on the viability of Huawei as a provider” and more details on the U.K.’s next steps will come soon. –Bloomberg

Also read: Modi govt seeks to dissuade mobile operators from buying equipment from China’s Huawei, ZTE


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