Huawei counts on influential friends to remain European 5G force

Jacek Tomczak is just the latest European politician accused of being in Huawei's pocket. The Polish deputy minister for development resigned his post last week as various charges of wrongdoing swirled around him. Among them is a report he lobbied enthusiastically on behalf of Huawei, the Chinese network equipment and smartphone maker that has been subject to US sanctions and European resistance for several years. Elsewhere in the region, Huawei has reportedly been able to recruit numerous other high-profile lobbyists and supporters as it fights restrictions.

In France, they allegedly include Lilla Merabet, a former Alsatian councilor reportedly under investigation for receiving payments from Huawei via a consultancy she founded. According to a separate report, France has also launched a judicial investigation into the activities of Jean-Louis Borloo, a former minister who served in the governments of both Jacques Chirac and Nicolas Sarkozy. Like Merabet, Borloo is suspected by investigators of taking money from the Chinese vendor to press its case, says the report.

There are similar stories throughout Europe, some dating back years. Even the family members of politicians are said to have been approached by Huawei. In 2019, long before the latest developments involving Tomczak, it was reported to have hired Xukun Ji, the Chinese wife of former Danish foreign minister Per Stig Møller, to defend its interests in Denmark. Lord John Browne, a British peer and former CEO of oil giant BP, was a UK recruit, quitting that role in July 2020, shortly before a government ban was imposed.

Lobbying for corporate interests is hardly a new political phenomenon; nor is it limited to representing Chinese companies. In the US, the world's best-known brands have for years employed people whose job is effectively to smooth talk political decision makers. Corporate donations to political parties are commonplace, and not just in North America.

Risky business

Yet Huawei's activities are happening in a region where it has been labeled a "high-risk vendor," a threat to national security. Experts and government agencies fear its 5G products may be a conduit for Chinese government spies, allowing them to eavesdrop on important communications and obtain sensitive data. At the behest of its government, Huawei could withhold software updates, plant bugs in networks or even switch off critical infrastructure across Europe, the company's opponents have argued.

Explicit links have never been established between China's government and Huawei, which insists it is a private company owned by its employees. There has also been no smoking gun that proves Huawei's software is riddled with "backdoors" for the Chinese military. In the UK, which has ordered the removal of Huawei's products from 5G networks by the end of 2027, telco executives say close examination has uncovered no evidence of malicious code.

But the company has been damned by its identity as a national technology champion of a more powerful and assertive China, an increasingly authoritarian country poised to invade Taiwan this decade, according to US hawks. European Union authorities, no doubt under US influence, appeared to reach similar conclusions several years ago. In the "5G toolbox" recommendations they published in 2020, they urge member states to impose restrictions on what they call "high risk vendors," a recognized euphemism for Huawei and ZTE, a smaller Chinese vendor.

Yet few had done so by the time Thierry Breton, a former EU commissioner, touched down on Finnish soil in February 2023 to give a speech on next-generation connectivity. "Let me mention here that although 23 member states took legislative action to implement the toolbox, only seven of them have actually imposed the necessary restrictions," he fumed. "This is not enough."

Breton's resignation in September has robbed the EU of a politician seemingly prepared to adopt a hard line on Huawei. As others lobby in the Chinese vendor's favor, it remains active throughout the region as a major supplier of 5G network products. In December 2022, data gathered by Strand Consult, a Danish firm of analysts, showed that only 11 of 30 European countries (including Norway, Switzerland and the UK from outside the EU) were entirely free of Huawei's 5G kit. And the list of countries using its 5G products included some of the region's largest.

German resistance

The main problem, for Huawei's critics, is Germany, the EU's largest economy and one of its powerbrokers. Despite EU pressure, Deutsche Telekom, Telefónica and Vodafone, Germany's three big mobile networks, have all continued to rely heavily on Huawei for the rollout of 5G infrastructure, which has now been extensively deployed. Estimates put Huawei's current share of basestation components at between 50% and 60%, with Strand Consult citing 59% back in December 2022.

The government's worry is the impact a Huawei ban could have on Germany's lucrative trade relationship with China, a massive export market for German cars and machine tools. Last year, Germany's Federal Statistical Office reckoned the value of all annual trade with China amounted to €254.5 billion (US$277.2 billion), making it Germany's "most important trading partner" for the eighth year in a row. Knowing this, telcos have argued that tearing out Huawei's products now would cost billions and risk service disruption, leading to further economic damage.

Rather than ordering a ban, then, authorities have concocted a scheme with telcos that would let networks retain nearly all Huawei's 5G products. The only components they must remove are the "core," the control center of the network, and part of the management system for RAN and transport infrastructure. But no operator was using Huawei's core network software when rules were published in July.

As for the injunction about that management system, numerous experts do not believe it sufficiently addresses the perceived security threat. In theory, Huawei would still be able to inject malicious code into its basestation software. What's more, substituting a new management system for Huawei's, and ensuring it will synchronize with Huawei's RAN, is likely to require Huawei's participation. The Chinese vendor's existing products do not come with the "open" RAN interfaces that would supposedly make this process easier for a telco to manage on its own.

Within the ranks of EU officials, there is unhappiness about the German scheme, according to a source that has EU connections. But such displeasure has not stopped Deutsche Telekom and Vodafone from lobbying governments in the Czech Republic and Poland to adopt it, said that source. Its successful export to other European markets would prevent Germany from being seen as an outlier. And a scheme backed by numerous member states would be harder for opponents to fight.

Poles apart

As one of the biggest countries in central Europe, with a population of more than 38 million people, Poland is an important European market for Huawei. According to an older report from Strand Consult, it was flooded with Chinese equipment in the 4G era, when three of the four networks looked heavily dependent on Huawei. By December 2022, some 38% of components used in Poland's installed 5G networks came from Chinese vendors, said Strand Consult.

But there have been signs of change in other big countries that also feature lots of Huawei equipment. Just last week, Spain's MasOrange revealed plans to build an open RAN with Ericsson, months after Spain's Expansión newspaper, citing sources, said the Swedish vendor would replace ZTE and some Huawei equipment as part of a deal. The full removal of Huawei from the MasOrange network would leave Vodafone as the only telco still using Chinese equipment in its RAN.

Romania, another sizable market, imposed restrictions on Huawei earlier this year. "We are disappointed with the government's decision, which is not rooted in any objective assessment or actual findings," said Huawei in response to the move. The telcos it mainly affects are Vodafone and Orange, both of which appeared to have 4G networks provided solely by Huawei, according to Strand Consult's data.

Anticipating legislation, Vodafone had unveiled Ericsson and Samsung as new 5G vendors just a few weeks before the government update. In rural areas, where Vodafone shares its network with Orange, Samsung already figured in trials. Orange, meanwhile, said it would "replace the equipment produced by non-certified 5G suppliers within the given terms" in response to a Light Reading enquiry.

Nevertheless, in more lenient countries, Huawei has been able to count on the loyalty of its network customers. Before the UK imposed restrictions, BT and Vodafone fought bitterly against bans, valuing Huawei for its technology and fearing its disappearance would limit choice. US sanctions have had no discernible impact on its product competitiveness so far, according to multiple sources. Huawei has been able to circumvent rules, exploit loopholes or find alternatives. Having European friends in high places is a bonus.