Huawei Seeks European Allies for 'Long' Fight With US

Iain Morris
3/6/2019

Andy Purdy is under no illusions about the dilemma in front of Huawei, the embattled Chinese equipment vendor he represents. "We face a geopolitical issue between China and the US that is going to continue for a very long time," said the chief security officer of Huawei's US business during a press event this week in Brussels, where Huawei raised the curtain on a new cybersecurity center.

Purdy did not stick around for a Q&A session with the world's media, leaving numerous questions hanging about the US threat to Huawei. But his remarks and the overall tone of the Brussels event, where European officialdom gave an ear-bashing to US technology giants, reflect a new assertiveness in Huawei's response. The protestations of innocence and whining about unfair treatment are making way for more proactive measures as Huawei goes on the offensive.

5G Powerhouse
Huawei's headquarters in the Chinese city of Shenzhen.
Huawei's headquarters in the Chinese city of Shenzhen.

The Chinese vendor, which overtook Ericsson in 2015 as the world's biggest supplier of telecom network equipment, is in the eye of a geopolitical storm. Suspicious of China, a hawkish US administration under the presidency of Donald Trump sees Huawei as a Chinese government stooge that has ripped off US innovation and sold Internet gear to US foes such as Iran. Underpinning all this are fears about China's growing technological might. Huawei is already ahead of Ericsson and Nokia, its two main rivals, in the development of 5G, say Europe's service providers. If 5G is the oil that will power artificial intelligence, a technology expected to shape the coming decades, the stakes could not be higher.

Huawei is exposed to a US attack on two main fronts. The first is the system of military and political alliances that have evolved around NATO since the end of the Second World War. The US has been able to exert pressure on allies in Europe, the Asia-Pacific and North America, whose telecom operators have grown heavily dependent on Huawei in the last ten years and are loathe to abandon it. Hawks argue Huawei's products could be a conduit for Chinese government spies and that 5G exacerbates the risk because it may be used to connect all manner of industrial and consumer devices and not just smartphones. Governments are faced with a choice between ditching Huawei and incurring the displeasure of the world's only democratic superpower.

Executives from Huawei have vigorously refuted the accusation they willingly collude with the Chinese government. Ren Zhengfei, its founder, has also stated he would rather close the company than bow to government demands. One concern is that China's military could insert rogue hardware components or software code into Huawei's products without the company's knowledge. Analysts have pointed out that global supply chains make Western firms equally vulnerable to such a hack, and that China's military would probably avoid using Huawei because it is the first place watchdogs will look. Others downplay the importance of network equipment: China and Russia have been able to carry out cyber attacks regardless of the underlying infrastructure, they say. But the US charges have been taken seriously. A few countries have already restricted Huawei's activities, and others could follow.

The second front is the supply chain itself. Just as Western firms use Asian factories and chips to make their equipment, so Huawei relies heavily on components from US firms and US allies. Meng Wanzhou, Huawei's chief financial officer, may soon go on trial in the US for allegedly covering up Huawei's activities in Iran, a country subject to US trade sanctions. If she is found guilty, the US could block sales of US components to Huawei. Last year, the same move against ZTE, after the smaller Chinese vendor was caught selling equipment to Iran and North Korea, nearly drove it out of business.

The European fightback
Huawei's counterattack accordingly has two prongs: to sway opinion in Europe, the main battleground in the current conflict; and to minimize the risk of a US components ban. The focus in Brussels this week was on the first of these efforts.

The Chinese vendor's overarching goal is to shift the current debate about network security and bring Europe's regulators and other stakeholders onside. If it can persuade officials to take a more holistic view of the security issue, and consider equipment from all companies as part of one interconnected global supply chain, it could deflect attention from Huawei and raise awareness of potential vulnerabilities in other vendors' kit. Better yet would be the establishment of a government-sanctioned security regime that provides a firm checklist for any vendor's gear, free from political interference. Where better to look than to the European Union (EU), a club of countries whose fondness for regulation is unmatched anywhere.

Huawei has already had meetings with senior EU officials, including Andrus Ansip, the European Commissioner for the digital single market, about setting up a security regime along the same lines as GDPR, a set of laws about data protection and privacy that has gained acceptance in other regions (partly because non-European companies must follow it if they do any business in the EU). "Hopefully with a GDPR version of cybersecurity, strengthened evaluation standards and mechanisms that demonstrate governance, the German government and the UK government will be satisfied," said Purdy, before disappearing from the stage of the Brussels Academy Palace, where Huawei held its event.

In the meantime, Huawei is reeling off all sorts of new messages about security. A unifying theme -- and one that may plant seeds of doubt about the freedom given to Cisco, Ericsson, and Nokia -- is that today's global supply chain means no security checks can be 100% foolproof. Nevertheless, executives were at pains to show that Huawei's products are tested to a rigorous degree. Planned before the anti-Huawei campaign had built momentum, a new cybersecurity center in Brussels will not have the same government oversight board as a facility in the UK, but it will let customers access Huawei's source code for testing.

Brussels Sprouts New Huawei Facility
Reporters are given a whistle-stop tour of Huawei's new cybersecurity center in Belgium.
Reporters are given a whistle-stop tour of Huawei's new cybersecurity center in Belgium.

European officials sympathetic to Huawei were in evidence, too. Ulrik Trolle Smed, who works in the cabinet of European Commissioner Julian King, launched into a tirade about the shortcomings of US technology giants that would have been music to the ears of the Chinese. Grumbling about a lack of transparency around the algorithms the web platforms use, he said: "In reporting from January they have fallen further behind. The lack of hard numbers is worrying. Facebook has again failed to provide all the necessary information. Twitter did not report on any additional information to improve ad placement." Peter Koroumbashev, a Bulgarian Member of the European Parliament, backed Huawei's calls for a common EU approach to cybersecurity.

Any GDPR-like security regime will certainly not materialize quickly. While the GSM Association (GSMA), a lobby group for the mobile industry, has also taken Huawei's side on the need for rules, Ericsson has already thrown a wrench in the works. A 5G post-development testing regime, proposed by the GSMA, would hinder innovation and be a "tax burden" on the industry, said Börje Ekholm, Ericsson's CEO, during last week's Mobile World Congress.

Even if Huawei and its allies get their plans off the ground, US hawks may be eager to shoot them down. A GDPR-like scheme that ultimately satisfies European governments, providing the legal justification for Huawei to continue operating in those countries, could badly upset relations between Europe and the US. Regardless of the geopolitical consequences, it would probably drive Huawei's US enemies to double their efforts on the second and more critical American front of the campaign.

"The US has reacted to different things," says Bengt Nordström, the CEO of Northstream, a Swedish consulting company. "They say it is easy for China to sell in other countries but difficult for Western countries to be active in China. They claim IPR [intellectual property rights] have been stolen and that Huawei has exported advanced technology to Iran. That has little to do with spyware in equipment. It will be sorted out on that level."

Next page: Not so quiet on the US front

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