Italy, Germany resist ban on Huawei’s 5G gear

News is a decisive blow to US-led campaign to discredit Chinese firm

By Christopher Scott

The German government is seeking to avoid any policy that would restrict Chinese telecommunications equipment maker Huawei from building out its 5G networks, Handelsblatt reported Thursday.

Also on Thursday, the Italian government denied reports that it was prepared to ban Huawei for the next-generation services.

Local media had reported earlier in the day that Rome was ready to place a ban on the use of equipment from Chinese firms.

But Italy’s industry minister swiftly corrected the record, saying “we have no intention of adopting any such initiatives,” according to Reuters.

Italian daily La Stampa had reported, citing Defense and Foreign Ministry sources, that the federal government was ready to use its powers to withdraw from existing contracts in order to safeguard strategic infrastructure.

German Chancellor Angela Merkel’s chief of staff Helge Braun, along with the ministries of Foreign Affairs, Home Affairs, Economics, Finance and Infrastructure, announced a unanimous position that the country does not seek to ban Huawei.

However, the German daily cautioned that new rules set to be completed before the country’s 5G auction could still restrict Huawei’s role.

Washington’s frantic crusade

The apparent embrace of Huawei comes as Washington has intensified efforts to persuade allies not to use gear from Huawei. The Chinese telecommunications equipment maker has fast risen to become the leader in the development of 5G network technology.

The campaign to discredit Huawei on national-security grounds has stalled in recent months, after successfully enlisting Australia. Along with Germany and Italy, governments in the UK and France have thus far declined to say they will ban Huawei. Industry groups warn that doing so would strike a blow to commerce in the region.

Canada is still considering a ban on Huawei’s 5G offerings. On Thursday the country’s largest telecommunications and media group, BCE, said that such a policy wouldn’t delay the company’s plan for rolling out the new ultra-fast networks, according to The Canada Press.

The result of an ongoing national-security review, BCE chief executive officer George Cope said, will not “in any way impact our timing in the market for 5G.”

Huawei’s European competitors, Ericsson and Nokia, lag far behind Huawei, according to industry experts. There is currently no US firm that is ready to provide the core equipment necessary to roll out 5G networks.

Observers say Washington’s last-minute attempt to block Huawei out of international markets comes too late, and reflects a lack of any domestic policy that promotes a competitive alternative.

For US allies, signing on to the confrontational approach risks harming relations with China, a country they rely on as an important – or their most important – trading partner.

This has been witnessed by Canada after the arrest of Huawei chief financial officer Meng Wanzhou in December. Meng, who is also the daughter of the company’s founder, was arrested by Canadian authorities at the behest of the US, prompting a sharp backlash from Beijing. China has warned that Canada will face consequences if it does not release Meng, a decision that could require breaking the terms of an extradition treaty with the US.

Lingering security concerns

Concerns about the national-security risks stem from the nature of telecommunications equipment itself, coupled with a Chinese cybersecurity law that obliges network operators to provide “technical support and assistance” to the government.

“Major telecom ‘backbone’ equipment connects to the manufacturer over a dedicated channel.… Equipment could be sold and installed in perfectly secure condition, and a month later, the manufacturer could send a software update to create vulnerabilities or disrupt service. The operator and its customers would have no knowledge of this change,” US think-tank CSIS wrote in a recent report.

China has dismissed the concerns raised by the US and allies as “fear-mongering.” Critics of Washington’s approach note that US companies have in the past worked with American intelligence services.

Huawei says it would never consider betraying customers by handing over data to the Chinese government because such a practice would be “commercial suicide.”

The apparent disconnect within Italy echoes mixed messages from other European countries, where the commercial interests of network providers clash with the advice of intelligence and defense officials.

French network provider Orange and the UK’s BT Group have both announced that they will restrict the extent to which they rely on Huawei for core components of wireless networks.

Inside the US, large telecom firms have for years faced political pressure not to work with Huawei, and there is bipartisan support for new legislation targeting Huawei and ZTE. ZTE is also a competitor for developing critical equipment for 5G networks.