Infrastructure report: The origins of the Huawei conundrum

And how to manage the risk

March 19, 2020
 Imaginechina/SIPA USA/PA Images
Imaginechina/SIPA USA/PA Images

The UK acquired Huawei equipment during the telecoms upgrade ordered by the Blair government. Has it been paying the price ever since? Photo: Imaginechina/SIPA USA/PA Images

In real life, stories rarely make a clean start or point to an unambiguous future. Boris Johnson was finally obliged to decide in January whether to allow the Chinese technology giant Huawei to participate in the building of the UK’s 5G network. If he decided against Huawei, he would antagonise China, whose markets had been misleadingly dangled in front of voters as Brexit-bait. If he decided in favour of Huawei, he would offend the US, a close ally whose markets had also been paraded as important.

In addition to the external actors, there were pressures from within his own party’s ranks, along with a steady accumulation of critical reports on China’s behaviour. There were the examples of close allies, Australia and New Zealand, which had both decided against Huawei, and there was disagreement within the UK’s national security apparatus. For Johnson it was a “zero cake” moment.

The UK acquired Huawei equipment during the telecoms upgrade ordered by the Blair government. The attraction was price and the security risk was ignored until it was too late. Since then, risk management has dictated close monitoring of Huawei equipment and software by UK personnel under the direction of the National Cyber Security Centre (NCSC).

They have no illusions about the danger that Huawei presents and readily agree that it is not a trusted supplier, but they differ from their US counterparts in their assessment of the risk, finding the US position irrational.

The NCSC argues that lack of diversity of suppliers is equally a security concern and points out that the US has neglected to maintain its own capability. For the NCSC, three suppliers is the magic number, which of necessity includes Huawei. It further argues that Huawei can be kept out of core operations and its participation limited.

This chimed almost exactly with what Johnson announced, to the fury of Donald Trump. Huawei participation, Johnson said, would be permitted but limited to 35 per cent of network infrastructure, and it would not be admitted to sensitive parts of the network or to core operations.

Leaving aside the technical argument about whether, in 5G, that is a meaningful distinction—in Australia, they think not—Johnson’s decision postpones rather than settles the matter. It is, in fact, a fudge.

Even if we were to stretch our credulity and believe that Huawei is independent of the Chinese Communist Party today, as it claims, there are any number of cases of Chinese companies being seized—either because they have transgressed politically or become too powerful, or because it suited the leadership to bring them down. And given that the UK government did ban China’s second biggest telecoms supplier, ZTE, on the grounds that it was too close to the Chinese government, making an exception for Huawei is illogical.

Johnson’s decision was largely determined by past mistakes, driven by cost and by fear of offending China. It would be expensive to rip out and replace Huawei equipment, but equally importantly, the UK, like the US, has no domestic capacity to address the risks of lack of diversity of supply. The second half of the NCSC’s argument is that the UK must remedy this deficiency for security reasons, in order to escape our current level of dependency on a company and a country that all sides agree is not a friend.

Even in the US, there have been calls for a return to an industrial strategy, crafted for exactly the same reason. If the dissenting Tory grandees who want Huawei equipment removed within three years prevail, they should also insist that spending money on native capacity is essential for national security in the 21st century.