By now everyone knows China and US have locked horns over trade. What started with a trade war has now become a gloves-off fight between these two countries. The political forces have not even spared businesses. Companies are being used as pawns in this bitter geopolitical standoff.

Huawei, one of the largest communication technology companies in the world is controlled by the communist state of China. The company is accused (by the US administration) of:

• Espionage through its communication technology and equipment

• Violating US economic sanctions on Iran

Things spiraled out of control after the arrest of Meng Wanzhou, CFO of Huawei, who also happens to be the daughter of the Founder of the company. She was arrested in Vancouver, Canada on 1 December 2018. The US administration submitted (29 January 2019) a formal extradition request to Canada for handing over Meng for trial in its jurisdiction.

During this tense period, Justin Trudeau, Canada’s Prime Minister fired Canada’s ambassador to China, John McCallum for his remarks that it will be great for Canada if the US drops its plans to extradite Meng.

China registered its protest at all forums. In a tit for tat response, the communist administration also arrested Canadian citizens living in its country.

Americans did not mince words when they told their allies to sever ties with Huawei. Huawei has become a geopolitical weapon for the US administration for use against China.

The allies, including Europe, complied with the American demand and immediately distanced themselves from the embattled company. There were three main reasons for doing so.

• To show unity

• The fear of (possible) American sanctions

• The fear of espionage (by Huawei)

Talking about Europe, Germany and France were the first ones to react. The rest of the bloc countries followed them.

Europe: current situation

The European Union is making diplomatic efforts to insulate the bloc from American threats. This shift in policy began last year and to a certain extent, these efforts have borne positive results. INSTEX, a special purpose vehicle designed to carry on trade with Iran despite US economic sanctions is one such initiative. Germany, France and Britain collaborated to design this trading system.

With Huawei, EU is revisiting its earlier decision of a blanket ban on doing business with the company. The stance adopted by the EU is that it cannot sever ties with any company because of “unproven security concerns”.

All three stakeholders; Huawei, the European Commission and the European mobile operators agree that the fear factor (of espionage) with no evidence does not justify a blanket ban on doing business.

Reuters (27 February 2019) quotes Huawei Chairman Guo Ping,

“Let experts decide whether networks are safe or not. The US security accusation of our 5G has no evidence, nothing”.

The European mobile operators are concerned that a blanket ban on business with Huawei will impede Europe’s efforts to lead in the field of communications and technology. The EU bloc’s plan to implement 5G network has been stalled because most of the bloc countries were in talks with Huawei to be their partner in laying down the 5G infrastructure.

Nick Read, CEO of Vodafone Group, has asked the United States to share any evidence it has about security concerns for doing business with Huawei.

The European Commission has issued a warning against “premature decisions based on partial analysis of the facts”.

The Five Eyes

The Five Eyes (FVEY) is an international intelligence alliance. Its members are America, Britain, Australia, Canada and New Zealand. The member countries collaborate in the field of “signals intelligence”.

The Head of Britain’s GCHQ signals intelligence service Jeremy Fleming says,

“We have to understand the opportunities and threats from China’s technological offer”.

Britain’s membership in FVEY and the remarks of its Head of GCHQ has bolstered the confidence of the EU countries.

An analyst (Frank Gillett) of Forrester, an American (technology) market research company, says,

“You’re going to see a messy, essentially managed response that will probably vary in detail from country to country. In the end, it’s about containing and managing the risk of Huawei, as well as any other vendor, but particularly Huawei”.

Outlook

It is evident that Huawei is a prisoner of a geopolitical war between two large economies of the world, China and America. European countries, intelligence services and mobile companies are demanding hard evidence, if there is any, from the US about Huawei’s business malpractices.

Europe has a vast talent pool of technical specialists who can dissect the equipment and infrastructure of Huawei for security checks and audits. It is high time that Europe deals with situations like this on merit rather than taking dictation from America.