Telecoms

Making a call

Germany says no to 5G ban on Huawei

Merkel-w

A difficult decision to make

History students in Germany make a mandatory stop at the Stasi Museum. Here they learn how neighbours in the former East Germany spied on one another – even using hidden cameras in fake watering cans. The museum stands as a reminder of the eery surveillance state that operated for decades in East Germany (brilliantly depicted too in the Oscar-winning film The Lives of Others).

Technologically things have moved on since the Cold War. But fears about snooping persist and Germany now faces one of the most difficult choices of any European nation on the rollout of its 5G network.

On the one hand Angela Merkel’s government is under intense pressure from the Americans to deny contracts to China’s Huawei. The Trump administration is threatening to reduce cooperation in areas like intelligence-sharing if Germany ignores its advice.

However, Germany’s huge bilateral relationship with the Chinese makes it more vulnerable to retribution if it blocks deals with Huawei. It is one of few Western countries to run a trade surplus with China and car manufacturers like Volkswagen and BMW represent arguably the most successful Western industrial groupings there. As a result, German newspapers reported that Merkel intervened personally to remove a clause that would have blocked Huawei from competing for 5G contracts from draft regulations published this month. Instead Berlin published a new “security catalogue” last week which only obliges Huawei to sign a ‘no spy’ clause, keeping open 5G tenders to the Chinese telecoms giant.

Understandably, Germany’s main telecom carriers – Deutsche Telekom, Vodafone and Telefonica – all want a swift resolution to the situation, after paying €6.5 billion ($7.21 billion) for their 5G licences. They made Huawei a key supplier for 4G and their challenges are compounded by the fact that 5G is being built on top of the older network.

5G ups-the-ante on questions of security because it will accelerate the adoption of connected intelligent devices. An EU report, published days before Germany’s draft regulations, spelled this out: “Hostile states could put pressure on 5G providers to facilitate cyber attacks that serve their national interests.”

Leading newspapers like Handelsblatt have been attracting hundreds of comments on articles about the 5G contracts and they are largely negative about Huawei. “In a situation where for once Europe has the right technology – in the form of Ericsson and Nokia – Germany decides to open the door to high-risk providers,” was one. “It’s absurd.”

Newspaper proprietors seem to agree. In the same week that China denied local access to the Frankfurter Allgemeine Zeitung, the newspaper ran an op-ed by Deutsche Welle’s director general, Peter Limbourg. “China does everything it can to block access to information, particularly from the foreign press,” the journalist-cum-CEO wrote. “So letting a Chinese firm build Germany’s 5G network is naïve to say the least.”

Many politicians concur and the draft regulations face a rough ride through the Bundestag. SPD foreign affairs spokesperson Nils Schmid said that giving Huawei a key role in 5G would be a “serious mistake” and the CDU’s Norbert Rottgen, who heads the parliamentary Foreign Affairs Committee, believed that a question of such strategic importance needs to be decided by MPs, not the chancellor alone.

“In reality, this is not about Huawei but the trust in the Chinese leadership: this is a company that is at the mercy of state interests and can, in doubt, not refuse government-led interference,” he warned.

The Financial Times has reported on a potentially ingenious solution to the situation, quoting unnamed US officials as saying that the Trump administration is looking at ways to subsidise Nokia and Ericsson. The Americans believe this could level some of the playing field with China’s state-sponsored capitalism and make the European equipment more cost-competitive with Huawei. It also makes for a topsy-turvy world where one government offers to subsidise another’s national champions – not a scenario that the authors of the General Agreement on Tariffs and Trade (GATT) ever anticipated.


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