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UK Concludes Huawei Safe for 5G – Trade War Hostilities Cooling?

Feb 17, 2019
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In a slightly surprising twist this evening, the UK government has concluded that the UK could effectively mitigate the risk of using Huawei equipment for its 5G network infrastructure. The report comes by way of the Financial Times (here), citing two sources familiar with the conclusion of the National Cyber Security Centre (NCSC). It’s likely that the UK’s conclusion would also mean that fellow European countries would follow its lead and also give the green light to Huawei to proceed with submitting bids and winning contracts within the EU, particularly given the UK’s status as a Five Eyes member.

One of the sources told the FT that:

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Other nations can make the argument that if the British are confident of mitigation against national security threats then they can also reassure their publics and the US that they are acting in a prudent manner in continuing to allow their telecommunications service providers to use Chinese components as long as they take the kinds of precautions recommended by the British.

Huawei Safe – A Deeper Topic?

There may be more to this than meets the eye. The US trade rumble with China has obviously been ongoing albeit currently being on hold pending the outcome of intense negotiations before a threatened increase in tariffs due to kick in next month if no deal is agreed. Mixed noises have been emanating from both the US and China on these discussions although the general market consensus seems to be that there may be a continued cessation of hostilities if indeed enough progress has been made by the time deadline day rolls around.

The US has had major concerns around Chinese telecoms companies with both Huawei and ZTE finding themselves the target of the US administration in recent times with the US urging allies in November to shun Huawei equipment and Australia (both Five Eyes members) blocking a Huawei contract to build out 5G infrastructure in the country.

While the UK is certainly a power in many ways, these kinds of geopolitical statements are unlikely to have been made in a vacuum, particularly given the timing, coinciding so closely with the US – China trade talks and it seems likely that this is part of a larger web of negotiation. The US was able to effectively shut down ZTE last year after it breached sanctions, forcing it to pay huge fines and reorganise its board and senior management team before it would allow US technology companies to sell to it again.

Huawei isn’t in the same position as ZTE was, but the US can still make life difficult for the firm and make it harder for Huawei to compete on the global stage. It won’t result in the effective shutdown of the largest telecoms equipment maker in the world overnight but it would certainly cost it business. As part of this, the US has shown China both the stick and the carrot in this sense.

So although it is quite possible that the UK just happened to come to its conclusion that Huawei was either safe or could be made safe enough that it wasn’t a security risk to use its equipment right now, it is also possible that this move signals a cooling down of the trade war between the US and China. If indeed a deal was announced, or even the planned tariff increases were postponed, the global economy would likely breathe a sigh of relief. We’ll be watching closely.

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