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« Finding a way out of the Huawei mess | Main | The Huawei shoe drops »

After a long phoney war, US takes a real shot at Huawei

Donald Trump has had to declare an emergency in order to keep Huawei out of the US.

Beyond some boilerplate about “unacceptable risk,” the order leaves us wondering what the emergency is.

Like the WMD of the Bush era, with some of the same characters, Huawei has become the idée fixe of the Trump administration.

Only the US’s closest allies are persuaded, although this time even the British are half-hearted. 

For an organisation that has been under the scrutiny of US security services for well over a decade, Huawei’s rap sheet as a rogue vendor is paper thin.

The massively-resourced agencies that uncovered the individual identities of the GRU agents that hacked the DNC server have been unable to come up with a single piece of data to confirm their hypothesis that Huawei is a PLA or communist party front or that it is planting vulnerabilities in its equipment.

Besides their access to global surveillance, these agencies have multiple other resources to draw on - the communications and movements of Huawei staff in many countries, for example, the laptops of employees crossing US-friendly borders, the testimony of ex-employees, and so on.

So far zippo, zilch, zero.

'We don't have anything'

In a deep dive into Huawei last month, LA Times reported:

“…none of the U.S. intelligence officials interviewed over several months for this story have made information public that supports the most damning assertions about China’s control over Huawei and about Ren’s early ties to Chinese military intelligence. They have yet to provide hard evidence and, privately, these officials admit they don’t have any.

Malcolm Turnbull, who as prime minister declared the Australian ban on Huawei, says it is about intentions rather than past behaviour. He told Hong Kong’s South China Morning Post:

“We have to, in an uncertain world, hedge against contingencies where people who we have friendly relations with, we may not necessarily be friends with in the future.”

It is certainly wise not to assume China is acting in good faith (although it is an assessment that should have been made in the early 2000s).

But there is nowhere near the weight of evidence against Huawei or ZTE to justify a total ban.

China isn’t a modern efficient state where central power is automatically transmitted to all parts of the country. It is big and shambolic and riven by dysfunction between the military, party, state and different geographies.

Unless there’s compelling to the contrary there is no reason to assume Huawei, a privately-held company in Shenzhen, is a creature of the communist party or the PLA.

Even EU countries that see China as a strategic competitor are unconvinced.

Missed: the economic case

The exclusive focus on security also means the US has missed the opportunity to make the economic case against Huawei - critical you would think in the middle of a ‘trade war’.

Huawei didn’t become a $100 billion company purely because of government assistance; ZTE has had the same help but is barely a fifth the size.

Undoubtedly the soft loans, cheap land and preferential treatment haven't hurt. The EU had a chance to address state support for Huawei and ZTE five years ago, but squibbed it.

It doesn’t make sense that Washington can loudly condemn Made in China 2025 yet not address Beijing’s thumb on the scale .

It underlines the extent to which the global assault on Huawei is being driven by US security services.

Brave face

The sweeping nature of Trump’s executive order make it clear that the US isn’t trying to accommodate Huawei or to eliminate unfair industry policies.

It is taking aim at Huawei's entire business, and possibly the global supply chain as well, reinforcing Beijing's repeated grievance that the US is trying to 'stop the rise of China.'

Huawei has so far put on a brave face. Founder Ren Zhengfei told a Nikkei journalist on the  weekend that the ban would only “slightly” trim Huawei’s growth. Teresa He, the president of chip unit HiSilicon, told staff the company had long ago prepared a backup plan.

Yet already Qualcomm, Broadcom and Xilinx and others have stopped shipments, Bloomberg reports.

It’s not just about hardware, though. Google has confirmed Huawei might lose access to Android in the future. Huawei has been developing its own handset operating system, but even if it works it will never reach the scale of Android.

The ban has forced China’s usually belligerent Foreign Minister Wang Yi into asking the US not to go “too far,” but the Trump Administration is obviously not inclined to step back.

Because this is about security, and not economics, it's doubtful even a trade agreement would restore Huawei's supply lines.

Huawei's last hope is that Trump can be persuaded by dimming prospects of US firms - those such as Huawei's own suppliers who face the loss of $11 billion in shipments, or those like Apple that are likely to feel the brunt of Beijing's inevitable retaliation.

More likely we are heading for a corporate meltdown and the potential shredding of a global trading system. 

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