UK faces pres­sure to re­view re­liance on Huawei

Chi­nese tele­coms gi­ant in the fir­ing line as Western gov­ern­ments fear its tech­nol­ogy is a threat to their na­tional se­cu­rity

The Daily Telegraph - Business - - Technology Intelligence - By Han­nah Boland, Hasan Chowdhury and James Cook

As Don­ald Trump and Xi Jin­ping tucked into sir­loin steaks and goat’s milk ri­cotta last Satur­day night at the G20 sum­mit in Buenos Aires, 7,000 miles away, in windy Van­cou­ver, the US ad­min­is­tra­tion was mak­ing its move.

While Meng Wanzhou was trav­el­ling through the Cana­dian air­port for a con­nect­ing flight, she was seized by of­fi­cials. The US Depart­ment of Jus­tice had re­quested the Cana­di­ans ar­rest the chief fi­nan­cial of­fi­cer of Huawei, the con­tro­ver­sial Chi­nese tele­com gi­ant, for ex­tra­di­tion to the US on al­le­ga­tions she had vi­o­lated sanc­tions on Iran.

On the sur­face, the ar­rest of Wanzhou – the daugh­ter of Huawei’s pow­er­ful founder Ren Zhengfei, and the woman many be­lieved was be­ing lined up to take on the CEO post – seems a pointed at­tack by the US in its on­go­ing trade chal­lenges with China. But in re­cent months, mount­ing con­cerns around Huawei have started to ex­tend well beyond the blus­ter from Wash­ing­ton.

Huawei is the world’s largest sup­plier of telecom­mu­ni­ca­tions net­work equip­ment and sec­ond­biggest maker of smart­phones, with rev­enue of about $92bn (£72bn) last year. Un­like other big Chi­nese tech­nol­ogy firms, it does much of its busi­ness over­seas and is a mar­ket leader in many coun­tries across Europe, Asia and Africa.

Both Aus­tralia and New Zealand, two coun­tries in­side the Five Eyes in­tel­li­gence-shar­ing al­liance, have taken steps to pre­vent the Chi­nese com­pany from de­ploy­ing its tech in their na­tional in­fra­struc­tures over po­ten­tial threats to na­tional se­cu­rity. Gov­ern­ments are con­cerned over the close links be­tween Huawei and the Chi­nese mil­i­tary, with coun­tries fear­ing that Huawei tech­nol­ogy could be used to con­duct es­pi­onage on be­half of the Chi­nese gov­ern­ment.

Huawei has con­sis­tently de­nied al­le­ga­tions that its de­vices could be used for spy­ing. A spokesman re­cently said: “Huawei firmly be­lieves that our part­ners and cus­tomers will make the right choice based on their own judg­ment and ex­pe­ri­ence of work­ing with Huawei.” It may not be a house­hold name in the UK like other tech­nol­ogy busi­nesses such as Mi­crosoft and Ap­ple, but the Huawei’s de­vices are widely used in the vi­tal broad­band and tele­phone back­bones that make up the coun­try’s na­tional in­fra­struc­ture. They span the en­tire tele­coms sup­ply chain, with Huawei run­ning ev­ery­thing from ba­sic equip­ment to far more com­pli­cated soft­ware. The firm is in­volved in al­most ev­ery as­pect of the UK’s tele­coms in­fra­struc­ture.

Huawei has also forged po­lit­i­cal and aca­demic links with the UK, in­clud­ing £3bn of re­cent spend­ing com­mit­ments and mul­ti­ple on­go­ing pro­jects with Bri­tish uni­ver­si­ties.

The close re­la­tion­ship be­tween Huawei and the UK may make it dif­fi­cult for its de­vices to be re­moved from UK net­works, es­pe­cially the fixed-line tech­nol­ogy. “It is too late for us to ac­tu­ally now try to pull Huawei out of all the sys­tems that it is used in,” says Ad­mi­ral Lord West, a former se­cu­rity ad­viser to Gor­don Brown. “We’ve ac­tu­ally got to try to ac­com­mo­date and find a way of ame­lio­rat­ing the risk … they are al­ready so in­volved across the board it would take a huge amount of work to ex­tract them from ev­ery sin­gle area.”

In Huawei’s ef­forts to win over the West, the UK has been seen as a cru­cial ally by the Chi­nese com­pany. While oth­ers opted to open up their net­works to Nokia or Eric­s­son, the UK wel­comed the Chi­nese tech gi­ant, a re­la­tion­ship that evolved after BT threw its weight be­hind the busi­ness in 2005. This first key win then laid the ground­work for Huawei to sign an­other, more sig­nif­i­cant, agree­ment with Vodafone.

One an­a­lyst in the tele­coms sec­tor sug­gested that Huawei’s ac­tiv­ity in the UK has in­volved more than just the sales of equip­ment. The com­pany does a sig­nif­i­cant amount of re­search and devel­op­ment in the UK and “prob­a­bly has more peo­ple here in the UK than in the rest of Europe”.

“They’ve used the UK as a mar­ket­ing pitch, which says: ‘Here is a ma­jor Western gov­ern­ment who thinks we’re pretty good and we do a lot of busi­ness with them, so what’s your prob­lem? Why don’t you all do busi­ness with us?’”

In the years since it en­tered the UK, Huawei has made ma­jor in­vest­ments in the coun­try – be­tween 2013 and 2017, it spent a to­tal of £1.3bn in both pro­cure­ments and in­vest­ments. Priscilla Mo­ri­uchi, who used to run the Asia threats team of the NSA, said: “The UK has been will­ing to take Chi­nese in­vest­ment in sec­tors that other al­lies or part­ners may not have.”

From the out­side, cer­tainly, the UK has seemed pretty cosy with the Chi­nese firm. The Na­tional Cy­ber Se­cu­rity Cen­tre (NCSC) and Huawei op­er­ate a test­ing fa­cil­ity to­gether in Ban­bury, widely known as “the Cell”, where they mon­i­tor threats and back­doors in Huawei’s hard­ware.

For years, re­port after re­port, re­leased by the watch­dog that mon­i­tors Huawei in the UK and over­seen by the Na­tional Cy­ber Se­cu­rity Cen­tre, has claimed Huawei poses no risk to na­tional se­cu­rity.

But in re­cent months the tide has changed. Over the sum­mer, the Huawei Cy­ber Se­cu­rity Eval­u­a­tion Cen­tre re­leased a re­port that found the body could now only pro­vide “lim­ited as­sur­ance that any risks to UK na­tional se­cu­rity from Huawei’s in­volve­ment in the UK’s crit­i­cal net­works have been suf­fi­ciently mit­i­gated”. It said that “short­com­ings in Huawei’s en­gi­neer­ing pro­cesses have ex­posed new risks in the UK telecom­mu­ni­ca­tion net­works and long-term chal­lenges”.

Al­though pub­licly the NCSC has said it is work­ing with Huawei to “man­age cy­ber se­cu­rity risks”, sources told The

Daily Tele­graph that re­la­tions were now “strained”, as a wave of pro­tec­tion­ism sweeps across the world.

This week, BT said that within two years it will re­move Huawei de­vices from its core 4G net­work. But yes­ter­day Three said that it had “no con­cerns” about part­ner­ing with Huawei hav­ing gone through a “rig­or­ous pro­cure­ment process”.

And Manch­ester Univer­sity, which runs six re­search pro­jects with Huawei, said that it is now mon­i­tor­ing the sit­u­a­tion with the com­pany, al­though a spokesman said that the univer­sity has “no im­me­di­ate plans” to re­view its on­go­ing work with Huawei.

As pres­sure con­tin­ues to mount on the Chi­nese firm from coun­tries across the world, the UK has some tough choices to make.

Vladimir Putin, Rus­sia’s pres­i­dent, and Meng Wanzhou, chief fi­nan­cial of­fi­cer for the Chi­nese tech ti­tan Huawei, at the VTB Cap­i­tal In­vest­ment Fo­rum ‘Rus­sia Call­ing!’ in Moscow ear­lier this year

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