The 5G Era: Technology as a Resource in Geopolitical Leadership

The main dilemma that Europe is facing is how to combine the security risks allegedly emanating from Huawei, Euro-Atlantic solidarity and a desire to introduce new advanced technology that is of decisive importance for the development of its own economy and society, writes Valdai Club expert Elena Maslova.

News agencies keep focusing on the trade war between the United States and China. As a phenomenon, trade wars emerged as an instrument of protectionism and an attempt to resist foreign influence. The current US-China trade war goes beyond economic barriers and represents a clash between two different state models on a broader plane. In addition, it is developing into a war for technological leadership.

The rapidly developing 5G technology is one of its instruments. The Chinese company Huawei is one of the leaders in developing G5 networks that are capable of ensuring incredible connection speeds.

Two superpowers – China and the United States – dispute who led in 5G introduction. Five leading companies control 75 percent of the world telecommunications market: two are Chinese (Huawei and ZTE), two European (Nokia and Ericsson) and the American Cisco. Indicatively, Huawei’s share alone is about 30 percent.

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This “phase I” trade deal is more like kicking the can down the road. It is not good and strong enough, since it will solve few problems. But amid this hard time for the China-US relationship, kicking the can down the road is still much better than keeping it out there. It is at least a step forward. We can cross our fingers for a future “phase II” and even “phase III”.
Expert Opinions

According to the GSM Association, up to 2034 the new standard will produce a profit of $2.2 billion for the world economy, or 5 percent of global GDP growth. Various production facilities and corporates will be the main consumers of 5G services: processing industry and utilities (35 percent), financial services (29 percent), government services (16 percent), informatics, communications and trade (14 percent), agriculture, and the mining industry (6 percent). In perspective, the G5 network is expected to be used for operating autonomous transport vehicles.

A report by the consulting company Accenture notes that 5G could help create 3 million jobs in the United States alone, which would eventually add $500 billion to the American GDP.

The trailblazer in introducing the new standard will receive considerable advantages: it will be able to more quickly develop the applications for the new network and will have an opportunity to use them not only for civilian purposes but also for strategic and military goals. Thus, the new standard will dramatically change not only the world economy but also politics.

The United States has already announced a boycott of Huawei. Japan, Australia and New Zealand imposed a ban on the construction of the 5G infrastructure by the Chinese company and some European countries (for instance, Poland) are considering the adoption of similar measures.

Under the circumstances the EU member countries find themselves in an interesting position. They are linked not only by the pan-European but also Atlantic solidarity (and security) and at the same time pursue their own national interests. Thus, Federal Chancellor Angela Merkel said Germany would work to enhance the security of the G5 network and made it clear that not a single company would be discriminated against based on national affiliation.

Italy holds a similar position. Huawei is actively present there and is carrying out its projects. The Huawei Center for Global Research and Development has been open in the Apennines since 2011. It cooperates with 14 Italian universities with a view to spreading digitization all over the country and at all levels.

“Huawei has no intention whatsoever to leave Italy because it is one of the most important markets in Europe and the world,” said its representative Thomas Miao in no uncertain terms after US Secretary of State Mike Pompeo visited the Apennines. Pompeo literally demanded that the Italian government wind down its cooperation with the Chinese giant. Luigi De Vecchis, President of Huawei Italy said: “I would like to remind you that there are security standards. We cannot ignore international security standards, so we will follow the EU’s common regulations. Collective security standards must be the same for all cyberspace.”

At present, digital security in the EU relies on EU General Data Protection Regulation that entered into force in May 2018.

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Expert Opinions

Symptomatically, the first meeting of the new Italian government of Giuseppe Conte was devoted to the cyber security of the G5 network. Following the meeting, the participants adopted a resolution on expanding the government’s authority in strategically important sectors and establishing the so-called “golden power” as regards Italian telecom companies (Linkem, Vodafone, TIM, Wind, and Fastweb). Thus, the Italian government received the right to control and interfere in the activities of these companies (approve their contractors, for one thing). This move is yet another manifestation of Italian balance diplomacy – a combination of national interests and Euro-Atlantic solidarity.

The main dilemma that Europe is facing is how to combine the security risks allegedly emanating from Huawei, Euro-Atlantic solidarity and a desire to introduce new advanced technology that is of decisive importance for the development of its own economy and society.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.