The Case Against Huawei: The Devil is in the Detail

The US Department of State has posted a video about the dangers posed by 5G technology on its Russian-Language Twitter account, where China’s Huawei is named as the greatest threat. The video is based on a series of accusations against Huawei and actually urges the views to steer clear of it. This material could be posted by the media or on the site on an NGO. But it has been posted by an official source, the foreign policy department. The problem here is that the accusations are based on questionable information or even speculation and assumption. Only in very few instances have they been backed by court rulings and regulators’ decisions. Despite this, the US State Department has posted a video where all the hypotheses not supported by any facts have been presented as hard evidence. In other words, a government agency has provided questionable arguments to damage the company’s reputation. Huawei could use this to sue for damages. But will it do this?

The video about the dangers of G5 technology, or more precisely Huawei, posted on the State Department’s Twitter account is not ingenious. In fact, it is quite simple and is based on generalization when a threat is painted in broad strokes, by means of general arguments that allow avoiding details.

The two-minute long video starts with new information realities. A great deal of personal data is stored on electronic storage media, and this trend will increase with the introduction of 5G technology. However, some companies could put your personal data in danger, the video says, urging the viewers to trust only 5G companies from democratic countries that have independent courts. Next the video mentions Huawei and claims that under Chinese laws the company is obliged to transfer personal data over to the Communist Party (the word “Communist” is highlighted in red, of course). You can trust companies with ethical and transparent business practices, but Huawei, the video claims, violates sanctions and supports repressive regimes, for example in Iran (“repressive” is in red as well). Moreover, Huawei has been accused of stealing competitors’ intellectual property, the video says, concluding with a rhetorical question: So, which company can be trusted when it comes to the protection of your personal data?

The video is immediately questionable. Let’s start with its democratic message. The underlying idea is that the security services of democratic countries would not steal personal data or will do so only under a court order, and then only in the national or security interests. Moreover, this activity can be challenged in court, provided you discover that your personal data has been stolen at all. This metaphorical game is as old as the hills. We have secret agents, while they have spies. We have business people, while they have oligarchs. We live in a democratic state, while they are ruled by a dictator. Let’s put aside these lofty matters and look at more concrete things.

Global China and the Fears of its Neighbours
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“Hide your strength, bide your time,” Deng Xiaoping used to say. In recent years, China has become increasingly vocal on the world stage. Has its historical moment come? Many observers believe that by means of its Belt and Road Initiative China is remaking Eurasia to serve its goals. Valdai Club experts explain whether this is true and if China’s interests can be aligned with those of its neighbours.

The allegation that Chinese laws oblige telecoms to transfer information to security services (read: Communist Party) is a popular argument in the case against Huawei. However, the law firms Clifford Chance and Zhong Lun have scrutinized the Chinese legislation and have not found any such requirements. The accusers could have done the same, but they prefer arguing that even if there are no formal requirements to this effect, the state could make them unofficially. This may be so, but in this case the US State Department’s video should have mentioned this. Instead, they used the questionable argument about such Chinese laws.

As for the sanctions, several departments have launched proceedings against Huawei over supplying its products, which contain US-made components, to Iran. In May 2019, Huawei was added to the Entity List of the US Department of Commerce’s Bureau of Industry and Security (BIS), which later issued a Temporary General License (TGL) to Huawei Technologies Co. Ltd. to carry on its business.  Similar investigations are being conducted by the US Department of the Treasury and the FBI, which has accused Huawei management of collusion to conceal violations. Huawei CFO Meng Wanzhou was arrested in Canada at the request of the US over reported links to sanctions violations.

The Americans probably have evidence to back their accusations against Huawei. However, no court rulings have been passed, and the investigations have not been completed either. What is important, though, is that US sanctions over Iran have been violated by dozens of companies over a period of the past 10 years. The “Iranian connection” is very popular: according to the Russian International Affairs Council (RIAC), Iran was named in 107 out of the 312 cases against sanctions violators opened by the US Department of Treasury. The violators include US, British and EU companies. In dozens, if not hundreds of cases, the violators are placed on the Specially Designated Nationals and Blocked Persons (SDN) list. This amounts to recognizing them as supporters of the repressive Iranian regime. But these details are too numerous to be included in a 2-minute long video, which must be simple and unambiguous.

Moreover, the US Treasury Department launched a civil penalties process against Apple. In 2019 Apple agreed to pay $466,912 to settle its potential civil liability for apparent violations of the US narcotics regulations. The violation was unintended because Apple failed to identify its potential client with the company added to the SDN list. The reasons for sanctions against Apple are different from those of Huawei, but its case shows that not even US companies are immune to sanctions violations.

As for copyright and industrial espionage charges, this is a long story. Several companies had complaints against Huawei before. Some of them, for example T-Mobile, took their complaints to court, which ruled against Huawei. Other claims were settled out of court or were open to argument. Such disputes often arise in the technology business, and Huawei is hardly an exception. Of course, it should be called to account for the infringements it permitted, but such cases must be investigated objectively, and the decisions on them must be taken in court. It is notable that Huawei does not cite Chinese laws to avoid an investigation or a trial, but either cooperates with the US authorities or settles disputes in court.

However, law is known to live side by side with political reality. The US political community has taken a united stand when it comes to external threats in the field of telecoms. There are reasons for concerns, and not only in the United States. The situation is similar in China, Russia, the EU, India and many other countries. ICT has become a matter of tough competition and a factor of security. Huawei was unlucky to get the threat badge. People tend to stigmatize others for whatever reason, while the media prefer to target and attack a pet peeve instead of getting down to the facts.

The trouble is that this is doing more harm to the US-led globalization efforts in the field of ICT than all the hackers and cyber spies put together. This campaigning is eroding the structure of the US leadership in which the United States was looked upon by many as a technological and moral landmark. The situation is changing now though. Technological restrictions could split globalization into rival regional and other clusters. Such videos posted by the US Department of State, and other similar products, will undermine the US claim to moral superiority. Globalization will only win if such problems are taken to court following an objective analysis of the offending content based on facts. At least, court proceedings will force content producers to think twice about what they say or do and analyze the smallest details.

The 5G Era: Technology as a Resource in Geopolitical Leadership
Elena Maslova
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.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.