Huawei: Will the government ban the Chinese vendor tomorrow?
Prime Minister Boris Johnson is due to decide whether to ban Huawei from the UK’s 5G infrastructure tomorrow, following intense pressure from MPs and US President Donald Trump to U-turn on a deal with the Chinese vendor over national security fears.
In January, Johnson struck a deal with Huawei to build technology for the UK’s 5G rollout as part of the PM’s plans to level up rural Britain and have full-fibre “gigabit broadband sprouting in every home” by the end of 2025.
However, Huawei’s market share was capped at 35 per cent after the telecoms giant was deemed a “high risk vendor” by UK intelligence agencies, following repeated warnings from the Trump administration that technology made by the Chinese firm could be used for state spying in Beijing. Huawei strongly denies the claims and insists it is a private company free from state interference.
Following pressure from a group of 59 rebel Tory MPs, the National Cyber Security Centre — a branch of GCHQ — last month opened a review into Huawei’s operations in the UK, and concluded that fresh sanctions against the company in the US could result in “severe” impacts for the Shenzhen-based firm.
UK security chiefs are now concerned that these sanctions will prevent Huawei from being able to vet its equipment properly, resulting in what GCHQ has warned as a shift in the risk balance regarding the Chinese firm.
Johnson has subsequently brought forward a decision on the company that was due to take place later this month. The Prime Minister will chair a National Security Council (NSC) meeting tomorrow morning, which will finalise the UK’s decision on whether to U-turn on the deal. A reversal could result in the cancellation of new Huawei orders and the stripping of existing Huawei technology.
Culture secretary Oliver Dowden will announce the decision to Parliament at 11.30 tomorrow after the NSC meeting. But which way will it go?
What’s all the fuss about?
The government’s decision on whether to scale back Huawei’s involvement in the UK’s 5G infrastructure is complicated by existing technology made by the firm that is already used by British vendors.
Huawei has supplied BT since 2003, and the telecoms firm is heavily dependent on technology made by the Chinese vendor for its 2G, 4G and 5G networks.
Chief executive Philip Jansen today warned that it would be “impossible” to remove Huawei from the whole of the UK’s telecoms infrastructure before 2030, and cautioned there may be wide-scale network blackouts if BT is forced to strip Huawei’s 5G kit without sufficient warning.
Vodafone last week added it would cost the British mobile firm “single-figure billions” if it was made to switch Huawei telecoms kit for another vendor’s, and said that it would need at least five years to phase out existing Huawei technology.
Meanwhile, one of the UK’s leading economic think tanks today warned that a total ban on Huawei could lead to a freeze in Britain’s trading relationship with China, Sky News reported. That in turn could depress UK GDP and spark inflationary pressures, according to the National Institute for Economic and Social Research (NIESR).
How will that affect the government’s decision?
Despite some last-minute lobbying from both Huawei and UK mobile vendors, the government is still expected to announce tomorrow that it will significantly scale back Huawei’s presence in the UK.
The government will likely outline two limitations on Huawei’s participation in the UK’s 5G infrastructure — an initial deadline after which no new items of its equipment can be installed in the UK, and a later deadline for all existing Huawei technology to be stripped from the UK’s networks.
Sir Iain Duncan Smith, the former Conservative leader, has called for a ban on new Huawei equipment to be imposed by “early next year” at the latest, and a complete veto on Huawei technology to be implemented by 2024.
Bob Seely, one of the 59 Conservative backbenchers pressuring Johnson to scrap the deal, also said he expects the government to announce an initial deadline of 2021, after which new 5G Huawei kit cannot be installed. However, he added he expect the PM will commit to a later deadline of 2025 to “rip out” existing Huawei technology.
But Tory rebels have told the Prime Minister that if he sets a deadline for the latter beyond the next election in 2024, he will face a revolt from his own party. It is thought that the threat of a backbench rebellion will prompt the PM to adopt a tough stance on Huawei, despite demands from Vodafone and BT for a lengthier deadline.
Seely told City A.M: “ I don’t mind an extended time period if it’s going to be cheaper for British telecoms firms, but they have to understand that the cheap kit has come at a geopolitical price.
“We need to be supportive of trade with China, but we need to be mindful that China is becoming more adversarial, and more communist, to be frank. We can’t just have business as usual, that would be unethical.”
How will tensions with China affect the decision?
The proposed timescale to pedal back Huawei’s involvement in the UK has been further inflamed by geopolitical tension between China and the US, which considers Huawei as emblematic of Beijing’s rising influence across the West.
Trump’s national security adviser flew to Paris today for talks on China in a last-ditch attempt to pile pressure on the PM to take a tough line on Huawei, in the hopes that doing so might prompt other countries such as Canada to follow suit.
And the dispute over Huawei also comes on the backdrop of escalating tensions between the UK and China over Beijing’s imposition of new security legislation in Hong Kong that hands Beijing sweeping powers over the city.
But the question of how the decision over Huawei will affect the UK’s relations with China is as important as how London’s relationship with Beijing will sway the Prime Minister.
Many have warned that the UK’s decision on Huawei will be seen as a litmus test on future relations between the two nations.
Liu Xiaoming, China’s ambassador to Britain, last week said a U-turn on Huawei would be damaging to the UK’s image as an open, business-friendly nation, in a sign that tomorrow’s decision could mar existing agreements between the UK and China.
“The China business community are all watching how you handle Huawei. If you get rid of Huawei it sends out a very bad message to other Chinese businesses,” said Liu.
Until now the UK has been China’s largest investment destination in Europe, but Chinese officials have warned that Beijing companies might pull out of commitments to build UK nuclear power plants and other infrastructure projects if Johnson does a 180 on the Huawei deal.
What has Huawei said?
Huawei executives have asked for last-minute meetings with Downing Street ahead of the NSC meeting tomorrow. The Chinese firm is seeking an extension for the “rip out” deadline until after the next UK General Election in 2024, in the hopes that a new government might U-turn on a potential decision to scrap the firm’s technology.
Huawei vice president Victor Zhang said in a science and technology committee meeting on Friday that the firm is “not in the position to comment on [the] political agenda” surrounding the deal.
“What we want to do is work with our customers [to make] sure the UK will have the best digital network.”
It is thought that Huawei may try to mount a legal challenge if it is slapped with an outright UK ban tomorrow. But when asked about the possibility, Zhang said now was “not the right time to make the case”.
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