The US has placed Chinese telecoms manufacturer Huawei on a blacklist of companies that supposedly threaten national security. Huawei is the largest telecommunications equipment manufacturer in the world, and the second-largest maker of smartphones, after Samsung. With 180,000 employees and $7-billion in profit on revenue of almost $90-billion, it was ranked 72nd on the 2017 Fortune 500 list.
The US decision effectively prohibits American companies from installing Huawei networking gear, or to export components to Huawei. This follows an executive order that didn’t name China or Huawei, but laid the groundwork for making such a trade ban possible. American officials have also told allies that it would stop sharing intelligence with them if they use Huawei or other Chinese technology to build out their next-generation networks.
The blacklisting could have significant consequences for Huawei. It will cost the company major customers, and cuts its ties with tech giants such as Google and Microsoft. It won’t be able to install the Android operating system or Google app ecosystem on its smartphones, for example (although there are pretty simple ways to get around such restrictions).
The move comes only days after the US and China failed to reach a truce in their trade war. US President Donald Trump, true to form, gave China an ultimatum: make a deal within a month, or face worse tariffs on all goods. Then, since trouble had been brewing over Chinese telecommunications equipment manufacturers for several years, he added the Huawei punch for good measure.
This is the latest salvo in a long-running trade war between the US and China, in which the US is both the aggressor and the biggest loser. It was sparked because Trump appears to believe mercantilism, which fell out of fashion in the late 18th century, is a great idea.
Mercantilism was based on the notion that trade is a zero-sum game, so that if your trading partner gains, that means you lose. It aimed to restrict imports, boost exports, and protect powerful domestic interests against foreign competition. It used to be implemented by establishing colonial empires and keeping standing armies and navies at constant war with other great economic powers. Since these methods are nowadays frowned upon, today’s protectionist measures are largely limited to export subsidies, import tariffs, and occasionally outright trade bans.
These policies play well to electorates who lap up economic populism and nationalist rhetoric, but it actually harms consumers in the country that protects its industry. Tax experts expect Trump’s tariffs to reduce GDP, raise prices, lower wages, and decrease employment in the US. By strengthening the US dollar against other currencies, imports become cheaper and exports more expensive, which directly counteracts the hoped-for reduction in imports and increase in exports. Tariffs mainly hurt your own people.
I say Trump appears to like mercantilism, because he is hard to pin down on the subject. On the one hand, he keeps saying pin-headed protectionist nonsense like “trade wars are good”. On the other, he told G7 leaders – right after imposing tariffs against Europe, Canada and Mexico – that the world should drop all trade barriers, tariffs and subsidies and adopt free trade. Perhaps his trade wars are a gambit designed to prove how damaging tariffs really are, in the hope of convincing the world to agree to his radical laissez-faire plan, but that seems a lot like wishful thinking.
Huawei equipment probably does pose security risks. In March, a British oversight board released an annual report that identified ongoing security issues in Huawei products, and no progress made on issues identified in earlier reports. It concluded that it would be difficult to manage the risk associated with using Huawei products in UK networks.
In April, Bloomberg reported that Vodafone had found potential back doors in devices on its networks in several European countries almost a decade ago, but that it believes the issues to have been resolved. The company publicly opposes any action against Huawei, citing prices and delays as major concerns.
Dutch intelligence services also claim to have found a backdoor in a major national telecoms network which it attributed to Huawei, and said it could allow the company to access customer data and potentially pass it along to the Chinese government. According to a Reuters report, the agency said it is “undesirable for the Netherlands … to depend on the hardware or software of companies from countries running active cyber programs against Dutch interests,” naming China and Russia.
Huawei denies that the vulnerabilities amounted to back doors, and in any case were removed once the company had been alerted. Vodafone also denied significant elements of the Bloomberg story. It is unlikely that all the vulnerabilities have been resolved, however, and although there is no firm evidence that any equipment sent data back to the Chinese government, as alleged, it would be safe to assume so. It is also far from clear that the problems are not simply software bugs that one might find in the products of any other vendor. A journalist writing for Wired magazine seems to think Huawei’s troubles are merely due to software bugs that one might find in the products of any other vendor, but that view seems a little naïve.
The US, however, is supremely hypocritical about the possibility that the Chinese government is spying on communications. Of course it is. Who isn’t? The US and its allies certainly are.
The world is flooded with devices and software with backdoors that send private data to the intelligence services of the US and its allies. It is impractical, if not impossible, for an ordinary consumer to avoid having their data mined by those countries, unless you isolate yourself entirely, as the heroic whistle-blower Edward Snowden, who revealed the existence of US and British surveillance programmes, has done.
In 2013, long before Trump became president, Snowden’s disclosures proved that the US government has deals to pipe data directly from major technology firms, including Microsoft, Yahoo, Google, Facebook and Apple. Its spooks can peruse your emails, see your search queries, view your browsing history, trawl through your photos and read the documents you share. It can track your mobile devices anywhere, at any time, even when location services are switched off. It knows who you call and can read your SMS messages. It has agreements with financial firms like Visa and SWIFT to track your buying habits. It vacuums up vast quantities of data from around the world.
They exploit security vulnerabilities to hack into networks and computer systems and host fake websites to steal login credentials. They work with manufacturers to install backdoors in routers, and have bribed major security companies to build backdoors into their encryption software. They deploy malware to hijack your devices. They can use the cameras and microphones on your devices without you knowing they were ever there. Some companies – notably Microsoft – provide information on newly discovered vulnerabilities to intelligence agencies before disclosing them to the public, so the spies have a ready supply of zero-day exploits available to them.
The US National Security Agency (NSA) is limited by law from spying on American citizens. So is the British equivalent, the Government Communications Headquarters (GCHQ), which operates similar surveillance programmes, partly funded by the NSA itself. There is a simple way around silly laws, however. The GCHQ legally spies on Americans, and the NSA legally spies on Britons. Then they “share intelligence”, under the agreement they have as part of the “Five Eyes”. The other members of this club are Australia, New Zealand and Canada. So laws designed to protect citizens in those countries from being spied upon by their own governments mean absolutely nothing.
Of course, outside the Five Eyes, everyone is fair game. Use an Android phone? The NSA has your number. Use an iPhone instead? The NSA owns you. Have a computer running Windows? The NSA is all over it like a virus. Have a computer running anything else? Don’t assume anything is beyond the NSA’s capabilities.
If you don’t think you’re worth spying on, you’d be wrong. Anyone in any position of responsibility has company information, or access to information, that should be confidential. If you’re a healthcare professional or attorney, or you’ve ever dealt with any of them, your information ought to remain confidential. If you’re a journalist, you need to be able to protect your sources. You can’t do that if every major government in the world reads your email. If your information can be compromised by government spies, it can be compromised by organised criminals. Sometimes, the line between the two is blurry. If you have money in the bank, or don’t want criminals to steal your identity to obtain loans in your name, this is a problem.
Government databases can be used to conduct warrantless searches to find people who, deliberately or accidentally, broke laws or regulations. Everyone does, sooner or later, so nobody is safe.
Private information can be abused to blackmail anyone into doing anything. Won’t inform on your business partner or family? How would you like your boss or spouse to know your porn preferences? Won’t stop agitating against the ruling party? How would you like your co-workers to know that you have just been diagnosed with an embarrassing disease? Speaking out about corruption? How would you like the knowledge you’re in arrears on your debts or municipal accounts, or you haven’t paid your traffic fines, to be made public?
If you’re blasé about government surveillance, consider China’s own social credit system. It is a dystopian model of totalitarian government control over everything people say and do. Offend anyone in any position of authority, and you might find yourself banned from public transport, jobs or even living quarters. And there’s nothing so uniquely Chinese about it that similar systems cannot be rolled out anywhere else in the world.
The US and its allies don’t have a problem with surveillance. They do it all the time, against foreigners and their own citizens, on a scale that is too big for most people to even comprehend. What they worry about is Chinese and Russian surveillance.
That is not unreasonable, of course, just like other countries would be uncomfortable with the surveillance networks of the Five Eyes.
Chinese and Russian surveillance equipment, software and techniques are being exported to countries around the world, including South Africa, along with those countries’ authoritarian vision of a sovereign, controlled and ring-fenced internet. We already see significant moves towards authoritarianism in this country, from requirements to host sensitive data within the country’s borders, to outright censorship of online content.
Europe is developing its own vision of the internet, which is causing significant friction with the US-based internet. Some US sites simply will not display content to European visitors, for fear of violating some EU copyright or privacy directive or another. China has long developed its internet independently, even creating domestic versions of popular social media, chat and microblogging platforms. It doesn’t care about privacy or copyright, but it does care about censorship and social control.
The fear of spying by foreign governments will increasingly fracture the internet and the technology market. Whether we’re consumers, network operators or government, the choice of which technology to use will depend on who we would rather have spying on us.
Countries with less developed technology industries will increasingly align themselves along the old Cold War lines, with either the liberal democracies of the West, or the authoritarian regimes of Russia, China and the Global South. Judging by its record of siding with the worst despots and dictators against the free world, I don’t trust the South African government to choose the lesser of these evils.
It is also not hard to conceive of a future in which the South African government mandates that equipment used in domestic telecommunications be locally produced. It ticks a lot of boxes: fear of foreign spies, the ability to insert domestic surveillance and censorship, stimulating a local technology industry, and political patronage deals for favoured suppliers.
As we saw during the isolation years of Apartheid South Africa, and as we’ve since seen with locally manufactured set-top boxes for digital terrestrial television or national broadband network projects, such plans will produce poor-quality products, high prices and broken deadlines. National security is a powerful excuse, but it doesn’t make mercantilism, or authoritarian government, any less harmful to ordinary citizens. DM