Economy /

Huawei’s international troubles continue, this time in Germany where members of Chancellor Angela Merkel’s party have gone against her wishes. Merkel favored an open bidding process for deploying 5G telecommunications infrastructure, which would have left the door open for the Chinese tech giant to gain a new European foothold. However, party delegates decided to force a debate and vote in the Bundestag at the Christian Democratic Union’s annual convention this weekend.

Party Rift

The rift between the chancellor and delegates from her party on Huawei is a matter of principle for both sides. Merkel views it at a hallmark of free-market capitalism to allow bids from all qualified parties. She also considers Huawei’s access to Europe against the backdrop of the global 5G rollout. As wireless carriers and governments rush to be on the frontlines of 5G adoption, they are often left with few options, leaving Huawei as not only the most economical option, but often the most capable. 

Huawei made its name on the back of its efficient and cheap telecom technology. Europe was its first international market when the company decided to expand beyond China. Compared to Ericsson and Nokia, European firms, the Chinese brand experienced rapid growth thanks to government funding and incentives that would be barred by European Union market regulations. 

“Huawei’s efforts have been accelerated due to the government subsidizing Huawei’s technology and providing similar incentives to expedite infrastructure development,” said Nate Snyder, former cybersecurity expert for the United States Department of Homeland Security. 

Alternatives 

Due to the US imposing a ban on Huawei technology and also heavily pressuring its allies to follow suit, the European branch won more contracts and saw their stocks rise as a result. They are not bad alternatives either, even if they are costlier than Huawei. In a competitive assessment by GlobalData, Ericsson scored nearly as high as its Chinese competition across several categories including architecture, standards, and 5G. 

Ericsson and Nokia offer something else that Huawei does not: security. A top issue for German politicians, an EU study found deficiencies in its 5G software.

“What the EU assessment report shows, however, is that while China’s/Huawei’s solution may be first to market and cheapest, it is unstable, full of flaws, and leaves itself open to potential exploitation by various threats and actors,” said Snyder.

Security risks aside, the main concern with Huawei is allegations that it funnels data back to Beijing. Chinese law compels businesses to assist the government’s intelligence agencies. As Merkel chose to allow the company into Germany, she insisted that it sign a “no-spying pact,” but such an agreement would hold little weight when the company is beholden to Beijing. 

Security

Merkel’s opposition within the Bundestag will make a Huawei 5G network difficult to approve. Former minister Norbert Röttgen was the most vocal opponent to the idea.

“No Chinese company is an independent company,” Röttgen said. “We must not allow any Chinese State influence on the Chinese net.” 

Röttgen helped lead the passage of a motion at the CDU conference to instil the Bundestag with the power to determine security standards for 5G infrastructure. He was backed by Merkel’s successor as party leader, Defense Minister Annegret Kramp-Karrenbauer. 

“We will define the security standard, and we will check whether it will be adhered to,” she said. “I think that’s a good, stable foundation for the different viewpoints on this issue.”

Other parties in the Bundestag have voiced objections to Huawei’s German access. The Greens sided against Huawei and the Social Democrats desired stronger language prohibiting “non-trustworthy manufacturers, especially if unconstitutionally controlled interference, manipulation or espionage cannot be ruled out.”

The move to shut the door on Huawei appears to be winning out among all parties, even the CDU, pitting the Bundestag against its chancellor. Merkel was one of the few European holdouts against restrictions on the Chinese telecom giant, despite calls from Washington to ban Huawei or face repercussions on the intelligence-sharing front. 

While on one hand Merkel damages relations with the US, on the other it imperils its relationship with China, its largest trading partner. The German automobile industry, in particular, is heavily reliant on China. Half of the profit for Daimler, Volkswagen, and BMW came from the Asian state and more German cars are sold there than any other foreign country. Germany exports nearly as much as it imports, 93.1 billion euros worth of goods versus 106.2 billion euros imported in 2018. 

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