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Trade war

Germany follows UK in casting doubt on US Huawei ban

Allies not convinced on security threat as 5G rollout looms

The logo of Huawei Technologies is pictured atop the German headquarters of the Chinese telecommunications company in Duesseldorf.   © Reuters

LONDON/HAMBURG -- The German government looks likely to avoid an outright ban of Huawei Technologies' equipment and allow the Chinese company to participate in its high-speed communications infrastructure in some form, as the country seeks to balance its relationships with the U.S. and China.

The German stance is similar to that of the U.K. which believes that the risks posed by Huawei are manageable, and would represent a blow to American-led efforts to convince allies to ban Huawei equipment  from 5G networks on security grounds.

The German cabinet has already delayed its decision from earlier in February, when it was first expected to determine whether to exclude Huawei. Germany is scheduled to hold an auction for 5G frequencies in mid-March and needs to make a decision by then.

A recent probe by Germany’s cybersecurity agency failed to show that the Chinese company could use its equipment to clandestinely siphon off data, The Wall Street Journal reported on Tuesday.

"If the U.K. and Germany, two key allies, are not on board, it will neuter the Trump administration's efforts to paint Huawei as a security threat," said Edward Alden, a senior fellow at the Council on Foreign Relations in Washington DC. "Canada will most likely waffle too," he said. 

Alden doubted that the U.S. has presented overwhelming evidence to its allies that Huawei poses a risk. One of the main concerns raised by critics is that Chinese law obliges Huawei to cooperate with the government if required. In addition the Chinese Communist Party can exert control over the company through cells it runs inside Huawei which answer directly to the party.

Despite this, the Financial Times reported on Sunday that the U.K. National Cyber Security Center had determined that the risks of using Huawei equipment in future high-speed communications networks could be mitigated. A source said the British probably would recommend an approach using multiple suppliers and partial restrictions.

As a member of Five Eyes -- an intelligence-sharing pact with the U.S., Canada, Australia and New Zealand -- the U.K. could influence other countries' policies.

However, London's hesitation to support the Trump administration with an outright Huawei ban may also be linked to political calculations. "In its current state, on the back foot on Brexit negotiations with the EU, the British government cannot afford to entirely antagonize China," CFR's Alden said. With no signs that bilateral trade deals with the U.S. or Japan are making progress, "Britain is increasingly isolated," he said.

"The U.K. may have been concerned that shutting Huawei out completely could delay its plans to roll out 5G," added Keio University professor Tatsuya Kurosaka, an expert on the communications industry.

Germany, for its part, has been unsettled by U.S. President Donald Trump's threats to impose additional tariffs on imported European automobiles. Car duties would have a much bigger impact on the German economy than the 5G roll out, and experts say that German ministries are divided in their opinion over how to handle the Huawei case.

German Economy Minister Peter Altmaier has hinted that a decision will not come before the mid-March 5G auction.

New Zealand also appears to be breaking ranks. "It is fair to say Five Eyes, of course, share information, but we make our own independent decisions," Prime Minister Jacinda Ardern said Monday, signaling that Wellington will evaluate the risks tied to Huawei separately from Washington.

This represents a possible shift for the country. In November, it rejected a proposal by a telecom to use Huawei 5G equipment, even while stressing the decision was not aimed at any company in particular.

In the meantime, the U.S. is doubling down against Huawei. Vice President Mike Pence, a China hawk, warned about the "threat" posed by the company at the Munich Security Conference on Saturday. Secretary of State Mike Pompeo also urged Eastern European countries to cooperate with the U.S over Huawei. But Slovakia, for one, does not consider the Chinese company a problem.

Among Asian allies, Japan plans to essentially bar Huawei products from 5G networks, citing security risks. SoftBank Corp., SoftBank Group's mobile arm, is considering replacing Huawei equipment in its existing 4G network in response to Japanese and U.S. government requests. It has not changed its stance that it will make a final decision taking all relevant factors into account.

Takashi Kawakami in Guangzhou contributed to this report.

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