Calls for Huawei boycott get mixed response in Europe

Logo of Huawei is seen in front of the local offices of Huawei in Warsaw, Poland January 11, 2019. (Reuters)
Updated 13 January 2019
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Calls for Huawei boycott get mixed response in Europe

  • Huawei has faced increasing scrutiny over its alleged links to Chinese intelligence services
  • Huawei had already seen the arrest of the daughter of the firm’s founder in Canada and US efforts to blacklist the company internationally over security concerns

PARIS: Europe is giving US-led calls for a boycott of Huawei 5G telecoms equipment a mixed reception, with some governments untroubled by spy suspicions against the Chinese giant, but others backing a ban.
In the latest setback for the company, Huawei said Saturday it had fired an employee in Poland who was arrested there a day earlier on suspicion of spying for China. “His alleged actions have no relation to the company,” Huawei said in a statement to AFP.
Huawei had already seen the arrest of the daughter of the firm’s founder in Canada and US efforts to blacklist the company internationally over security concerns.
Several Asian and Pacific countries have followed Washington’s call for a Huawei ban, but the picture in Europe is more nuanced, not least because Huawei’s 5G capabilities are so attractive. They are well ahead of Sweden’s Ericsson, Finland’s Nokia and South Korea’s Samsung, analysts say.
Fifth generation (5G) technology represents a quantum leap in wireless communication speed, and will be key to developing the Internet of things, including self-driving cars. That is why Europe wants to deploy it as quickly as possible.
“Operators have looked at alternatives but have realized that Huawei is currently more innovative and probably better for 5G,” said Dexter Thillien, an analyst at Fitch Solutions.
Huawei has faced increasing scrutiny over its alleged links to Chinese intelligence services, prompting not just the US but also Australia and Japan to block it from building their 5G Internet networks.
But in Europe, Portugal’s main operator MEO signed a deal with Huawei in December during a visit by Chinese President Xi Jinping, praising the Chinese company’s “know how, competence, talent and capacity to develop technology and invest in our country.”
By contrast Norway, whose current networks are for the most part made up of Huawei equipment, is thinking of ways to reduce its “vulnerability,” according to the Nordic country’s transport and communications minister quoted in the local press — especially toward countries with whom Oslo “has no security cooperation,” an implicit reference to China.
Britain’s Defense Secretary Gavin Williamson meanwhile said he had “grave, very deep concerns about Huawei providing the 5G network in Britain.”
The Czech cybersecurity agency said that Chinese laws “force private companies with their headquarters in China to cooperate with intelligence services,” which could make them “a threat” if involved with a country’s key technology.
Germany is under pressure from Washington to follow suit, news magazine Der Spiegel reported. But the country’s IT watchdog says it had seen no evidence Huawei could use its equipment to spy for Beijing.
Meanwhile, telecom operators across Europe, under heavy pressure to roll out 5G quickly, seem to be playing down security fears because using Huawei makes business sense to them.
“Huawei is much more expensive today than its competitors but it’s also much better,” said a spokesperson at a European operator who asked not to be named because of the sensitive nature of the matter. The quality of Huawei’s equipment “is really ahead” of its European competitors, he added.
Furthermore, “everywhere in Europe, operators are the target of huge controls in that area and Huawei’s equipment has never been found to be at fault.”
To add to the confusion, large operators could reject Huawei equipment in some of their markets, but not in others.
Historic French operator Orange has said that it won’t use Huawei networks in France, but could very well do so in Spain and Poland.
Germany’s Deutsche Telekom announced a deal with Huawei for its future 5G network in Poland, but hasn’t said what it will do in Germany itself.
Meanwhile, Huawei is making great efforts to prove its good faith. It has opened test labs for its equipment in Germany and the UK in cooperation with the governments there, and is to launch another in Brussels by the end of the first quarter.
The stakes are high: Europe is a crucial market for Huawei, whose combined sales for Europe, the Middle East and Africa accounted for 27 percent of overall group sales in 2017, mostly thanks to spending by European operators.
Huawei rotating chairman Guo Ping in late December complained that his company was being subjected to “incredibly unfair treatment.”
“Huawei has never and will never present a security threat,” Guo wrote in a New Year’s message to staff.
Some analysts doubt that even a widespread ban on Chinese telecoms networks equipment could possibly guarantee watertight security.
“In Paris alone, there are more than a million Huawei smartphones. If you want to listen in, that’s how many opportunities you have,” said a sector specialist.


Gulf of Oman tanker attacks jolt oil-import dependent Asia

Updated 15 June 2019
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Gulf of Oman tanker attacks jolt oil-import dependent Asia

  • Iranian threats to close the Strait of Hormuz have alarmed Japan, China and South Korea
  • Japan’s conservative prime minister, Shinzo Abe, was in Tehran when the attack happened

SEOUL: The blasts detonated far from the bustling megacities of Asia, but the attack this week on two tankers in the strategic Strait of Hormuz hits at the heart of the region’s oil import-dependent economies.

While the violence only directly jolted two countries in the region — one of the targeted ships was operated by a Tokyo-based company, a nearby South Korean-operated vessel helped rescue sailors — it will unnerve major economies throughout Asia.

Officials, analysts and media commentators on Friday hammered home the importance of the Strait of Hormuz for Asia, calling it a crucial lifeline, and there was deep interest in more details about the still-sketchy attack and what the US and Iran would do in the aftermath.

In the end, whether Asia shrugs it off, as some analysts predict, or its economies shudder as a result, the attack highlights the widespread worries over an extreme reliance on a single strip of water for the oil that fuels much of the region’s shared progress.

Here is a look at how Asia is handling rising tensions in a faraway but economically crucial area, compiled by AP reporters from around the world:

WHY ASIA WORRIES

The oil, of course.

Japan, South Korea and China don’t have enough of it; the Middle East does, and much of it flows through the narrow Strait of Hormuz, which is the passage between the Arabian Gulf and the Gulf of Oman.

This could make Asia vulnerable to supply disruptions from US-Iran tensions or violence in the strait.

The attack comes months after Iran threatened to shut down the Strait of Hormuz to retaliate against US economic sanctions, which tightened in April when  the Trump administration decided to end sanctions exemptions for the five biggest importers of Iranian oil, which included China and US allies South Korea and Japan.

Japan is the world’s fourth-largest consumer of oil — after the US, China and India — and relies on the Middle East for 80 per cent of its crude oil supply. The 2011 Fukushima nuclear disaster led to a dramatic reduction in Japanese nuclear power generation and increased imports of natural gas, crude oil, fuel oil and coal.

In an effort to comply with Washington, Japan says it no longer imports oil from Iran. Officials also say Japanese oil companies are abiding by the embargo because they don’t want to be sanctioned. But Japan still gets oil from other Middle East nations using the Strait of Hormuz for transport.

South Korea, the world’s fifth largest importer of crude oil, also depends on the Middle East for the vast majority of its supplies.

Last month, South Korea halted its Iranian oil imports as its waivers from US sanctions on Teheran expired, and it has reportedly tried to increase oil imports from other countries.

China, the world’s largest importer of Iranian oil, “understands its growth model is vulnerable to a lack of energy sovereignty,” according to market analyst Kyle Rodda of IG, an online trading provider, and has been working over the last several years to diversify its suppliers. That includes looking to Southeast Asia and, increasingly, some oil-producing nations in Africa.

THE GEOGRAPHY AND THE POLITICS

Asia and the Middle East are linked by a flow of oil, much of it coming by sea and dependent on the Strait of Hormuz.

Iran threatened to close the strait in April. It also appears poised to break a 2015 nuclear deal with world powers, an accord that US President Donald Trump withdrew from last year. Under the deal saw Tehran agree to limit its enrichment of uranium in exchange for the lifting of crippling sanctions.

For both Japan and South Korea, there is extreme political unease to go along with the economic worries stirred by the violence in the strait.

Both nations want to nurture their relationship with Washington, a major trading partner and military protector. But they also need to keep their economies humming, which requires an easing of tension between Washington and Tehran.

Japan’s conservative prime minister, Shinzo Abe, was in Tehran, looking to do just that when the attack happened.

His limitations in settling the simmering animosity, however, were highlighted by both the timing of the attack and a comment by Iranian Supreme Leader Ayatollah Ali Khamenei, who told Abe that he had nothing to say to Trump.

In Japan, the world’s third largest economy, the tanker attack was front-page news.

The Nikkei newspaper, Japan’s major business daily, said that if mines are planted in the Strait of Hormuz, “oil trade will be paralyzed.” The Tokyo Shimbun newspaper called the Strait of Hormuz Japan’s “lifeline.”

Although the Japanese economy and industry minister has said there will be no immediate effect on stable energy supplies, the Tokyo Shimbun noted “a possibility that Japanese people’s lives will be affected.”

South Korea, worried about Middle East instability, has worked to diversify its crude sources since the energy crises of the 1970s and 1980s.

THE FUTURE

Analysts said it’s highly unlikely that Iran would follow through on its threat to close the strait. That’s because a closure could also disrupt Iran’s exports to China, which has been working with Russia to build pipelines and other infrastructure that would transport oil and gas into China.

For Japan, the attack in the Strait of Hormuz does not represent an imminent threat to Tokyo’s oil supply, said Paul Sheldon, chief geopolitical adviser at S&P Global Platts Analytics.

“Our sense is that it’s not a crisis yet,” he said of the tensions.

Seoul, meanwhile, will likely be able to withstand a modest jump in oil prices unless there’s a full-blown military confrontation, Seo Sang-young, an analyst from Seoul-based Kiwoom Securities, said.

“The rise in crude prices could hurt areas like the airlines, chemicals and shipping, but it could also actually benefit some businesses, such as energy companies (including refineries) that produce and export fuel products like gasoline,” said Seo, pointing to the diversity of South Korea’s industrial lineup. South Korea’s shipbuilding industry could also benefit as the rise in oil prices could further boost the growing demand for liquefied natural gas, or LNG, which means more orders for giant tankers that transport such gas.