US steps up pressure on Huawei, ZTE

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A man holds a sign calling for China to release Wang Bingzhang and former Canadian diplomat Michael Kovrig, at the Supreme Court bail hearing of Huawei CFO Meng Wanzhou in Vancouver, Canada. (Reuters)
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Canada detained Meng Wanzhou, chief financial officer of the Chinese telecommunications giant Huawei, at the request of the United States. (AP Photo)
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Huawei is viewed with suspicion in the US because of fears that their switches and other gear could be used to spy on Americans. (Reuters)
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Huawei is viewed with suspicion in the US because of fears that their switches and other gear could be used to spy on Americans. (Reuters)
Updated 17 January 2019
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US steps up pressure on Huawei, ZTE

  • Washington has been pressing allies to refrain from buying Huawei’s switches and other gear because of fears they will be used by Beijing for espionage
  • Canada detained Huawei founder Ren Zhengfei’s daughter, Meng Wanzhou, who is Huawei’s chief financial officer, in December at the request of US authorities

WASHINGTON/BEIJING: A bipartisan group of US lawmakers introduced bills on Wednesday that would ban the sale of US chips or other components to Huawei Technologies Co. Ltd, ZTE Corp. or other Chinese telecommunications companies that violate US sanctions or export control laws.
The proposed law drew sharp criticism from China where Foreign Ministry spokeswoman Hua Chunying called the US legislation “hysteria,” intensifying a bitter trade war between Beijing and Washington.
The bills were introduced shortly before the Wall Street Journal reported federal prosecutors were investigating allegations that Huawei stole trade secrets from T-Mobile US Inc. and other US businesses.
The Journal said that an indictment could be coming soon on allegations that Huawei stole T-Mobile technology, called Tappy, which mimicked human fingers and was used to test smartphones.
Huawei said in a statement the company and T-Mobile settled their disputes in 2017 following a US jury verdict that found “neither damage, unjust enrichment nor willful and malicious conduct by Huawei in T-Mobile’s trade secret claim.”
Hua urged US lawmakers to block the bills.
“I believe the action of these few representatives are an expression of extreme arrogance and an extreme lack of self-confidence,” Hua said.
“Actually the whole world can see very clearly that the real intent of the United States is to employ its state apparatus in every conceivable way to suppress and block out China’s high-tech companies,” she added.
The legislation is the latest in a long list of actions taken to fight what some in the Trump administration call China’s cheating through intellectual property theft, illegal corporate subsidies and rules hampering US corporations that want to sell their goods in China.
In November, the US Department of Justice unveiled an initiative to investigate China’s trade practices with a goal of bringing trade secret theft cases.
At that time, Washington had announced an indictment against Chinese chipmaker Fujian Jinhua Integrated Circuit Co. Ltd. for stealing trade secrets from US semiconductor company Micron Technology relating to research and development of memory storage devices.
Jinhua, which has denied any wrongdoing, was put on a list of entities that cannot buy goods from US firms.
On Capitol Hill, Senator Tom Cotton and Representative Mike Gallagher, both Republicans, along with Senator Chris Van Hollen and Representative Ruben Gallego, both Democrats, introduced the bills that would require the president to ban the export of US components to any Chinese telecommunications company that violates US sanctions or export control laws.
The bills specifically cite ZTE and Huawei, both of which are viewed with suspicion in the US because of fears that their switches and other gear could be used to spy on Americans. Both have also been accused of failing to respect US sanctions on Iran.
“Huawei is effectively an intelligence-gathering arm of the Chinese Communist Party whose founder and CEO was an engineer for the People’s Liberation Army,” Cotton wrote in a statement. “If Chinese telecom companies like Huawei violate our sanctions or export control laws, they should receive nothing less than the death penalty — which this denial order would provide.”
The proposed law and investigation are two of several challenges that Huawei, the world’s biggest telecommunications equipment maker, faces in the US market.
In addition to allegations of sanctions-busting and intellectual property theft, Washington has been pressing allies to refrain from buying Huawei’s switches and other gear because of fears they will be used by Beijing for espionage.
Huawei’s founder, Ren Zhengfei, denied this week that his company was used by the Chinese government to spy.
Canada detained Ren’s daughter, Meng Wanzhou, who is Huawei’s chief financial officer, in December at the request of US authorities investigating an alleged scheme to use the global banking system to evade US sanctions against Iran.
For its part, ZTE agreed last year to pay a $1 billion fine to the United States that had been imposed because the company breached a US embargo on trade with Iran.
As part of the agreement, the US lifted a ban in place since April that had prevented ZTE from buying the US components it relies on heavily to make smartphones and other devices.


INTERVIEW: Karim Sabbagh, DarkMatter CEO - why digital security threats are key issue for governments and businesses

Updated 24 February 2019
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INTERVIEW: Karim Sabbagh, DarkMatter CEO - why digital security threats are key issue for governments and businesses

LONDON: Cybersecurity looks like becoming the big theme of this year, and maybe for many years to come.

In a survey in January by the World Economic Forum, the threat of cyberattack was mentioned as one of the most serious global threats by business leaders; in the Middle East it was an especially worrying concern, second only to the oil price as a perceived risk.

For Karim Sabbagh, that is both a worry and a business opportunity. “The impact on economies and societies is huge. One of the challenges we have as captains of industry and as citizens is that we’re fascinated by the ability we have to digitize things in our day-to-day lives. But the sad part is that for every dollar we spend on new digital enablement, we’re not spending enough on cybersecurity,” he said last week on the sidelines of the IDEX defense exhibition in Abu Dhabi.

Sabbagh is CEO of DarkMatter, the Middle East’s home-grown digital security firm. Amid the guns, tanks and desert camouflage gear at IDEX, he explained to Arab News why we should all be taking the threat of cyberattack much more seriously, and spending a lot more money to defend against it.

“I can show you a demonstration in our booth. I can interfere with your transport network, your airport operations or your power grid. All these things aren’t fiction, they’re all for real,” he said against a backdrop of simulated warfare displays in the UAE’s big defense show.

“The people with bad intent will continue to evolve their techniques and their approaches. So the question isn’t how do I completely eliminate the known risks, but how can I prepare for threats in the future.”

The “people with bad intent” are enemy governments, industrial spies, ransom seekers, or people who “subscribe to a cause,” he said.

“From what we’ve seen … state-led attacks were the most prevalent. In private organizations, it was more about accessing data and using that data for your own commercial benefit,” he added, leaving the distinct impression he knew far more than he was willing to say publicly.

DarkMatter has been in business since 2015, the brainchild of Faisal Al-Bannai, the Emirati entrepreneur probably best known for the Axiom chain of telecom stores he has made into one of the best-known names in Middle East retail.

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BIO

Born
•Beirut 1963

EDUCATION
•BA and MBA, American University of Beirut
•American Century University, New Mexico, US

CAREER
•Regional director for strategy, Leo Burnett Middle East
•Senior vice president, Booz & Co.
•President and CEO, SES
CEO, DarkMatter

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“He’s the single shareholder, and what he does is quite unique,” Sabbagh said. “Faisal is an entrepreneur, very driven and very passionate, with all the traits you’d like to see from entrepreneurs. He likes to see things through, and has a very long-term view.”

Sabbagh became CEO of the company last year after a stint with SES, a Luxembourg-based firm that provides satellite communications services to the US and other Western governments.

Before that, Lebanon-born Sabbagh worked for many years in the UAE and Saudi Arabia as a partner at management consulting firm Booz & Co., specializing in telecommunications and media.

He takes a broad view of the digital communications business in the five business sectors DarkMatter serves.

“How do I come up with technologies, devices and applications that can give me peace of mind that communication on these devices is secure? As we were doing work on those things, we also started engagement in areas concerning digital transformation, and questions about how the government provides new services that are digitized to all its citizens and residents,” he said.

A key part of DarkMatter’s work is the interaction of humans with technology. Sabbagh cites a recent cyber-attack in Singapore, in which the country’s medical records were accessed and compromised.

After a lengthy audit, the authorities discovered there were two main reasons. One was that on the network there were patches and fixes that weren’t done. So there was something that belonged to the realm of known vulnerability that wasn’t attended to,” he said.

“The second one was human capital. Through human intervention that attack was enabled, not by design but by accident. It boils down to technology and humans, the story of humanity since we invented fire.”

Why is the threat of cyberattack so high up the list of concerns for the Middle East? Sabbagh examined this in a work he co-authored in 2008 entitled “Oasis Economies,” which examined the social tensions created in traditional Arab societies going through the modernization process. He feels the lessons then still apply today.

“My conclusion is that as you try to liberalize economies but try to preserve the social safety net, as you try to liberalize the way people go about their daily lives while preserving the culture, you’re constantly trying to manage these tensions,” he said.

Highly digitized and progressive Arab youths live side by side with more conservative forces, he added.

Smart nations and smart business can’t be truly smart unless they secure their communications.

Karim Sabbagh, DarkMatter CEO

“In one family, even one household, you move from a very traditional way of living to the kids being astrophysicists, building probes to land on the moon. I’m not exaggerating,” he said.

“We have a highly digitized young population, not like the ageing populations of the West. These digital tools are available to them and they can be very productive, but if used inadequately they can be very harmful. So it doesn’t surprise me that the awareness around cyber threats in the region is very pronounced, and rightly so.”

These issues are especially pronounced in Saudi Arabia, which is going through the rapid transformational process of its Vision 2030 reform plan.

The modernization strategy involves the creation of a series of hi-tech hubs such as NEOM, the $500 billion megaproject involving a highly automated conurbation in the Kingdom’s northwest.

“In the old world, the industrial technology and the information technology operated in two different environments, but today there’s a big intersection between them,” Sabbagh said.

“The bigger the intersection the more efficient these businesses are, but the downside is that there’s a bigger attack surface from a cybersecurity standpoint. So the more countries such as Saudi Arabia advance their digitization processes, the more advanced they’ll become, but the downside is that the attack surface expands.”

The solution, he believes, is “defense, defense, defense” against cyberattack. “The best attack is defense,” he added.

Expansion of DarkMatter into Saudi Arabia is one of the priorities for later this year, moving the firm outside its UAE base and complementing existing business centers in Canada, Finland and India. “Saudi Arabia is probably one of the markets we’ll look at very closely,” he said.

One line of defense Sabbagh unveiled at IDEX was the new version of DarkMatter’s successful Katim phone, an ultra-secure and virtually indestructible mobile device that the firm is aiming at the defense, energy and government sectors.

The first version of the device was a big commercial success, but the second is designed to operate in even more hostile environments, with the promise of total data security.

“It’s designed to military standards in terms of ruggedness. Our engineers ran over it in a truck, and I wasn’t amused until they showed me a video of the phone working afterward,” he said.

“You can immerse it in water for 30 minutes and it still works. If the phone detects any attempt to try to interfere with it, either physically or via software, the data stored on it will automatically self-destruct. It’s a leap forward for us,” he added, emphasizing the “quantum resistant crypto protocols” that DarkMatter uses.

What do governments, always protective of data security, think of the new device? “The government is one of the users, as well as businesses where you have critical infrastructure being deployed,” he said.

Sabbagh summed up DarkMatter’s essential business philosophy: “Smart nations and smart business can’t be truly smart unless they can secure their communications. If they aren’t secure I can access their communications, hack them and interrupt their operations. People can give me all the smart slogans they want, but if I can hack you and interrupt your information, that’s not a very smart proposition.”