Posts Tagged ‘Deutsche Telekom’

Germany looks to ban Huawei from 5G

January 17, 2019

Berlin turns against Chinese telecoms supplier over security concerns

Image result for Huawei, 5G, photos

By Guy Chazan in Berlin

Germany is looking at how to stop the use of Huawei products in the build of its 5G network, making it the latest western country to clamp down on the company over mounting security concerns.

The German government is considering introducing security requirements for 5G, the next generation of mobile communications, that would be harder for Huawei to meet. The initiative was first reported by the German daily Handelsblatt. A statement from the economics ministry said the security of the future 5G network and the safety of products offered by different telecommunications suppliers was “highly relevant” for the German government, and it would be “guided” by such concerns in its buildout of the network. But it also stressed that no decision had yet been taken on concrete measures.

The German move came at a time when the US has been actively lobbying countries to ban Huawei from developing 5G mobile phone networks on national security grounds, arguing that its technology can be used by the Chinese government for spying or cyber attacks. The tough new position is a shift from Berlin’s previous view of the company.

In October, Günter Krings, deputy interior minister, wrote to the Green MP Katharina Dröge that there was “no concrete legal basis” for excluding any particular equipment supplier from the 5G buildout in Germany “and none is being planned”. He said the German law on telecommunications was contained provisions that were “sufficient . . . to address possible security concerns”.

But as the deadline for Germany’s 5G buildout approaches, the government’s position has hardened. The 5G spectrum licences are to be auctioned this spring, and telecoms companies need clarity by then as to which suppliers they can work with.

Last month Deutsche Telekom said it would reassess its system for procuring network equipment. A spokesman told Handelsblatt that the company “takes the global discussion about the security of network elements made by Chinese producers very seriously”. Opposition MPs said they were pleased that the German government was finally taking security concerns over Huawei seriously.

“For too long, the government underestimated the explosive nature of this issue,” said Katharina Dröge. She called on ministers “to finally say publicly what they think of Huawei being involved in the 5G buildout.” The EU is also increasingly concerned about Huawei.

Andrus Ansip, the senior Brussels official on tech policy, recently warned that Chinese groups could be ordered by Beijing’s intelligence services to build “back doors” into their systems. Australia and New Zealand, which are members of the “Five Eyes” intelligence sharing network with Canada, the US and the UK, have already blocked Huawei from forming partnerships with local telecoms carriers.

The UK and Japan have also publicly distanced themselves from Huawei’s plans to supply 5G telecoms, a breakthrough technology that will allow objects such as fridges, cars and smartphones to “talk” to each other. This week Huawei’s founder and president Ren Zhengfei broke his silence over the allegations against the company, saying it had “never received any request from any government to provide improper information”.

The 74-year-old former Chinese army engineer also denied that China’s new national security law obliged Huawei to build back doors into its telecoms equipment in order to gather electronic intelligence. Huawei has also been thrown into crisis by the arrest of Meng Wanzhou, its chief financial officer and Ren Zhengfei’s daughter, on charges of breaking US sanctions against Iran as she tried to change planes in Canada.



Amid Growing Global Scrutiny of Huawei, Poland Makes An Arrest

January 11, 2019

“Poland is Huawei’s base camp in the region.”

Detention follows a U.S. push to dissuade allies around the world from using Huawei gear

The Huawei logo
Officers of Poland’s counterintelligence agency this week searched the local Huawei office. Above, a Huawei ad in Warsaw. PHOTO: JAAP ARRIENS/NURPHOTO/ZUMA PRESS

Polish authorities detained and charged a local sales director of Huawei Technologies Co., a Chinese national, with conducting high-level espionage on behalf of China, amid widening global scrutiny by Washington and its allies of the technology giant.

The arrest is another bombshell for Huawei, following the early December detention of the company’s chief financial officer in Canada, at the U.S.’s request, on charges related to Iranian sanctions. Unlike those allegations, the nature of the charges in Poland speak directly to suspicions by Washington and other Western governments that Huawei could be used by Beijing as a global spying tool.

For years, Washington has labeled Huawei a national security threat, saying it could be forced by China to use its knowledge of the telecommunications equipment it sells around the world to tap into, or disable, foreign communications networks. Huawei has denied that forcefully through the years. Part of its defense has been that it hadn’t been implicated in overseas spying allegations.

Officers of Poland’s counterintelligence agency this week searched the local Huawei office, leaving with documents and electronic data, as well as the home of the Chinese national, said Stanislaw Zaryn, a spokesman for Poland’s security coordination office. The Chinese individual wasn’t named, but was identified by Polish state television as a graduate of one of China’s top intelligence schools, as well as a former employee of the Chinese consulate in the port city of Gdansk.

People familiar with the matter identified him as Weijing Wang. He is known in Poland as Stanislaw Wang, according to these people and a public LinkedIn page that matches his biographical details.

A person who knew Mr. Wang described him as a well-known figure in local business circles, often spotted at events sponsored by Huawei in Poland. “He spoke great Polish,” this person said. “He was a really well-known Chinese guy in Poland and was always around.”

Before taking over as a Huawei sales director in the country, Mr. Wang was Huawei’s public-relations director in the country, according to this person and the LinkedIn page.

Why China's Huawei Matters

Why China’s Huawei Matters
Chinese telecom giant Huawei has long caused tension between Washington and Beijing. WSJ’s Shelby Holliday explains what the company does and why it’s significant. (Photo: Aly Song/Reuters)

In Poland, Mr. Wang worked in Huawei’s enterprise division, handling sales of information-technology and communications equipment to government customers, according to people familiar with the matter. That business area sometimes involves a higher level of scrutiny than others, given that the buyers are in the government, one of these people said.

Image result for zte corp, photos

As part of the same investigation, Poland’s Internal Security Agency also detained one of its own former officials, a Polish citizen who was deputy head of the agency’s IT security department. That person, who wasn’t publicly identified, had knowledge of the inner workings of the Polish government’s encrypted communications network, which is used by its top officeholders, the state broadcaster said.

Both men have been charged with espionage, according to Mr. Zaryn. The crime carries up to 10 years’ imprisonment. They have pleaded not guilty.

“Huawei is aware of the situation, and we are looking into it,” a spokesman for the company said. Huawei said it complies with laws and regulations in the countries where it operates, and requires employees to do the same. A Chinese Foreign Ministry statement said Beijing “is highly concerned about it. We require relevant countries to handle relevant cases fairly and in accordance with law,” the statement said.

Polish counterintelligence officers also searched the offices of French telecommunications carrier Orange SA, said Mr. Zaryn.

Orange said it was aware of the search of its offices in Poland. In a statement, the company’s local unit said it had handed over belongings of one of its employees. “We have no knowledge if there is any relation of these actions to his professional duties,” it said. Orange said it was cooperating with the probe.

The Polish national who was arrested had previously worked for Orange, according to state-owned television. Mr. Zaryn declined to discuss the personal details of the Polish citizen, but said he was a veteran of the country’s intelligence and law-enforcement agencies who had held director-level positions in several.


“He was in many different institutions,” he said. That included the police and Poland’s secret services. The individuals were detained on suspicion of espionage earlier this week. A judge has ordered them detained for three months, Mr. Zaryn said.

Mr. Zaryn said Poland acted alone in the probe. “I do not think there was any international cooperation in this investigation.”

Last month, Canadian authorities, at the behest of U.S. officials, arrested Huawei CFO Meng Wanzhou on charges she lied to banks about the company’s business in Iran. Ms. Meng denies the charges.

In 2012, a U.S. congressional report labeled Huawei a national security threat, a finding the company said was politically motivated. Huawei has long denied that it is a spying threat, saying that it is owned by its employees and operates independently of Beijing.

The congressional report all but shut the telecom-gear and smartphone maker out of the U.S. market. Still, it flourished overseas, quickly eclipsing Western rivals like Nokia Corp.and Ericsson AB as the world’s biggest seller of telecom gear—equipment like cell towers and switches that enable mobile networks.

For much of last year, American officials redoubled efforts to limit sales of Huawei gear in the U.S. Some small American carriers, particularly rural ones, use the gear, partly because it is cheap.

Washington also started more recently to press allies aggressively to avoid using Huawei gear. Australia has also been out front raising public concern about Huawei equipment. A number of countries, including Australia, the U.K., Germany, New Zealand and Japan have agreed to review their telecom-gear supply chain, or have specifically restricted the sale of Chinese equipment, in the wake of the new scrutiny.

The push from Washington comes as many carriers around the world are starting to roll out 5G, the latest generation of mobile-telecom technology that promises faster connections and is envisioned to help enable internet connections for everything from factories to toothbrushes.

Last month, Germany’s Deutsche Telekom AG announced the launch of the country’s first fully functional 5G network using equipment from Huawei.

Poland has been Huawei’s top market in Central and Eastern Europe, and its ambitions to roll out 5G equipment in the region have gone farther in Poland than most places outside China. Last year, the government named the company an official partner of its 5G strategy. In September, Huawei and Orange’s local unit began installing the first test antennas of a 5G network the two companies hoped to launch together. In November, the prime minister’s office said Huawei would build a science-and-technology center in the capital. It already runs a research-and-development center there.

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“Poland is Huawei’s base camp in the region,” said Mo Jia, an analyst at Canalys. “And this market is very critical to Huawei’s smartphone business.”

Counterintelligence agencies elsewhere in the region, however, have issued unusually public warnings against Huawei for years, part of broader international scrutiny on cyber vulnerabilities in what is the North Atlantic Treaty Organization’s eastern flank, a front line for cyberattacks against U.S. allies. As far back as 2013, the Czech Security Information Service, a domestic security agency, suggested excluding Huawei from public tenders and said the company might be installing backdoors on its equipment to allow outsiders to log into government computers from elsewhere.

Besides telecom equipment, Huawei is also the world’s No. 2 smartphone maker, behind South Korea’s Samsung Electronics Co. , and has been a top player in Poland’s market for the devices. Until as recently as the first quarter of 2018, it was the top seller of smartphones there, though has more recently been edged out by Samsung, according to research firm IDC.

Hope for the best and prepare for the worst.   Photographer: JUNG YEON-JE/AFP

Write to Drew Hinshaw at and Dan Strumpf at

Berlin’s dilemma: My way or the Huawei?

January 2, 2019

As the US pushes allies to follow suit in closing the door to Chinese telecom firms, Berlin is finally waking up to cybersecurity risks. But some say Germany is still underestimating a wider threat.

A man lights a cigarette outside a Huawei retail shop in Beijing

“The West’s theory that China would liberalize as it acquired wealth has been proven incorrect, and now each nation is faced with a fundamental question: Is it morally right, and even safe, to increase the power of a brutally dictatorial regime to provide economic benefits for our own industries?”

Nicholas Eftimiades, ex-CIA and now lecturer at Penn State, doesn’t mince his words, many of which chime with the increasing ebullient stance in Washington.

And he has a point, one that must be considered as Germany decides whom to select to implement its 5G next-generation mobile broadband, which will replace its existing 4G system.

China’s Huawei has been a front-runner, but that may be about to change as Washington ramps up whatever pressures it can to gain advantage in its trade spat with Beijing. In particular it wants Germany to follow other Western countries in banning or restricting the engagement of Chinese firms such as Huawei and ZTE in their domestic internet systems.

The ongoing merger of T-Mobile US and Sprint Corp. in this case is crucial and could have huge implications for Deutsche Telekom (DT), T-Mobile’s parent company. DT’s promise to end the use of Huawei equipment could tip US regulators to sign off on their $26 billion (€22.5 billion) merger.

But Germany has relatively good relations with China and DT with Huawei, and Berlin has sought to keep a distance from the US’s aggressive trade stance toward Beijing.

The issue goes to the heart of issues of global leadership, technological change and where middle-ranking states such as Germany stand, weighing up traditional alliances against cost and technological necessity.

What China wants, Germany has

“Germany is an important target for Beijing, because its companies are world-class in areas the Chinese Communist Party considers strategic,” Peter Mattis, research fellow in China Studies at the Victims of Communism Memorial Foundation, told DW.

China targets in particular solar energy, integrated circuit manufacturing equipment and assembly technology, advanced robotics, high end computer chips and satellite technologies.

Realizing, for example, it can’t compete with German carmakers, Beijing has focused on battery cells and electromobility and has long sought to develop its own commercial jet to break up the Airbus and Boeing duopoly.

China is said to employ a million intelligence agents, many of whom are focused on obtaining German technologies. The German Interior Ministry estimates that Chinese economic espionage could cost Europe’s largest economy between €20 billion and €50 billion a year.

Berlin wakes up to the threat

Germany has for some time also accused Beijing of interfering in the EU, in particular in Greece and Hungary, and in the West Balkans and is pushing for a European investment screening process to better control foreign investment in strategic areas.

So the DT case will be revealing on several levels. The company said recently it was reviewing its vendor plans in Germany and other European markets where it operates.

According to the Bundesnetzagentur (BNetzA), the German Network Agency for its 5G auction, security is not included in the conditions for awarding the contract.

And some agree this is the way to go. “I think Germany is right to not blindly follow any foreign advice regarding Chinese 5G manufacturers,” Jan-Peter Kleinhans, project director for IoT Security at Berlin-based think tank Stiftung Neue Verantwortung, told DW. “This has to be taken with a grain of salt as it’s part of the ongoing trade tensions/war between China and the US.”

T-Mobile US and Sprint branches in New YorkThe merger of T-Mobile and Sprint, the third- and fourth-largest carriers in the United States, is finally taking shape, with the transaction to close in the first quarter of 2019

A question of progress

China invested heavily in the standardization of 5G because it realized that with 3G/4G it had lost the battle over standards and was thus dependent on foreign, mainly US, companies. “With 5G they did not make the same mistake again,” Kleinhans says.

“Europe has to live with the fact that China has highly competitive ICT products and plays an ever increasing role in international standardization,” Kleinhans says. “If we are uncomfortable with that and if we do not want to be dependent on Chinese tech in the future, we simply need to invest, heavily, in European, indigenous innovation,” he adds.

But are we missing the point?

Kleinhans and others believe China conducts extensive industrial espionage, but that this should not be conflated with 5G. “Banning Chinese 5G manufacturers from public procurement because of fear over industrial espionage does not make sense,” Kleinhans says.

Huawei already provides about 45 percent of Germany’s 4G base stations and so far there is been no case in which they have been exploited for industrial espionage, Kleinhans says.

“It is technically possible but absolutely not efficient to use base stations for industrial espionage. It is much easier to use ‘conventional’ attack vectors such as phishing mails or other means of network exploitation to compromise a network and establish persistent access to then be able to steal blueprints, data,” he says.

It is difficult to assess these threats from outside the security community, David Kennedy, a telecom analyst, said. “But there have never been any reported instances of backdoors or anything similar in Huawei equipment,” he told DW.

However, it could still be a rich hunting ground in the future for hackers,” Munich-based Mike Hart, VP of Central Europe at FireEye, a publicly listed cybersecurity company, told DW.

By hook or by crook: 5 ways the Chinese obtain German secrets

1. Acquisitions or buying into ideas

A 2018 report by the BfV, Germany’s domestic intelligence agency, said the activities of China’s intelligence services include a rising number of acquisitions of German companies. Billionaire Li Shufu, for example, become the biggest single shareholder in Mercedes-Benz parent Daimler and robot maker Kuka was bought by Midea Group.

2. Social media or how to make false friends and influence people

In late 2017 it was reported that up to 10,000 German citizens had been contacted by fake social media accounts, mainly via LinkedIn accounts which were subsequently found to be linked to China’s secret service.

3. Hacking or how to hop the clouds

The Federal Office for Information Security (BSI) recently identified small weak-link service firms as the gateways used to hack German industry, Süddeutsche Zeitung reported. The US named German firms targeted by “cloud hopper” hackers, allegedly from China.

4. The old fashioned way — bribery

In 2016, a German MP was contacted by a Chinese businessman apparently called Jason Wang, who portrayed himself as a connected business figure and offered the MP €30,000 for insights into his work. ‘Jason Wang’ turned out to be one of 500 fake social media accounts run by the Chinese.

5. Academic collaboration: Flattery will get you everywhere

China uses a range of open and hidden channels, offering investments, cooperation agreements, building networks and organizing joint conferences. This subtle networking can then be mobilized when needed.

Britain’s Defense Secretary Has ‘Deep Concerns’ Over Huawei Role in 5G Network

December 28, 2018

Britain’s defense secretary has said he has “grave” and “very deep concerns” about Chinese technology company Huawei’s involvement in the UK’s new 5G mobile network.

Gavin Williamson told The Times of London that Beijing sometimes acts “in a malign way” and said that a widespread review of security related to Huawei would be warranted.

Huawei is a major supplier of broadband gear and mobile networks in the UK, meaning its products are used in critical national infrastructure. The company has supplied broadband equipment to BT, the UK’s largest telecom provider, and mobile networks to Vodafone.

Williamson’s statements come as the United States, New Zealand, Australia, and Japan have all banned Huawei from involvement in their 5G upgrades.

Companies in France and Germany also have raised concerns about Huawei, with France’s Orange saying it wouldn’t hire the company to build out its 5G network, while Germany’s Deutsche Telekom announced that it was “reassessing [its] procurement strategy,” following the recent scrutiny of Huawei.

Logo von Huawei (Reuters/H. Hanschke)

“I have grave, very deep concerns about Huawei providing the 5G network in Britain. It’s something we’d have to look at very closely,” Williamson told The Times.

“We’ve got to look at what partners, such as Australia and the United States, are doing to ensure that they have the maximum security of that 5G network. We’ve got to recognize the fact, as has been recently exposed, that the Chinese state does sometimes act in a malign way,” Williamson said.

A sign that reads "5G park" inside the Huawei global headquarters
A sign that reads “5G park” inside the Huawei global headquarters in Shenzhen, China, on Dec. 18, 2018. (Nicolas Asfouri/AFP/Getty Images)
Huawei has repeatedly maintained that it’s a private company not under the control of the Chinese regime and isn’t subject to Chinese security laws overseas.However, it is well-documented that Chinese companies are linked to the communist regime. Many firms are required by law to establish Communist Party branches that can take part in decision-making to ensure that the company’s activities are in line with the Party’s policies.

Ren Zhengfei, the founder of Huawei, has expressed how important 5G is to the company.

“The war of 5G is related to Huawei’s future fate,” Chinese media reported Ren as saying during a November company meeting. “We must win the competition for 5G networks, and we will not hesitate to pay the full price in order to achieve victory.”


The company has attempted to mitigate concerns about its security by offering $2 billion to make changes in its hardware and software required by Britain’s security agencies.

However, earlier this month, European Union technology commissioner Andrus Ansip raised concerns about the Chinese communist regime’s rule that technology companies cooperate with its intelligence services.

“This is about mandatory backdoors,” Ansip told Euractiv. “It is not a good sign when companies have to open their systems to kind of secret services.”

Ansip added that “ordinary people” have reason “to be afraid” of Chinese companies like Huawei.

Andrus Ansip
Andrus Ansip, European Commissioner for the Digital Single Market, in Brussels on March 25, 2015. (Emmanuel Dunand/AFP/Getty Images)

Alex Younger, the head of Britain’s MI6 spy service, said in a rare public speech Dec. 3 that the UK would need to decide how comfortable it is having Huawei involved in critical communications equipment.

“We need to decide the extent to which we are going to be comfortable with Chinese ownership of these technologies and these platforms in an environment where some of our allies have taken a quite definite position,” Younger said.

BT has since said it won’t be using Huawei’s hardware in its 5G network, and has also begun removing the Chinese company’s equipment from the “core” of its 3G and 4G mobile networks. It also will remove any Huawei gear found in a new communications system being developed for the UK’s emergency services, though BT didn’t say why.

Read the rest:

Huawei’s troubles grow in Europe as more countries look at cybersecurity

December 24, 2018

Germany’s Deutsche Telekom said that it was re-evaluating its procurement strategy after network security concerns from Chinese manufacturers

Belgium’s cybersecurity agency is considering a ban on Huawei after the UK’s MI6 raised concerns on Chinese ownership of these technologies

Huawei gear will be ripped out of the core part of a U.K. police communications network

The U.S. dispute with China over a ban on tech giant Huawei is spilling over to Europe, the company’s biggest foreign market, where some countries are also starting to shun its network systems over data security concerns.

Some European governments and telecom companies are following the U.S.’s lead in questioning whether using Huawei for vital infrastructure for mobile networks could leave them exposed to snooping by the Chinese government.

Telekom Bilanz-Pressekonferenz

Telekom chief Rene Obermann

Bans in Europe could significantly increase the financial pressures on Huawei. They would also cost Europe tens of billions of dollars as the region looks to build up “5G” networks, which are meant to support a vast expansion in internet-connected things, from self-driving cars to factory robots and remote surgery.

“Europe is still divided over Huawei, but the trendline is moving in a fairly clear direction” as the U.S. exerts pressure on allies to block it, said Thorsten Benner, director of the Berlin-based Global Public Policy Institute think tank.

Geopolitical tensions over Huawei intensified after its chief financial officer, who is also the daughter of founder Ren Zhengfei, was arrested Dec. 1 in Canada in connection with U.S. accusations that the company violated restrictions on sales of American technology to Iran.

Huawei has been blocked in the U.S. since 2012, when a House Intelligence Committee report found it was a security risk and recommended that the government and private companies stop buying its network equipment.

Germany’s Deutsche Telekom said last week it “takes the global discussion about the security of network elements from Chinese manufacturers very seriously.” The company said it uses multiple companies to build its network, including Ericsson, Nokia and Cisco.

“Nevertheless, we are currently reevaluating our procurement strategy,” the company said.

The statement is significant because until recently it had been one of Huawei’s “biggest cheerleaders” based on its cheap and reliable equipment, said Benner.

It came shortly after Alex Younger, the director of Britain’s Secret Intelligence Service, or MI6, said in a speech that Britain needs “to decide the extent to which we are going to be comfortable with Chinese ownership of these technologies,” according to local media reports.

At about the same time, mobile provider British Telecom said it was removing Huawei equipment from key parts of its current 3G and 4G networks as part of an internal policy not to use it for core infrastructure, which will also apply to 5G networks.

The British government-run center that tests the company’s equipment and software this summer identified “shortcomings in Huawei’s engineering processes that have exposed new risks” in U.K. networks. Huawei said it’s working on fixing those issues.

Norway’s telecom ministry said it was considering clarifying requirements from network operators, without being more specific.

Belgium’s cybersecurity agency is reportedly considering a ban on Huawei. And the Czech Republic’s prime minister ordered his government office on Tuesday to stop using Huawei mobile phones, after the national cybersecurity agency warned that products by Huawei and another Chinese telecom company, ZTE, pose “a security threat.”

The European Union’s head of technology policies, Andrus Ansip, said “we have to be worried” about possible security risks from Huawei when asked about the company’s role in European 5G and driverless car projects.

Huawei, founded in 1987 by a former military engineer, denies accusations it’s controlled by China’s ruling Communist Party or designs equipment to facilitate eavesdropping. It said it recognizes and shares security concerns around the rollout of new 5G networks and is happy to take part in Deutsche Telekom’s review.

Associated Press


Huawei gear pulled from $3 billion U.K. police phone network


Huawei Technologies Co. gear will be ripped out of the core part of a U.K. communications network for police and other emergency responders by the company delivering the £2.3 billion ($3 billion) project, BT Group PLC.

BT has been pulling equipment from the Chinese tech giant out of its own core structure since the 2016 acquisition of mobile carrier EE, which used Huawei gear throughout its systems. That work extends to the Emergency Services Network EE has been building for Britain, though some Huawei parts will remain in the broader access network.

While BT says it’s been an ongoing process to remove some Huawei gear and the ESN decision aligns with a long-standing corporate policy to keep the Chinese company out of the core, critics of Huawei will be emboldened by the step to limit its involvement. Huawei has come under fire from governments globally over fears its equipment could enable Chinese spying.

The firm, which has always denied connections with the state and any espionage risks, has been dragged into a trade war between the U.S. and China, with American officials trying to persuade allies to block the tech company from rollouts of next-generation mobile networks. Australia, New Zealand and Japan have all followed the U.S. in imposing bans against Huawei in recent months, and concerns have been raised by authorities in European countries including the U.K., Germany and France.

Image result for Britain, police, first responders, photos

Fully replacing Huawei parts in the core part of the network will take up to four years, with BT footing the bill. A government spokesman told the Sunday Telegraph — which first reported the ESN action — that while Huawei parts would be removed, it was content the emergency systems infrastructure does not pose a security concern.

“We have ongoing plans to swap to a new core network vendor for Emergency Services Network, in line with BT’s network architecture principles established in 2006,” an EE spokesperson said in emailed comments. “This will be managed with no disruption to the ESN service.”

A Huawei spokesman told the Telegraph the company had worked with BT for 15 years and that the British carrier had a longstanding policy to use different vendors for different network layers. BT said Huawei remained an important equipment provider, according to the report.

Are Huawei’s Global Ambitions Seriously Damaged? — Is Made in China 2025 “On Hold”?

December 16, 2018

While a Huawei executive faces possible U.S. charges over trade with Iran, the Chinese tech giant’s ambition to be a leader in next-generation telecoms is colliding with security worries abroad.

Australia and New Zealand have barred Huawei Technologies Ltd. as a supplier for fifth-generation networks. They joined the United States and Taiwan, which limit use of technology from the biggest global supplier of network switching gear. This week, Japan’s cybersecurity agency said Huawei and other vendors deemed risky will be off-limits for government purchases.

None has released evidence of wrongdoing by Huawei, which denies it is a risk and has operated a laboratory with Britain’s government since 2010 to conduct security examinations of its products. But the accusations, amid rising tension over Chinese technology ambitions and spying, threaten its ability to compete in a sensitive field as carriers prepare to invest billions of dollars.

Huawei (Reuters/H. Hanschke)

“This is something that’s definitely concerning Huawei at this stage, because there is a political angle to it and a business angle,” said Nikhil Bhatra, a senior researcher for IDC.

Huawei is no ordinary electronics supplier. The company founded in 1987 by a former military engineer is China’s first global tech brand and a national champion at the head of an industry Beijing is promoting as part of efforts to transform this country into a technology creator. It has China’s biggest corporate research-and-development budget at 89.7 billion yuan ($13 billion) in 2017 — 10 percent more than Apple Inc.’s — and foreign customers can draw on a multibillion-dollar line of credit from the official China Development Bank.

That puts Huawei at the heart of strains over the ruling Communist Party’s technology aspirations, competition with Western economies and ties between companies and government, including possibly spying.

A European Union official, Andrus Ansip, expressed concern that Chinese rules requiring telecom equipment suppliers to cooperate with intelligence services would involve possible “mandatory backdoors” in computer or telecom systems.

“Do we have to be worried about Huawei and other Chinese companies? Yes, I think we have to be worried,” said Ansip, the trade bloc’s vice president for a digital single market.

The company says it is employee-owned and operates independently. It denies it designs equipment to allow eavesdropping or that it is controlled by the Communist Party — a stance critics including some U.S. senators say is doubtful in China’s state-dominated system. The company notes it uses the same global components suppliers as Western manufacturers.

“Not a single shred of evidence against the company has ever been presented,” Huawei said in a written response to questions.

The company is the “most examined telecoms equipment vendor,” the statement said. It said foreign officials visit regularly to see “the lengths we go to assure them of the integrity of our technology.”

Huawei, headquartered on a leafy campus in Shenzhen, near Hong Kong, has been working on 5G since 2009 and is one of the major suppliers of the technology, along with Sweden’s LM Ericsson and Finland’s Nokia Corp.

The company whose technology winds up being adopted stands to reap billions of dollars from sales and license fees.

5G promises more than just faster mobile phone service. It is designed to support vastly expanded networks of devices from internet-linked cars and medical equipment to factory robots and nuclear power plants. Annual sales of 5G network gear are forecast to reach $11 billion by 2022, according to IHS Markit.

That makes it more politically sensitive, raises the potential cost of security failures and requires more trust in suppliers.

Even a “really minuscule” risk could disqualify a provider, said Andrew Kitson, head of technology industry research for Fitch Solutions.

But Kitson sees commercial motives behind the accusations against Huawei. He said many come from U.S. and European suppliers that are losing market share to Chinese rivals.

“There never has been any actual proof,” said Kitson. “They’ve only got to make a few insinuations for other governments to sit up and think, hang on, even if there is no proof, it is too much of a risk.”

Huawei took a new hit on Dec. 1 when its chief financial officer, Meng Wanzhou, was arrested in Vancouver on U.S. charges of lying to banks about transactions with Iran.

Huawei is more politically important than ZTE Corp., a Chinese rival that was nearly driven out of business after Washington blocked it from buying U.S. technology over exports to Iran and North Korea. President Donald Trump restored access after ZTE paid a $1 billion fine, replaced its executives and hired U.S.-picked compliance officers.

That won’t work with Huawei, which is the “key to Beijing’s aspirations to lead globally” on 5G, Eurasia Group said in a report. It said Chinese leaders would see an attempt to impose ZTE-style controls as “tantamount to an open technology war.”

Huawei’s U.S. business evaporated after a 2012 congressional report labeled the company and ZTE security threats. The same year, Australia banned it from bidding on a national high-speed broadband network.

Taiwan, the self-ruled island Beijing claims as its territory and regularly threatens to attack, imposed curbs in 2013 on Huawei and other Chinese telecoms technology. Lawmakers are discussing expanding the controls.

Elsewhere, Huawei supplies phone carriers in Asia, Africa and Europe. The company says it serves 45 of the 50 biggest global telecom operators. Its 2017 global sales rose 16 percent to 604 billion yuan ($92.5 billion) while profits increased 28 percent to 47.5 billion yuan ($7.3 billion).

Huawei accounted for 28 percent of last year’s $32 billion global sales of mobile network gear, according to IHS Markit. Ericsson was second with 27 percent and Nokia had 23 percent. ZTE, South Korea’s Samsung Electronics Corp. and other vendors made up the rest.

Asked about the impact of security concerns on its 5G business, Huawei said this year’s total revenue — which also includes the No. 3 global smartphone brand and an enterprise unit — should exceed $100 billion. That would be an 8 percent gain over 2017.

Washington is pressing allies to shun Huawei, but Germany, France and Ireland say they have no plans to ban any 5G network suppliers.

Huawei “has an important place in France” and “its investments are welcome,” the country’s economy minister, Bruno Le Maire, said Dec. 7, according to news reports.

The company has agreements to field test 5G equipment with Deutsche Telekom, Bell Canada, France’s Bouygues, Telecom Italia, India’s Bharti Airtel and carriers in Singapore, South Korea and Ireland.

China’s foreign ministry complained critics were “hyping so-called threats” to hamper Huawei’s business without evidence.

As for Ansip’s concern about eavesdropping, “we have no such law that authorizes” backdoors, said a spokesman, Lu Kang.

IDC’s Bhatra said excluding Huawei would leave countries with only two major 5G suppliers, Ericsson and Nokia. That would limit competition, raise prices and might slow innovation, he said.

Already, industry analysts say telecoms equipment costs more in the United States and other markets that lack lower-priced Chinese competitors.

“There are quite widespread implications,” said Bhatra.

Associated Press


See also:

Doors are slamming shut for Huawei around the world


HSBC’s involvement in Huawei case could still complicate trade talks with China even though the bank isn’t being investigated


Attention digital engineers: HSBC wants you to consider a career in banking


(This will likely add to the perception of China as a nation that does not obey the rule of law, many in the U.S. say)


 — (Wang Yi hints that human rights laws are being violated)


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As U.S. sanctions near, Europe fails to protect Iran deal

September 24, 2018

At a meeting in Washington after Donald Trump pulled out of the Iran nuclear deal in May, a senior U.S. official told European diplomats that their efforts to save the deal by protecting EU investment in the Islamic republic were pointless.

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“You can’t,” the official said, and with just six weeks until the next wave of U.S. sanctions hits Iran on Nov. 4, European diplomats acknowledge he was right.

The European Union has failed to design a workable legal shield for its companies in Iran to beat the global reach of the U.S. financial system and defy President Trump, the diplomats say.

Instead, Europe is engaging with Russia and China to show that it is at least searching for ways to ensure Tehran gets some benefits from its oil sales so Iranian President Hassan Rouhani has a reason to keep to the accord, according to seven European officials and diplomats.

Facing a collapsing economy at home, Rouhani is in a bind as he addresses the U.N. General Assembly on Tuesday, pressed by hardliners to abandon the 2015 deal as its economic benefits evaporate.

EU-Iranian trade this year is running at 2 billion euros ($2.35 billion) a month, but this is expected to fall as big European companies pull out and Iranian oil exports are choked off by U.S. sanctions.

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European heavyweights Peugeot, Renault, Deutsche Telekom and Airbus are among companies that have pulled out of Iran since May, while Air France and British Airways have also now ended operations after falling traffic.

Denmark’s A.P. Moller-Maersk will stop shipping Iranian oil.

The accord, signed in Vienna by the United States, France, Britain, Germany, China, Russia and Iran, lifted sanctions in exchange for Tehran limiting its nuclear program, designed to prevent the country from obtaining a nuclear bomb.

Trump says the deal, the biggest foreign policy achievement of his Democratic predecessor, Barack Obama, failed to stop Iran’s ballistic missile program, its nuclear activities beyond 2025 or its role in wars in Yemen and Syria.

Britain, France and Germany say abandoning the pact does not address U.S. security concerns and instead threatens stability in the Middle East. Iran denies seeking nuclear weapons.

The U.S. Treasury is reimposing sanctions on Iran’s energy, auto and financial sectors in two phases, starting this August.

The EU has tried to neutralize the U.S. penalties with measures such as euro-denominated finance lines and a law that could make it an offense for EU citizens to comply with U.S. sanctions. But these have not reassured companies that they would be protected against U.S. fines or risks to their U.S.-based activities if they did business in Iran, diplomats said.

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FILE PHOTO: Iran’s President Hassan Rouhani

“If you decide to do business with an enemy of the United States of America, you will not being doing it with the United States,” said a U.S State Department official. “You will not have access to the U.S. financial system.”

Americans diplomats say the anger that EU diplomats showed in their May meetings with State Department officials in Washington has faded. The Europeans are beginning to grudgingly accept their failure to shield European investment in Iran from U.S. sanctions, the American envoys in Europe say.

“When the sanctions really start to hurt at the end of the year, it will make it much harder because what we will have on the table won’t be enough,” said one senior European diplomat.


The European Commission’s boldest idea is for European central banks to pay Iran directly for oil in euros and bypass the U.S. financial system. But it has so far proved too politically sensitive at both the European Central Bank and Germany’s Bundesbank, two diplomats said.

In Luxembourg, the European Investment Bank, the bloc’s lending arm, rejected lending to EU companies in Iran for fear of jeopardizing its ability to raise money on U.S. markets.

Now Berlin, Paris, London and Brussels are working on a barter system once used by Moscow during the Cold War to exchange Iranian oil for European goods without money changing hands, using a so-called special purpose vehicle – a company set up to handle the business.

Such a system could appeal to Asian countries that purchase Iranian oil, such as India, which had contacted Brussels about avoiding U.S. sanctions. But diplomats say its complexity is evidence that the European powers are cornered.

“It’s very complicated and I think it would only work in a limited way,” a senior European diplomat said on condition of anonymity because the discussions are confidential.

Another European diplomat echoed that, saying: “By the end of the year, we hope to have some of these (proposals) in place and by then we’ll have seen November 4 pass and only then we will see whether what we can do will have any impact.”

In a sign of the obstacles, the European Union’s focus has also shifted to the longer term to try to overcome a perception that European policy is held hostage by the U.S. treasury.

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Jean-Claude Juncker

Commission President Jean-Claude Juncker has proposed promoting the euro as a global currency to challenge the dollar, potentially allowing oil to be priced on world markets in euros. But economists said that China has sought a global role for its renminbi currency for years without success.

“There should be no illusion that we are talking about slow, tectonic changes,” said Nicolas Veron, an economist at Brussels-based think-tank Bruegel.


The European Commission had also been in talks with Japan to avoid U.S. measures, but Tokyo looks set to stop importing Iranian crude by mid-October after the United States ruled out granting waivers from sanctions to any country.

Meanwhile, the United States is pressing to cut Iran out of the Belgian-based SWIFT global payment network that facilitates the bulk of the world’s cross-border money transactions, as it was in 2012 before the nuclear deal.

Although the United States does not hold a majority on SWIFT’s board of directors, the Trump administration could threaten to sanction bankers working at there, diplomats said.

“If you threaten maximum pressure, then it implies no waivers, no softening of the position, no loopholes so it’s only a matter of time,” said a senior French official.

Germany’s Foreign Minister Heiko Maas in August called for a SWIFT-style system independent of Washington, but officials say that is another longer-term, complex project to consider.

Through what one Western official called “strategic messaging”, Europe hopes that by showing Tehran that capitals are working intensively on measures to keep European investment flowing into Iran, the Islamic Republic will stick to the terms of the nuclear accord and avoid doing anything rash.

“I think that the symbolism is the most important thing at this point,” said Sanam Vakil, a senior associate fellow at Chatham House, a London-based international think tank.

Berlin, Paris and London “don’t have the political strength and time to be able to offer Iran anything serious or significant,” she said.

Additional reporting by Alissa de Carbonnel in Brussels; Editing by Giles Elgood



From June 6, 2018


Ministers from Germany, France and Britain have written to senior U.S. officials urging them to protect European companies working in Iran from getting caught up in Washington’s new sanctions on the Islamic Republic.

In the June 4 letter, the foreign and finance ministers singled out key areas where they expected exemptions for EU firms, including pharmaceuticals, healthcare, energy, automotive, civil aviation, infrastructure and banking.

Washington said last month it would impose new economic penalties after pulling out of a 2015 pact that world powers signed with Iran, under which Tehran agreed to curb its nuclear activities in return for sanctions relief.

Germany, France and Britain were all signatories to that deal and said in the letter they were still committed to keeping it going.

“An Iranian withdrawal from the (nuclear agreement) would further unsettle a region where additional conflicts would be disastrous,” said the ministers and the EU’s top diplomat in the letter to the U.S. Treasury Secretary and U.S. Secretary of State seen by Reuters on Wednesday.

The European ministers said they shared most of Washington’s concerns about the status of Iran’s nuclear program after 2025, its development of ballistic missiles and “destabilizing actions” in the Middle East.

But they said preserving the 2015 nuclear deal was “the best basis on which to engage Iran and address those concerns”.

The ministers said they expected the United States as an ally to refrain from taking actions that would harm Europe’s security interests, including secondary sanctions that could prevent the European Union from continuing to uphold the nuclear accord.

“As close allies, we expect that the extraterritorial effects of U.S. secondary sanctions will not be enforced on EU entities and individuals, and the United States will thus respect our political decisions,” they wrote.

The ministers also urged Washington to grant exemptions to maintain banking and financial channels with the Central Bank of Iran and other Iranian banks that are not sanctioned by the EU.

(Reporting by Tom Koerkemeier; Writing by Madeline Chambers and Andrea Shalal; Editing by Paul Carrel and Andrew Heavens)

German firms end Iran projects amid new US sanctions

August 16, 2018

German rail operator Deutsche Bahn and Deutsche Telekom are ending projects in Iran after Washington imposed new sanctions against Tehran and said firms doing business with Iran would be barred from doing business with the United States.

New US sanctions against Iran took effect last week and several European companies have suspended plans to invest in Iran in light of the US sanctions, including oil major Total as well as carmakers PSA, Renault and Daimler.

Deutsche Telecom subsidiary Detecon offers consulting services to companies in the telecommunications industry. (AFP)

State-owned Deutsche Bahn is involved in two projects in Iran via its subsidiary DB Engineering&Consulting, a spokeswoman said on Thursday.

“Both projects will be ended in August and September 2018 respectively,” she said. “Due to the altered banking practice we have sought to bring the contract to an amicable and timely conclusion.”

Deutsche Bahn signed a memorandum of understanding with the Iranian rail operator Bonyad Eastern Railways (BonRail) in May 2017 for the first project, which aimed to identify and address potential in rolling stock and organization, she said.

The second project, which started around 1-1/2 years ago, was a consulting contract for Iranian state railway RAI that included restructuring the company, the spokeswoman added.

Separately, Detecon, a subsidiary of T-Systems — Deutsche Telekom’s IT services arm — has terminated its business in Iran, a spokesman said. Detecon offers consulting services to companies in the telecommunications industry.

“Until the decision to stop operations was made, sales in Iran in 2018 amounted to around €300,000,” he said.

“Given the sensitivity in relations with Iran worldwide, Detecon ended its business in Iran with immediate effect in mid-May 2018.”

The ending of Telekom’s involvement in Iran followed soon after the announcement that its US unit, T-Mobile, would buy Sprint Corp. in a $26 billion deal that remains subject to the approval of US regulators.


ThyssenKrupp hit in ‘massive’ cyber attack — Secrets of Steel, Submarines, Israel Probably Stolen

December 8, 2016


By Eric Auchard and Tom Käckenhoff | FRANKFURT

Technical trade secrets were stolen from the steel production and manufacturing plant design divisions of ThyssenKrupp AG (TKAG.DE) in cyber attacks earlier this year, the German company said on Thursday.

“ThyssenKrupp has become the target of a massive cyber attack,” the industrial conglomerate said in a statement.

In breaches discovered by the company’s internal security team in April and traced back to February, hackers stole project data from ThyssenKrupp’s plant engineering division and from other areas yet to be determined, the company said.

ThyssenKrupp, one of the world’s largest steel makers, attributed the breaches to unnamed attackers located in southeast Asia engaged in what it said were “organized, highly professional hacker activities”.

Globally, cyber attacks on banks, retailers and other businesses have led to widespread consumer data breaches and mounting financial losses in recent years, but revelations of industrial espionage are rare.

ThyssenKrupp’s belated disclosure came a week after an attack on nearly 1 million routers caused outages for Deutsche Telekom customers.

German business magazine Wirtschafts Woche reported the attacks hit sites in Europe, India, Argentina and the United States run by the Industrial Solutions division, which builds large production plants. The Hagen Hohenlimburg specialty steel mill in western Germany was also targeted, the report added.

The company declined to identify specific locations which were infected or why it had not previously disclosed the attack. It said it could not estimate the scale of the intellectual property losses.

A criminal complaint was filed with police in the state of North Rhine-Westphalia and an investigation is ongoing, it said. State and federal cyber security and data protection authorities have been kept informed, as well as Thyssen’s board.

Secured systems operating steel blast furnaces and power plants in Duisburg, in Germany’s industrial heartland in the Ruhr Valley, were unaffected, the company said.

No breaches were found at its marine systems unit, which produces military submarines and warships. The infected computer systems have been cleansed and are now subject to constant monitoring against further cyber attacks.

A previous cyber attack caused physical damage to an unidentified German steel plant and prevented the mill’s blast furnace from shutting down properly.

The country’s Federal Office for Information Security (BSI) revealed two years ago that the attack caused “massive damage”, but gave no further technical details and the location of the plant has remained shrouded in mystery.

Subsequent media reports identified the target as a ThyssenKrupp facility, but the company has denied it was hit.

The company, a major supplier of steel to Germany’s automotive sector and other manufacturers, is looking to merge its European steel operations with Indian-owned Tata Steel (TISC.NS) to combat over-capacity in the sector.

(Editing by Jason Neely/Keith Weir)



 Secrets stolen in cyber attack on German firm making Israeli subs


“ThyssenKrupp has become the target of a massive cyber attack,” the corporation said in a statement.

Israel’s fourth submarine is en route to the navy’s Haifa base from Germany. (photo credit:IDF SPOKESMAN’S OFFICE)

Cyber attacks earlier this year led to hackers stealing technical trade secrets from a German steel-making giant that sells submarines to Israel, Essen-based ThyssenKrupp AG said Thursday.

“ThyssenKrupp has become the target of a massive cyber attack,” the corporation said in a statement.


The cyber attacks were reportedly detected in April and traces of the breaches were traced back to February of this year.

The company stated that it has not identified hacks into its marine systems unit, which manufactures the likes of military submarines and warships sold to Israel.

ThyssenKrupp, one of the world’s largest steel makers, attributed the breaches to unnamed attackers located in southeast Asia engaged in what it said were “organized, highly professional hacker activities.”

The German company did not specify which documents had been stolen, nor the exact extent of their losses.

However, it was reported that cyber hackers had stolen engineering data and information from other divisions of the ThyssenKrupp.

The company has filed a complaint with local police.

Last week, Israeli media reported of an Iranian state-owned firm holding stake in the Germany conglomerate.

Israel’s Defense Ministry later contradicted initial remarks denying any knowledge of Iranian involvement in the German giant.

Following a “thorough examination,” the ministry acknowledged that it had been aware since 2004 of the Iran Foreign Investments Company’s involvement in ThyssenKrupp.

The Iranian investments in ThyssenKrupp began in the 1970s, and were inherited by the Islamic regime when it took over Iran in the 1979 revolution,Yedioth Acharonoth initially reported.

The revelation came amid scrutiny in Israel of other aspects of the Israeli defense ministry’s contract with ThyssenKrupp in 2011.

Attorney General Avichai Mandelblit has ordered the police to look into allegations that Prime Minister Benjamin Netanyahu’s personal lawyer, David Shimron, used his close relationship with the premier to push for purchasing several submarines from ThyssenKrupp, award the company a contract for naval vessels to defend Israel’s gas fields and allow it to build a shipyard in Israel.

JTA contributed to this report.


BERLIN — After hackers infiltrated the German Parliament’s computer network in May 2015, it took nearly a year before the country’s intelligence agency concluded that the attack was most likely the work of their Russian counterparts.

Last week, when 900,000 Germans lost access to internet and telephone services, it took a matter of hours before politicians began pointing fingers at Moscow.

Berlin is now concerned that Germany will become the next focus of Moscow’s campaign to destabilize Western democracies as national elections approach next year.

Those fears intensified after the Obama administration accused the Russian government of attacking Democratic Party emails during the American presidential campaign.

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