Why Australia Banned Huawei from its 5G Telecoms Network

Canberra’s hand was forced by overlapping cyber and national security concerns

As Canberra, Australia’s sleepy bush capital, was gripped by yet another political leadership crisis this month that later overthrew former Prime Minister Malcolm Turnbull, an unexpected media release was dropped on the capital’s distracted media.

Amid the chaos, the government had finally taken a much-anticipated decision on the involvement of Chinese telecommunications giant Huawei in the build of Australia’s next piece of critical national infrastructure, its 5G network. Informed by a national security review that had been undertaken, then acting home affairs minister — and now prime minister — Scott Morrison had banned Huawei.

The text of the announcement worked hard to avoid stating this directly. Instead, you had to carefully read between the lines. But China’s state-run media agencies were quick to confirm the ban and get to work.

The nationalist tabloid Global Times published exclusive statements from Huawei that threatened legal action. Their first English-language editorial on the topic, titled “Canberra stabs Huawei in the back”, stated “those who wilfully hurt Chinese companies with an excuse of national security will meet their nemesis”.

The Chinese government also vocalised its frustrations in press briefings. China’s Foreign Ministry urged the Australian government “to abandon ideological prejudices and provide a fair competitive environment for Chinese companies.”

The Commerce Ministry responded to the ban with a statement. “Australia should look at the big picture of bilateral economic and trade co-operation, rather than easily interfere with and restrict normal business activities in the name of national security,” it said.

The Australian government’s closed-door review focused on the security of the telecommunications industry and the vendors supplying equipment to that industry. A key sentence in its announcement pointed to concerns over unauthorised access or interference by “vendors who are likely to be subject to extrajudicial directions from a foreign government that conflicts with Australian law”.

A debate about Huawei’s involvement in Australia’s telecommunications industry has been simmering for a decade. Last week’s ban is not the company’s first in Australia. In 2012 it was excluded from Australia’s National Broadband Network. Since then, Huawei has engaged in a charm offensive in the hope of swaying public and political opinion.

They’ve used the same template in Australia as they have elsewhere round the world, placing former politicians on their local board of directors, hiring advisers straight out of relevant political offices, sponsoring popular sports teams (including the Australian capital’s rugby league team) and, most controversially, funding the travel of federal and state politicians to visit their headquarters in China.

However, it was not concerns over such moves that spelt the end for Huawei’s 5G ambitions in Australia. Rather, a series of security issues weighed heavy.

These included the Communist party’s tightening grip on its technology companies and the vulnerability of telecoms systems to subversion for espionage purposes.

African Union officials this year accused China of hacking its computers at the Beijing-funded $200m headquarters building in Addis Ababa. There were no allegations made about Huawei and China’s foreign ministry denied the AU hacking allegations as “baseless” and “complete nonsense”.

More generally, there were concerns in Australia over allegations of Chinese government’s intellectual property theft and cyber espionage. The latter was highlighted again in Australia last month after allegations that Chinese cyber actors had not just hacked into one of Australia’s premier universities — the Australian National University in Canberra — but had held an ongoing presence in the university’s IT systems for at least seven months.

One option under consideration by Canberra was the UK government’s approach, to start a cyber security evaluation centre that would be responsible for providing Australian policymakers with an ongoing assessment of Huawei products. This option was seen as a sort of middle road compromise. Given the less-than-happy state of the Australia-China relationship, this option was seen as one that would at least avoid a backlash from Beijing.

But, there was a hitch. While it might have been a better outcome for Australian diplomacy, the UK’s approach has not worked. After seven years of operation, this world class research centre has only been able to provide “limited assurance” that risks to UK national security have been sufficiently mitigated.

The UK’s National Cyber Security Centre said last month that it “is less confident” it can provide “long-term technical assurance of sufficient scope and quality around Huawei in the UK” because of the “repeated discovery of critical shortfalls”.

In bureaucratese, the language used by the UK government in this report was damning. Clearly informed by the experience of its five-eyes partner, the announcement read: “[The Australian] government has found no combination of technical security controls that sufficiently mitigate the risks.”

However, a key impetus behind the Australian decision was a close analysis of China’s 2017 national intelligence law which states: “Organisations and citizens shall, in accordance with the law, support, co-operate with, and collaborate in national intelligence work and guard the secrecy of national intelligence work they are aware of.”

This law is a double-edged sword for China. Requiring individuals and organisations to engage in intelligence activities bolsters intelligence collection but with a clear cost to companies, their reputation and ongoing access to international markets.

As Australia prepares for more threatening statements from the Chinese Government and intimidating op-eds from its state controlled media, which will no doubt include accusations of “anti-China” bias and threats to retaliate against Australian industry through boycott diplomacy”, it’s important to note two things.

First, this decision was not taken lightly, nor was the decision political. There were several compelling and overlapping cyber and national security concerns that forced the Australian government’s hand. As new Foreign Minister Marise Payne has noted, the decision was about solely protecting Australia’s interests.

Second, China’s 2017 National Intelligence Law is bad news for the international expansion ambitions of China’s companies. When weighing up the involvement of foreign companies in critical infrastructure projects, how can policymakers put forward credible arguments in support of companies whose international behaviour is bound by their domestic security laws?

Long-term, the Chinese Communist party is going to have to make a tough call about how it sees its citizens and organisations. Which is more important — that they participate in espionage or participate in and benefit from the global economy?

As Huawei’s demise in Australia has shown, you can’t have your cake and eat it too.

Source: ft