Why the US is intensifying its attack on the UK over Huawei

By John Ross Source:Global Times Published: 2020/5/28 18:33:40

A 5G technology exhibition is held in Hangzhou, east China's Zhejiang Province, Jan. 19, 2019. (Xinhua/Xu Yu)

The connections may not immediately seem evident between COVID-19, Brexit, and the new intensified drive by the US to try to force Britain to cut Huawei out of its 5G network. But they immediately become clear when the present economic, and therefore geopolitical, consequences of the US and UK governments' catastrophic errors in mishandling COVID-19 are understood.

Due to these government errors, COVID-19 struck Britain and the US in ways that created the world's greatest pandemic disasters - the UK is suffering the highest number of daily deaths per capita of any country, and the US has passed the milestone of 100,000 coronavirus deaths. The economic prospects in 2020 for both countries are therefore grim - the IMF projects the US' GDP will fall by 5.9 percent and the UK's by 6.5 percent. 

Relating these disasters to Huawei, earlier this year, before COVID-19, the UK government rejected US demands that Huawei should not participate in the UK's 5G network. The decision on this issue certainly made concessions to the US by ruling that Huawei could not play a role in "core" parts of the 5G network, and a 35 percent limit was placed on Huawei's total participation. This was a retreat from the earlier "golden period" of UK-China relations under Cameron, when Huawei head Ren Zhengfei was a guest at the prime minister's official residence. Nevertheless, the Johnson government's decision rejected US demands that Huawei be entirely excluded from Britain's 5G network. 

Also, embarrassingly for future US pressure, the UK's official National Cyber Security Centre (NCSC) affirmed that no security risk to Britain was created by the government's decision: "The cap at 35 percent ensures the UK will not become nationally dependent."

The UK government allowed Huawei to participate in the UK's 5G network simply because it was in the direct interests of the national economy. Facing significant downward economic pressure due to Brexit, the UK government declared that it would launch a policy of technological upgrading. For 5G, the UK set the ambitious target for the entire country to have access to "gigabit capable" network speeds by 2025 - which in practice relied on 5G. 

Setting a 35 percent limit on Huawei's participation in its 5G was already expensive for the UK and its telecoms operators. In January, BT, the former British Telecom, estimated the 35 percent limit would cost it around 500 million pounds ($613.35 million) over five years. A report from media and telecoms specialist Enders Analysis estimated a full 5G ban on Huawei would cost UK networks 1.5 billion pounds.

Furthermore, as even the strongly pro-Johnson and anti-China newspaper the Daily Telegraph noted: "Huawei kit already makes up large parts of the UK's 4G mobile networks… '5G depends heavily on 4G infrastructure,' says Matthew Howett, of Assembly Research. 'Switching out Huawei for 5G will mean replacing some 4G equipment which would need to be added to that cost.' Assembly estimated the total economic cost would be 7 billion pounds."

The loss from banning Huawei would also significantly slow 5G's introduction. Regarding the government's 2025 goal: "A sudden u-turn [on Huawei] could push this target into the distance."

But despite the considerable damage that would be done to the UK's economy by excluding Huawei, the Trump administration refused to accept the Johnson government's decision. Instead it set about creating strategic levers to increase pressure on the UK as part of a global offensive against Huawei.

Internationally, the US introduced sanctions attempting to force foreign manufacturers using US chipmaking equipment to obtain a US government license before being able to sell chips to Huawei. 

Within Britain, the US helped create a so-called "China Research Group" (CRG) of Conservative MPs. The name was significant as it was modeled on the "European Research Group" of Tory MPs which was the driving force behind Brexit. Indeed, the two groups substantially overlapped as Brexit's aim had always been more direct subordination of Britain to the US. 

The CRG's goal was made clear when it immediately launched a campaign to overturn the Johnson government's decision to allow Huawei to participate in Britain's 5G. It directly linked this to COVID-19, with the group's leader Tom Tugendhat claiming the coronavirus required an "urgent need for a better understanding of China's place in the world."

The CRG's tactical goal was clear. The Johnson government's majority in the House of Commons is 80. Therefore, if 40 Conservative MPs would vote against the government's policy and with the opposition Labour Party, which has a reactionary position on Huawei, then the government would be defeated on Huawei. By these means the US would not need to successfully persuade the Johnson government to reverse its decision on Huawei - the US could aim to ensure the government was outvoted in Parliament. All-out backing by the US would very probably give the CRG the ability to gain the votes of 40 Tory MPs.

Faced with the threat of Parliamentary defeat by the US, the Johnson government set about retreating from its previous Huawei decision. On May 23 a government spokesman announced: "Following the US announcement of additional sanctions against Huawei, the NCSC is looking carefully at any impact they could have to the UK's networks." The government simultaneously leaked to British newspapers that it would propose a so called "compromise" by which it would push for the total elimination of Huawei equipment in British phone networks by 2023. 

This latter decision would, naturally, be a further step toward accepting US requirements despite the damage that would be done to the British economy. The CRG and the US are creating maximum pressure for the UK to accept US demands before Johnson and Trump's likely meeting at the G-7 Summit next month. 

Johnson would undoubtedly like to maintain the original decision on Huawei, as making it came at the cost of a dispute with the US. But now, via the CRG, he can feel the US grip tightening around the UK government's throat. The threat to overturn the Johnson government's previous decision on Huawei is therefore not a negotiating bluff; it is a direct result of US pressure.

China's proposals for UK-China economic cooperation, including on 5G, are not only in its own interests but in the UK's national interests. But the Johnson government is experiencing the full consequences of its decision to support Brexit. Outside the EU its international goal is a trade treaty with the US. But while the EU is a powerful international bloc with the economic strength to resist the US, the UK outside the EU is much too weak to do so. Therefore, in negotiations on a trade treaty, the US can apply relentless pressure to impose its own conditions - it is proposing to the UK a similar clause to the new US trade treaty with Canada and Mexico, which gives the US veto rights over the UK signing trade agreements with China, and the US can increase pressure on the UK on Huawei.

The UK was already in a weak position to resist these attacks even before its government's mishandling of COVID-19 led to the health, and consequent economic, disaster already noted. Now, facing the deepest economic downturn since the Great Depression, the UK is even more trapped in a strategy of Brexit which imposes subordination to the US. 

The Johnson government has cut itself from any participation in the EU's stimulus package to recover from COVID-19 and will therefore be forced to orient even more toward the US, even if this damages UK's economy.  From the viewpoint of UK's national interests, and its own declared strategy of a 'global Britain,' the Johnson government should give high priority to relations with China. But in practice, faced with the US offensive, the Johnson government is under intense pressure to act against UK's interests on Huawei.

The US will intensify that pressure on the UK due to the serious situation its own economy faces.  Following the international financial crisis, the US failure to rapidly overcome this, and China's success in comparison, led to a huge shift in the international relation of economic forces against the US - during 2007-19 China's economy grew by 150 percent while the US' grew by 22 percent. 

A further similar shift in the international relation of forces in favor of China during the COVID-19 crisis would therefore be catastrophic for the US. But a huge downturn in the US economy under COVID-19's impact is inevitable - the US possesses neither the ideology nor the practical economic mechanisms to prevent this. The only question during the COVID-19 crisis is therefore: By how much will China's economy outperform the US? 

As the US is incapable of stopping its own economic downturn, the only means it has to attempt to turn the relation of forces against China during COVID-19 is to try to slow China's economy - regardless of any severely negative effects for other countries which would benefit from cooperation with China. The attack on Huawei is part of that - and the US' renewed attack on the UK over Huawei is intensified by the US offensive to attempt to avoid the consequences of its catastrophic mishandling of COVID-19.

The author is senior fellow at Chongyang Institute for Financial Studies, Renmin University of China. He was formerly director of Economic and Business Policy for the Mayor of London. bizopinion@globaltimes.com.cn 


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