Huawei Ban Approaches, National Security Expert Says EU Report Amplifies Concerns

CapitalWatch interviewed CGA senior advisor on national security Nate Snyder on Huawei's quarterly results, the fast-approaching supply ban and the recent 5G risk assessment by EU members.
Belinda ZhouOct 23,2019,06:55

The European Commission published its report on the EU-coordinated risk assessment on cybersecurity in fifth-generation (5G) network on October 9th.

Huawei Technologies Co. at the forefront of the China’s 5G crusade enjoyed the unbiased treatment in German despite the US pressure. Germany claimed on October 14th that no single vendor would be barred from the country’s 5G networks.

News website reacted with titles like “Merkel chooses Huawei over U.S. and EU objections” to the news about German’s openness to the trouble-ridden tech giant after the EU’s report on 5G cybersecurity. 

Back on 26 March 2019, after receiving the support from the European Council, the Commission called on member states to complete national risk assessments and review national measures and to work together at EU level on a coordinated risk assessment.

In a conversation with CapitalWatch last Friday, Nate Snyder, shared his opinion. Snyder served as a senior counterterrorism official with the US Department of Homeland Security and the Countering Violent Extremism Task Force under US President Obama.

Snyder took Huawei’s threat as a global issue with vulnerabilities and threat to national security. He explained that these threats and vulnerabilities just scratch the surface and the EU report confirms that a Huawei 5G network across the EU (and US) is a counter-intelligence nightmare.

He said is not surprising that some telecom operators in the U.S. and Germany will suffer from billions of dollars to their expenses. But he still argued that the EU and the US need to focus on setting their own interoperable standards, diversifying supply chains, and working with groups such as the O-RAN Alliance.

CapitalWatch: What’s the impact of report on the EU-coordinated risk assessment on the Washington’s policy?

Nate Snyder: I think right now as far as the impact on policy and posturing of the government on sort of discussions moving forward 5g and, especially, if there is any intersections with trade talks, we think that still yet to be seen and measured. 

However, I think EU assessment validates many of the concerns that the national security community has been raising. I think also validates the concerns that both parties have been raising in the senate like the sort of pitfalls of 5G network.

And also I think it validates and bolsters the concerns the various vulnerabilities that exist and how we need to be cautious and take the building of the 5G infrastructure not only as a domestic concern in the U.S. but also looking as a global issue that is going to potentially affect, in the U.S. perspective, the security of many of the allies and partnerships we have with EU member states.

So I think with the further continuous narrative that we have been talking about here from the U.S., the EU assessment report just reinforces those concerns.

CapitalWatch: Germany’s proposal on 5G network security leaves door open for China’s Huawei, as Chancellor Angela Merkel reported to have stepped in to ensure tech giant was not prohibited from pitching for contracts. What’s your opinion on that?

Nate Snyder: The German assessment report became available about one month and a half ago. Before the EU assessment came out, they have already reported German assessment. Essentially, it’s a preview of what the EU assessment reports, automatically gives analysis on vulnerabilities and threats.

CapitalWatch: Germany’s telecom operators, all of which are already Huawei customers, have warned that banning the Chinese company would delay the launch of 5G networks for several years and add billions of dollars to their expenses. 

Nate Snyder: A few months ago, the White House hosted a number of tech leaders to discuss and there was a number of them that raised the similar concerns that the so-called blacklist and the executive order that came out that we have immediate detrimental impact from the business perspective and similar to what German providers are saying. It would have impacts regards to the potential slowdown of potential 5G rollout here in the states.

So it sounds like providers are also thinking same thing as Germany, which is not surprising. But I think it also bring an argument that what the countries are going to look at priorities and importance. Is it looking at providers and the private sector in regards to a bottom-line figure and policies that may affect potential profits? Or immediate returns from a provider’s perspective? Or is it make better sense to look at from a national security position.

My arguments along with a number of others who are in the national security space see the flaws and vulnerabilities of 5G network has once we go into the direction potentially work with technology companies like Huawei. Once we take that leap, it’s gonna be almost impossible to undo and therefore we’re going to potentially be riddled with numerous and countless vulnerabilities that potential openings for future exploitations and attacks on the 5G network.

Many of them are saying, even the providers are saying, instead of taking that risk and taking that chance, it makes sense not to do that, and instead to the focus on developing new interoperable standards. Providers working on other access points to develop new protocols in new ways to get on to the 5G highway and therefore also looking at diversifying supply chains and unlock the competitive potential of other global providers. It will give customers more choices, but at the same time mitigate concerns that are outlined in the EU report.

CapitalWatch: You mentioned the EU and the US need to focus on setting their own interoperable standards. Can you talk about that in detail?

Nate Snyder: Many of global providers in open-access network(OAN) alliance have essentially agreed to diversifying and making network access more accessible and also promoting further competition  and innovation. A key part of that is looking at interoperable ability and looking at leveraging this new software-based technology to provide more access to, say for instance, 5G network. 

You will have, at least here in the U.S., providers build and develop their own interoperable standards with 5G technology that’s coming out and under the discussion in the EU. That also potentially mitigates a lot of concerns that has been pointed out in regards to Huawei’s technology.

CapitalWatch: For countries that chose to continue doing business with Huawei, will there be a reaction from Washington?

Nate Snyder: Huawei currently has approximately about 50 contracts globally and half of those, 24 agreement, are with EU member states governments. I think the growing concern here from the U.S. perspective for instance that our major allies and partners, who we share information with, or potentially sensitive information with, if we know that the government is on Huawei network infrastructure, we’ll potentially change how we communicate and share potentially sensitive information.

I think the answer is probably yes. There are also ongoing discussions with some our close partners like the United Kingdom. If the United Kingdom wants to go ahead and I think where they left discussions were to potentially entertain the idea allowing noncore Huawei technology to be a part of 5G network standard of the UK.

CapitalWatch: Previously, President Trump temporarily exempted some trade with Huawei after a round of talks with Beijing. Are the discussions on Huawei part of the current ongoing trade talks? 

Nate Snyder: I think the U.S. government was also getting pressure from the U.S. providers similar to the German government is facing with providers over there. 

There is real concern that by both parties in the U.S. co-signed by Senator Rubio and Senator Warner that was sent up to the White House and the U.S. senior trade representative and Secretary Pompeo, saying in no way before should Huawei be used as sort of chip in regards to overall trade talks with China. Considering how pulverized the government is here politically, it seems to be one area where  the bi-partisan unity on the concern that it should be used bargaining chip in the trade talks.

CapitalWatch: Many U.S. companies are asking for exemptions on tariffs regarding certain products. Obviously, it hurts their business. With Huawei, do you see a possible exemption on trade for some U.S. companies or some products?

Nate Snyder: Could be. I know there were discussions on easing restrictions on technology that may already be globally available to Huawei. But I don’t know honestly if that is set in stone or if that’s the direction they’re moving forward. 

I could see potentially that happening, but other than this extension that the President gave that’s up until November, I think easing of opening and trading of technology with Huawei is still a vulnerability that we need to take seriously because if we’re going to trade with Huawei on technology, software, or hardware and those are used to ultimately build or become a part of our domestic 5G network, that from a national security perspective, or even a cyber-perspective, it will then open up whatever that infrastructure is built with various access points and potential vulnerability points just due to the fact that Huawei's tech is part of that new infrastructure and I think Huawei understands this and they’re looking for just any way to enter the U.S. market but also with that instead of understanding that if their tech is used in any way shape or form in the US 5G infrastructure that they will be able to expand their influence or their tech footprint into the infrastructure. 

So it’s sort of looking at all angles to see how they could be part of the US 5G network development and I think that is also a political concern so I would say the easing of restriction in that aspect would not be a good idea.

CapitalWatch: Some U.S. companies doing business with China found ways to circumvent the ban and continue doing business with sanctioned Chinese companies. In your opinion, how effective is this blacklisting on Huawei?

Nate Snyder: I think that is really interesting that they are projecting or sharing information that despite the US ban and despite that hurdle that growth of Huawei and progress of them standing up that 5G networks has not slowed down. I would also take that information as a little bit suspect and the reason being because we’ve known for quite some time – and this is an understood fact – that Huawei’s tech and business has largely been subsidized by the Chinese government and this makes Huawei gives them a competitive commercial advantage. 

So that’s at least from my perspective – I would not take those reports at face value. I would definitely keep it – a bit skeptical of what these reports are actually saying and I think it does make sense for Huawei from a commercial standpoint. They want to be able to show to end users, customers and investors that their business is not being impacted. I think that makes sense from an economic and business perspective and so they’re gonna put out info that validates that. I would say that the information they’re sharing or however they’re construing it I would look with extreme skepticism but the underlying factors in regards to growth and uninterrupted progress from the econom standpoint I would not be able to share my insight with you.

CapitalWatch: While it is understood that the primary aim of the ban is the national security of the U.S., there is talk that shunning Huawei’s 5G technology puts U.S. a few steps back in development. What’s your opinion on that?

Nate Snyder: That is definitely an argument that Huawei has been using. And I think it is also a concern of some US providers and it has some validity to it whereas you look at the Huawei solution and tech to develop their 5G network, they have showed that they have the tech, the hard, the soft, and could rapidly stand up a network, but from the US perspective is - at what cost? 

Not only from a financial cost, but from national security long-term cost of what this will mean – if not years, then decades onend – we’ll be relying on telecommunication infrastr that was reported by the EU report of having massive vulnerabilities, having code that is not efficient and has multiple holes in it and is itself open to attack by state and non-state actors, organized crime and potential terrorism orgs and that’s just from the infrastr perspective and not even weighing into the counterintelligence perspective. 

We want to be careful of who’s listening in and or has access to the network to intercept what would be sensitive information. And from that perspective it is still really concerning and goes back to my previous arg that – yes, this may slow down development and implementation – is it worth the risk of potentially leaving ourselves open to attacks, to exploitation, etc – for years to come? But also in order to – if this is a race of who can get the 5G network fastest- one of the ways that we can close the gap and distance with H in this race is having US providers work on interoperable solutions as an alternative to H as a single provider. I think if they’re able to do that, then not only will you unlock the commercial potential of competition from econom standpoint, you will also be able to diversify the threat and also mitigate a number of the vulnerablityis cited in the EU report and unlock their potential that way. 

Sure, it may be not as fast as Huawei can set up a network but if the providers and if the US government were to provide the necessary incentives to promote growth and innovation within US provider community, we could very much close the distance with Huawei and therefor mitigate the time it would take to set up a network.

CapitalWatch: Some U.S. companies doing business with China found ways to circumvent the ban and continue doing business with sanctioned Chinese companies. In your opinion, how effective is this blacklisting on Huawei?

Nate Snyder:  I think what we have seen on the outset and it’s been quite effective so much so that we’ve seen providers that have thought ahead and met with the White House and applied for the extension that’s up in November. And I think with the sensitivities and the high visibility that issue has, the U.S. government and this administration are keeping close tabs on providers that stray outside of the ban and its conditions. And I would like to think that a number of experts and I would say academics in the national security community have raised this concern to a level that I think hopefully providers think twice and even other tech companies think twice of circumv the ban but I think you raise a very important point that once this extension closes, our providers will stay true to the ban or are they going to look at their profits and look for loopholes or other ways to do business w H in that respect. 

And I think a lot of that is dictated by Capitol Hill and the Senate and White House and that is also very much a poitlital issue and if the White House sees that as a continuing priority that the ban needs to be enforced, hopefully that will serve as a level of accountability for the providers and other tech companies.