Heralding a new chapter of matters-of-state upending matters-of-commerce, a November 2, 2013 Australian Financial Review (AFR) article sports a telling title: “Global Digital Wars Take Australia Hostage” (link). In what seems, on balance, a well-researched article (with a couple of glaring exceptions), the AFR piece details how, among other things, American government pressure on Australian authorities may have contributed to an initial ban on Huawei’s participation in Australia’s National Broadband Network (NBN) three years ago, as well as that ban’s very recent renewal under the newly-elected regime Down Under.
The authors ably detail the ongoing saga of Australia’s Government-sponsored NBN project, first announced in 2008. They report that “while the Australian public first learned that Huawei had been sensationally barred from any involvement in the NBN in March 2012, the intelligence community appears to have made its mind up by 2008 at a time when Chinese espionage concerns were climaxing.” They add: “Around this time a highly classified team of three representatives from the Attorney-General’s Department, ASD and ASIO were sent on a global fact finding mission, which included a lunch in the CIA director’s personal ante room, to consult with Australia’s international intelligence partners on Chinese telco risks. Huawei was the key target. While the triumvirate could find no smoking gun, the report, which is believed to have been submitted to cabinet’s national security committee, was said to be very clear in its conclusion. In the words of one participant, “the risk of allowing Huawei to help build the NBN was just too serious to contemplate.”
According to the article, shortly thereafter, in April 2009, the initial NBN tender was cancelled, only to be re-opened not long later, with the possibility of Huawei participation. Another government review was conducted and, again, Australian intelligence services balked against Huawei involvement in the NBN. The article continues, reporting that while Huawei was “blindsided” when it was announced in June 2010 that Alcatel-Lucent had been selected as the initial NBN equipment supplier, the company continued to believe, based on indications from senior Australian Administration officials in 2011, that they would be chosen as “one of the NBN Co’s two primary vendors in a multi-company model that maximised competitive pricing tension and product innovation.” Once again, my countrymen stepped in: Per the article, “In November 2011 President Barack Obama paid his first official visit to Australia. One conspiratorial month later the Attorney-General’s Department asked Huawei’s brass to come to Canberra…” where “officials informed them they were being barred outright from involvement in the NBN, a message that was formalised in a letter months later.”
Finally, in terms of detailing the NBN tale to date, the AFR article neatly captures last week’s unfortunately updated news, reporting “In a single week the world’s largest telecommunications equipment provider, Huawei, has swung from the prospect of being triumphantly welcomed back into Australia’s national broadband network to having Prime Minister Tony Abbott humiliatingly reaffirm Labor’s ban on China’s national champion.” Again, Huawei had anticipated a policy course-correction in the context of a shift in Australian Government leadership. And, yes, again, the U.S. had been ratcheting up the screws on Australian authorities: “In an exclusive report in the AFR in July 2013, the only man to have ever led both the CIA and NSA, General Michael Hayden, alleged Huawei had ‘shared with the Chinese state intimate and extensive knowledge of the foreign telecommunications systems it is involved with’ and intelligence agencies have evidence to prove it.”
Hayden’s empty rhetoric aside, in addition to relaying the history of the NBN saga, the AFR article points out that the concerns about Huawei were, as much as anything else, defined by intelligence types “looking in a mirror:” “It is no small irony that the scores of intelligence operatives interviewed by the Financial Review over the past nine months repeatedly noted that early assessments of the Huawei risks were based on what agencies knew of the capabilities employed by western intelligence. “Put it this way,” one spook says, “If Huawei was run by Americans or Australians, we’d be doing what we say they are doing.” Later in the piece: “We are base-lining their capabilities and operations off what we know we can do – not on what they are actually doing…” And again: “Yet as another Australian intelligence executive notes, ‘The only reason we can make assessments like that is because we know we are up to with our own firms’”.
As for the glaring exceptions I referenced in the opening paragraph to this post, for whatever reason the authors seem to discard careful research in favor of shallow reporting in the article’s “The Evidence” paragraph, which begins with a reiteration of a very tired and obviously incorrect version of Huawei’s Founder and CEO bio. Per the AFR piece: “Ren Zhengfei, was a deputy director in the People’s Liberation Army’s Information Engineering Academy, which is associated with China’s electronic intelligence efforts.” Flash back to my March 23, 2013 blog post titled “Obscure 2000 Report – Source of much Huawei Mis-information – Corrected, Finally…” (link) in which I detailed how the U.S. Center for Strategic and International Studies (CSIS) – no friend to Huawei – put the false version of the bio to rest by exposing it as a misinformed media report from the year 2000 that had been subsequently mis-referenced by government and media for the better part of a decade. Notably, the opening sentence of “The Evidence” paragraph similarly features an equally incorrect version of Huawei’s Chairwoman’s bio.
The paragraph continues with additional mis-statements, again reflecting a rather bizarre deviation from studious reporting on the part of the authors. For instance, there is this statement: “Australian security authorities cite British intelligence highlighting that Huawei has been able to undercut foreign competitors, and obtain speculator market share growth, by enticing customers with up to $30 billion of ultra-cheap loans, or “vendor finance”, funded by Chinese state-controlled banks.” This bit of misinformation has been soundly debunked for almost two years. Indeed, in a June 13, 2011 blog post titled “Calling Foul on Exim’s Huawei FUD” (link) I carefully exposed the fallacy behind the “$30 billion in financing” claims. Huawei has further clarified (and updated) these facts on numerous occasions for numerous audiences – it is a bit befuddling that the AFR authors didn’t do the homework here that they obviously did in preparing the balance of their article.
“The Evidence” paragraph concludes with reference to “A senior official working inside ASD” who in 2009 claims “that by leveraging off an NSA executive embedded in ASD they were able to obtain a top secret ‘noforn’ (no foreign eyes) technical NSA report that identified irrefutably malicious “program code” that had been deliberately inserted into the “firmware” in Huawei devices. This backdoor could be installed or replaced with a benign substitute by Huawei executives remotely managing the network in question.” This is certainly intriguing (particularly in the context of the Australians leveraging "embedded" NSA executives to disclose U.S. "noforn" information to foreigners, allies or not), but hardly a verifiable source for reporting purposes, which, again, is puzzling given the more studious, fact-based approach taken in the balance of the article.
Indeed, further to that latter point, and in the context of "truthfulness" and the "reliability"of sources, we should perhaps remember that the NSA is the organization whose leader promotes "collecting the haystack to find the needle" (link) and yet, paradoxically, per multiple U.S. Government spokespeople, the NSA is in fact not hoovering up and analyzing our calls and mails, notwithstanding rather dramatic evidence to the contrary.
In any event, the article lays bare the fact that what is really happening Down Under is, in the authors’ words, “just a localised skirmish in a far wider and more complex conflict between the world’s two most powerful nations, China and the United States.” It’s certainly not about network security and data integrity. All parties are more than aware of the fact that every telecom gear vendor is subject to common, industry-wide vulnerabilities and threats. Blocking one vendor by virtue of its country of headquarters does nothing to secure networks and data, given that all vendors rely on common and global supply chains, which utterly exposes the hypocrisy of such blockades (and, incidentally, in terms of hypocrisy, why isn’t anyone pointing out that a primary winner of the Australia NBN deal - France-based Alcatel-Lucent - is the 50% owner of China-based Shanghai Bell, from which much of the NBN gear will almost certainly ship, and the balance of Shanghai Bell is owned by the Chinese Government?).
Why do we all lose?
Network security and data integrity are very real concerns, but politico-protectionist blockade-like remedies not only don't address these concerns, they introduce new ones: Stymied investment and innovation, fewer jobs, less competition, more expensive broadband and nasty market-access barriers that, if and when replicated, will very likely fragment the global information and communications technology industry and Balkanize the Internet. From there, the cycle renews and feed upon itself, leading, almost certainly and ultimately, to strife and conflict. Is this in anyone's best interest?
Why do we all lose?
Network security and data integrity are very real concerns, but politico-protectionist blockade-like remedies not only don't address these concerns, they introduce new ones: Stymied investment and innovation, fewer jobs, less competition, more expensive broadband and nasty market-access barriers that, if and when replicated, will very likely fragment the global information and communications technology industry and Balkanize the Internet. From there, the cycle renews and feed upon itself, leading, almost certainly and ultimately, to strife and conflict. Is this in anyone's best interest?
