Huawei and other Chinese tech companies pose a major security risk to the European Union, according to Estonian politician Andrus Ansip, the current Vice President of the European Commission and European Commissioner for Digital Single Market. In his recent remarks on the arrest of Huawei Chief Financial Officer Meng Wanzhou, the 62-year-old asserted the average consumer and politician both ought to be "afraid" of the potential consequences of allowing the Chinese tech sector to continue operating on the Old Continent unchecked.
Mr. Ansip reiterated many previous concerns voiced about Huawei by other government officials and industry watchers in the West, including the possibility that the Shenzhen-based company is implementing intentional backdoors into its hardware and software with the goal of spying on its customers on behalf of Beijing. Huawei dismissed that notion as baseless on countless occasions, arguing any such allegations are merely an attempt to stifle its unprecedented growth and prevent it from competing with otherwise technologically inferior Western rivals. The firm did as much in response to Mr. Ansip's comments as well, with one of its spokespeople saying its leadership is disappointed with his remarks and never did anything to warrant such suspicion as part of a statement provided to media outlets.
An unprecedented leadership crisis
The Chinese original equipment manufacturer is currently going through an unprecedented leadership crisis following Ms. Meng's arrest which occurred in Vancouver on December 1. The industry veteran and daughter of Huawei founder Ren Zhengfei was released on bail just yesterday after depositing $10 million CAD ($7.5 million USD) with a Canadian court. The arrest itself was made on the request of the U.S. Department of Justice that's suspecting Huawei's CFO of organizing a banking scheme and establishing secret ties with a company called Skycom operating in Iran with the intention of violating stateside trade sanctions imposed on the Middle Eastern country. Most other details of the case are unknown as Ms. Meng already won a publication ban, limiting the media's ability to uncover and report on the thereof.
Growing EU distrust
Mr. Ansip's latest comments on Huawei are far from the first occasion on which a senior European official expressed distrust toward the Chinese company. Skepticism about its intentions and the overall level of security offered by its products and services have been on the rise in recent times, even in European countries which were traditionally its strong allies such as the United Kingdom. The British government is presently pressuring Huawei into addressing a number of security concerns identified in its networking solutions as part of an alarming July report that the firm is still largely ignoring. Following an unprecedented level of public pressure, Huawei vowed to do so last week but has yet to provide any significant details on how it intends to go about doing so. This month's reports from Belgium indicate Brussels is considering banning Huawei from its buildouts of fifth-generation mobile networks planned to start in the near future. The EU's strongest economy, Germany, isn't expected to follow suit for the time being, having repeatedly said it doesn't see a point in singling out and penalizing any single vendor solely based on their country on origin.
The U.S. anti-China initiative continues
Simultaneously, the United States is pushing its allies to ban both Huawei and ZTE from 5G rollouts, citing a variety of security concerns. Washington has a long history of issues with Huawei and has repeatedly blocked the company from doing business in its jurisdiction on any significant scale. This year, it first did so by pressuring AT&T into dropping the plan to carry Huawei's Mate 10 series of Android flagships, then went on to ban all government agencies from purchasing or licensing not just the firm's technologies but any solutions merely associated with it in any shape or form. The penalty was included as an amendment to this year's spending bill voted through by Congress and also included ZTE.
All roads lead to Iran
Iran is not only connected to Ms. Meng's arrest in Vancouver but has also been the cause of significant friction between the EU and the U.S. in recent months. The Trump administration withdrew from the country's nuclear deal with Iran earlier this year, whereas the European political bloc is still supporting the initiative, claiming Tehran is fulfilling its part of the bargain and isn't working on weaponizing its nuclear technologies. Broken trade sanctions imposed against Iran were also the reason why state-backed ZTE was nearly pushed into bankruptcy this summer after it also violated a 2017 settlement with the Commerce Department meant to put an end to that affair. In response, Washington hit the firm with a denial order that prevented it from purchasing and licensing American technologies, rendering it unable to continue producing contemporary smartphones and networking equipment.
It wasn't until President Trump personally called for the Commerce Department to make peace with ZTE in order to facilitate trade talks with China that the agency agreed to a new settlement with the company, lifting its denial order but demanding it to pay a $900 million fine, make another $400 million eschew payment for cases of future violations, and replace the entirety of its management and board. The deal allowed ZTE to stay in business but forced it to take out a $10 billion loan in order to cover its near-term losses, which is why many industry analysts now believe its overall operations are overleveraged.
Huawei is now bound to be examining ZTE's disastrous episode with the U.S. government closer than ever as one of its top executives is now accused of similar Iran-related transgressions. However, unlike ZTE's case, Ms. Meng is personally accused of an embargo-violating scheme and is hence facing up to 30 years in prison under U.S. federal law. The Department of Justice is currently trying to extradite her and while her bail has already been set and paid, she's been restricted in her movement in Canada and is under a limited house arrest, having been forced to wear and ankle bracelet and surrender her passport due to being a perceived flight risk despite repeatedly arguing to the contrary.