The Huawei deal puts Britain’s Five Eyes relationships at risk


CapX, 25 April, 2019

With the NCS leak about Huawei’s inclusion in the UK’s 5G infrastructure on the front pages, the Five Eyes intelligence alliance has come under renewed scrutiny. Our role in the world’s largest and longest-lasting intelligence partnership has been one of our key assets, enabling us to punch above our weight in Washington and in corridors of power across the world.

But intelligence relationships are a lot like a marriage. They involve trust – and the development of key institutions or traditions that keep each partner reassured about the intentions, reliability, and thoughts of the other party. The Five Eyes relationship, a marriage, if you will allow, is an incredible feat of alliance-management. Many Britons know little, if anything, about it. If they do, it’s probably through the X-files or Wikileaks. The reality is more banal but at the same time, more incredible.

After fascism was defeated in the Second World War, five democracies (Australia, New Zealand, Canada, the UK, and US) pooled their resources on human and signals intelligence. Crossing into uncharted territory, they institutionalised intelligence-sharing in ways that are unprecedented for sovereign states. Later, programmes were created allowing officers from one country to serve in the corresponding bureaucracy of another allied nation. A British signals officer might spend time in the NSA in Maryland, or a Canadian diplomat might spend a year in the FCO, or an Australian defence official might serve time in the Pentagon.

These intelligence bureaucracies might have presented risks to the democratic integrity of the participating nations, but surprisingly, the Five Eyes relationship worked seamlessly from its earliest days. The robust constitutions underpinning all five countries allowed elected representatives to oversee the budgets and policies of their intelligence services and manage them according to their democratically permitted discretion. While slip-ups occurred, they were the exception rather than the rule. The group spent the Cold War protecting the rights and freedoms of many ordinary citizens to great success, all in the shadows and for very little personal reward or public acknowledgement.

As the cyber age arrived, the Five Eyes adjusted and adapted, but they have not always been quick off the mark. The current arrangement by which British engineers check Huawei’s code and equipment occurred after a slip-up in the early 2000s when BT nearly awarded a network contract to what was then an obscure Chinese tech company with little security oversight.

Twelve years on and that company has gone from strength to strength, combining the telecommunications ability of BT with the data-storage capacity of Google and the powerful handsets of Apple. It’s a remarkable achievement, but how exactly did Huawei come to dominate the European telecoms market so quickly? What role did state loans play in subsidising products that were sometimes 18 per cent cheaper than its competitors?

As we approach the end of the telecoms review process, it has become clear that a great lobbying battle has taken place in Westminster between Huawei and its British carrier-supporters who stand to benefit from its financing, and the Australian and US Governments, whose security is under threat. It’s been clear that despite presenting the UK with constant signs of Huawei’s links to Chinese intelligence, examples of hacking behaviour, and involvement in the situation in Xinjiang, the National Security Council has decided that the UK can “mitigate the risk”.

After all, they reason, we handed 4G over, surely a 4G solution for a 5G problem will do the job. The problem with this assessment is that by the Government’s own accounts, Huawei’s 4G solutions were not up to standard.

That should have been the end of the story, but Brexit has played a large role behind the scenes. It leaps off the page from a report commissioned by network carriers that says “£7 billion at risk if Huawei banned”. It leaps out again when The Guardian asks in tremulous tones whether a ban will impact Britain’s trade relations with China (No.It didn’t with either the US or Australia who have whopping trade relations with Beijing). And so, the panic has continued.

Liz Truss, Chief Secretary to the Treasury , is quoted in the Daily Express as saying that a decision should be made on a “case-by-case” basis, and that any decisions “should be led by the UK – we shouldn’t be deciding on the basis of what the Americans think or what the Australians think” , which is the marital equivalent of telling your spouse that you’ll have a drink with whoever you damn well please and that they shouldn’t be suspicious.

The government has a right to make its choice, but there will likely be unforeseen consequences as a result of its decision. With Five Eyes, Britain is married. It has partners that trust it to do the right thing and in exchange provide it with vast amounts of sensitive real-time data. The Treasury might not think that is very important, but Britain’s spy chiefs do and the trust shared between partners is certainly worth more than £7 billion and being degraded to a second-tier partner or being excluded altogether would be a huge blow to our capabilities.

In the long run, Britain can do what it wants. Washington and Canberra won’t force us to do the right thing, but they will have to react and protect their own interests and the interests of the remaining four, but China’s covert influence-campaigns and given the known unknowns of 5G, the British government should spend more time thinking these questions through.

Forbes, Zak Doffman, 24 April, 2019

This was backed up by John Hemmings, Asia Center Director at the Henry Jackon Society, who described the move as “a huge mistake… critical to the well-being of the U.K.’s reliable critical infrastructure, critical to a secure liberal society, and critical to our Five Eyes alliance.” He dismissed the economic drivers behind the decision, saying that “cutting out Huawei from 5G network would cost Britain £7bn – How much will it cost to pull out in 10 years time?”

There’s no way we can trust the tech arm of the Chinese state to run our communications


With Bob Seely, MP, The Telegraph, 24 April, 2019

The decision by the National Security Council to greenlight Huawei’s limited participation in the construction of Britain’s 5G network is incomprehensibly short-sighted. It is a cyber Trojan horse. 

The NSC approval of some sort of half-way measure – which will allow Huawei to participate while limiting it to the periphery away from the “core” of the network – sounds reassuring. However, behind all the techno-babble is the hubristic argument that the UK Government believes that it can contain Huawei-related risks by technical means. Not only is this wrong, it reveals an approach to risk-assessment that is so narrow it is basically useless.

There are two vital questions that the Government needs to ask: What is Huawei’s relationship to the People’s Republic of China? And what are the risks to the UK – economic, security, and political – of including Huawei in its digital infrastructure? As far as we are concerned, from months of research towards a report that will be published next month, these questions have not been adequately answered.

We still lack enough knowledge about 5G to ascertain whether concepts about layered defence will still hold with the new system. There are arguments for and against the Government’s position, but not even the technical community is unified in this understanding. Indeed, the idea of merely allowing Huawei to build the 5G antennae has serious flaws related to the re-purposing of subcircuits.

We have been reassured that US warnings about Huawei are overblown because it is a “private” company. Huawei even invited scores of Western journalists to its massive campus in Shenzhen to share its heart-warming tale of the brave little firm that could, rising up against all odds to become a global powerhouse as an employee-owned firm. But this is simply not true. It is, to all intents and purposes, part of the Chinese state.

We know from the CIA’s briefings to its Five Eyes allies that Huawei is known to have been funded by Chinese state intelligence. It’s Chairwoman, Sun Yafang, between 1999 and 2017, worked for state security before assuming her role at Huawei. 

Why should all this matter? Because Huawei is to all intents and purposes a state-owned, state-directed, and state-funded entity. They do not operate on capitalist principles, often work in line with state strategic direction, and are unfairly subsidised, outcompeting the local firms. Huawei’s rise in Europe from 2.5 per cent market share to 25 per cent market share occurred at least in part because it had a credit line of £30 billion, allowing it to undercut European competitors by 18 percent. That’s not capitalism as we know it, that’s a state-funded monopoly. And it is a state-funded firm which is operating to China’s state agenda. 

Who controls communications will have great power over our societies in the future. Therefore, ownership of those communications structures, access to the information flows and the attitude toward human freedom, is paramount in shaping free societies in the 21 st Century and beyond. Huawei, whilst a private company, is the preeminent commercial communications firm of the Chinese state which, under Chinese law, must support the state’s intelligence work. By allowing Huawei to be a part of our hugely complex 5G networks, we take a risk with the future of free societies. How much risk is the question, not whether there is risk.

In all this, the risks are more varied and more concerning than simply network stability. They are economic as Huawei eats up Western 5G competitors; they are security-linked as Huawei maintains our networks, running our systems without transparency and without proper safeguards in place; and finally, they are social as Huawei enters Western society through our devices. 

Last year Australia blocked Chinese 5G providers. The US, Japan, and India appear to be doing the same. We need to be mindful of our alliances and security partnerships. In 2017, we learned that Western companies had misused user-data to impact a democratic election. These were companies staffed by people who were raised in Western liberal societies, who for the most part think that democracy is a plus. Huawei’s workers have grown up in an increasingly-authoritarian China that has planned a complex Orwellian techno-surveillance state for the past 10 years and is now on the cusp of rolling it out.

If we can’t trust our own high-tech firms, what’s to say that we can trust the corporate arm of the Chinese Party-State with our data, our security, and our values? The simple answer is that we can’t.

With Britain focused on Brussels, the Special Relationship is coming under strain


The Telegraph, 12 April, 2019

The news that the EU has given Mrs May an extension until October 31 is – it’s fair to say – another embodiment of the mess that Westminster has let itself get into.

It seems that Brussels is willing to let this government exhaust itself into submission, perhaps surviving a leadership contest, only to achieve total meltdown in October.

Yet if things were bleak for our relationships on the Continent, they’re nothing compared to a new, truly horrific, risk that is brewing in our transatlantic relationship. Compounding affronts to our American allies are causing conniptions in Whitehall and raised eyebrows in Washington.

First, there are the implications of the Withdrawal Agreement for trade deals outside the common market. Remarkably fuzzy on this issue, any deal that ties the UK to the common market will severely limit our ability to make trade deals with other big economies. And for those who know about trade, that means the United States.

For all the caricatures of the US as the home of gun-toting freedom lovers, the country is our largest trade partner outside the EU, accounting for 13.3 per cent of British exports, surpassing Germany to account for £48 billion in trade. The US also invests a large amount into the UK economy, accounting for 35.8 per cent of the total number of foreign direct investment projects into Britain in 2017. For context, Germany only accounted for 8.6 per cent.

More serious than losing an opportunity for new trade though is the risk of losing the security partnership we already share. For it now appears as though we risk crashing out of the Special Relationship as well as crashing out of the European Union (or certainly giving it a good try) by allowing Huawei, a Chinese telecommunications firm, to build the UK’s new 5G network.

The US and UK have long sat at the head of the Five Eyes relationship (Australia, the UK, the US, New Zealand, and Canada), which allows for regular intelligence-sharing and acts as a bedrock to the NATO Alliance. In addition to high levels of interoperability, the Five Eyes arrangement allows for British personnel to be embedded inside the US bureaucracy, so you might have a UK FCO official attached to the Department of State and vice versa. It’s not at all common in the diplomatic world, and causes a sort of wonder even among some of the closest allies of the US. It also enables us access to the some of the best intelligence, particularly satellite data. It is a remarkable bond.

Currently, both the British Government and its national security advisers are writing a “Supply Chain Security Review” of companies that who will be able to help build Britain’s new 5G network. While it’s not set up as a report on whether or not to ban Huawei, the eyes of the world’s security services are keenly awaiting its publication. Alarmingly, the National Cyber Security Centre, despite admitting that Huawei’s processes are “shoddy” and allow for systemic risk, is still only considering a “partial” ban.

This sounds like being partially pregnant, given the interconnectivity of the new so-called internet-of-things. What’s most of concern is the NCSC’s confession that since raising their concerns in July 2018, Huawei has done nothing to change their practices, and what solutions they’ve suggested are below-par.

Huawei is the only company which currently has the end-to-end capability to provide 5G, provoking British companies to throw themselves into the fray, egging on HMG to allow the Chinese firm inside. A consortium of British companies – perhaps sensing an opportunity to drive the price for deployment even further down – have commissioned a report themselves.

Ban Huawei, they cry, and it will cost us £6.8 billion, but the report studiously avoids mentioning security concerns over data theft, the loss of intellectual property, and even worse, over the potential costs to the Special Relationship. In March of this year, US General Scaparrotti, NATO’s Supreme Allied Commander Europe warned Germany of the US commitment to it if Berlin chose Huawei. This warning should not be ignored by our decision-makers.

It is said that Britain’s Ambassador to Washington, Christopher Meyer, told his staff to never use the term, Special Relationship as it misrepresented the hard-nosed reality of relations between the world’s superpower and the United Kingdom. The Special Relationship, that old cliché, upon which many transatlantic toasts have been made. Rome to America’s Greece, as Harold Macmillan had it, the UK has often sought influence and interest over American foreign policy elites, and who can blame them?

The relationship is vital to Britain’s interests, both strategic and economic. Exiting the EU may be the will of the people, but letting narrow commercial interests crash us out of the Five Eyes and Special Relationship is an altogether more dangerous proposition.

Vice, David Gilbert, 22 March 2019

“The sudden decision by North Korea to remove its officials from the liaison office is no doubt aimed at the Moon Jae-in administration, which is keen to push peace talks forward,” John Hemmings, Asia Director at the Henry Jackson Society, a British foreign policy think tank, told VICE News. “It’s really a less-than-subtle attempt to split Washington and Seoul over the added sanctions.”

South China Morning Post, Wendy Wu, 19 March 2019

Dr John Hemmings, director of the Asia Studies Centre and deputy director of the Henry Jackson Society, a Britain-based think tank, said at the same event in Washington that Britain was considering formalising a policy of sharing intelligence with Japan.

He said about US$124 billion worth of trade – 12 per cent of Britain’s total – went through the South China Sea each year, “quite a significant amount of our revenue, so we would be concerned about anyone – China or whichever regional country – trying to control that waterway”.

“[Britain] will not lead, but certainly it will follow and will join and become a responsible partner of the community of the states that are interested in an Indo-Pacific concept,” Hemmings added.

The Netherlands said in October that it would send a warship to join British aircraft carrier HMS Queen Elizabeth on its first operation deployment in Indo-Pacific waters in 2021.

“We’ll see more of that,” Hemmings said, adding that Britain, Canada, Australia and various European countries would be “banding together and operating in groups like this”.

Jeremy S. Maxie

Energy & Political Risk Consultant

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