Germany crackdown set to exclude Huawei from 5G rollout

Germany is to impose tough new restrictions on telecoms equipment providers which will effectively exclude Huawei from the buildout of the country’s 5G phone networks.

An IT security bill that Angela Merkel’s cabinet is planning to pass in the coming weeks would stop short of an outright ban on Huawei but creates bureaucratic obstacles that could prove insurmountable for the Chinese company, according to MPs with knowledge of the draft legislation.

A move by the German government to phase out Huawei as a supplier of 5G telecoms equipment would be a huge blow to the Chinese company’s international ambitions. Germany, like the UK, has been one of Huawei’s key markets for expansion outside mainland China and its deals with companies such as Vodafone and Deutsche Telekom have helped turn it into the world’s largest supplier of telecoms equipment.

MPs who have seen the new bill say it will introduce a two-stage approval process for telecoms equipment, involving a technical check of individual components combined with a political assessment of the manufacturer’s “trustworthiness”.

“The German parliament requires the legal means to be able to exclude untrustworthy suppliers like Huawei from the 5G buildout, and this new law appears to do just that,” said Nils Schmid, foreign policy spokesman for the Social Democrats, a junior partner in Ms Merkel’s coalition government who has called for a tougher approach to Huawei.

The bill is not yet finalised and may still undergo technical changes. But it is already clear that it will make it almost impossible for Huawei to participate in Germany’s 5G programme.

“How can Huawei, a company with suspected links to the Chinese state, pass a political trustworthiness test?” said one MP involved in the discussions on the new law. “It’s impossible.”

Angela Merkel in the Bundestag on Wednesday. The German chancellor faced a rebellion from her own party to take a hard line on Huawei © Michael Kappeler/dpa

The bill also envisages a key role for Germany’s intelligence services, which have long been sceptical about Huawei. “In its current form [the bill] envisages that when doubts arise as to a company’s trustworthiness then the government can investigate it, using information provided by the intelligence services,” said Thorsten Frei, an MP with Angela Merkel’s CDU/CSU.

Germany joins a growing group of countries that have moved to impose restrictions on Huawei, which critics believe could be used by Beijing to conduct espionage or cyber sabotage. Washington has repeatedly cited a law obliging Chinese companies and citizens to aid the state in intelligence-gathering. Huawei has denied that it is a tool of the Chinese government.

In July, the UK government banned operators from buying new 5G equipment from Huawei from the end of the year, while France has created regulatory hurdles designed to steer telecoms operators away from using the company’s kit.

The US government has been pressing its allies in Europe to drop Huawei as a supplier for several months. Last year the US warned it would scale back intelligence-sharing with Germany unless Berlin blocked Huawei. “The American pressure has been just brutal,” said one senior German official.

On Wednesday, US secretary of state Mike Pompeo used a trip to Rome to warn the Italian government that Chinese technology companies “with ties to the Chinese Communist party” were a threat to Italy’s national security and the privacy of its citizens.

Ms Merkel has resisted US pressure to impose an explicit ban on the Chinese company, telling the FT earlier this year that it was wrong to “simply exclude someone per se”. Instead, she has sought to tighten the country’s security requirements towards all telecoms equipment providers and diversify suppliers.

But she has faced a rebellion from her own party, which has demanded a much harder line on Huawei — as have the Social Democrats and opposition Greens.

Huawei declined to comment on the new German law, stressing that the bill had yet to be finalised. It said it was a “purely private company” that was co-operating with the German security authorities and could “see no plausible reasons to limit our access to the [German] market”.

Deutsche Telekom and Telefónica, two of Germany’s biggest mobile operators, declined to comment. Vodafone said it would “continue to monitor the situation and will always comply with regulations”.

All three companies have used Huawei equipment for their mobile and fixed line networks and that has continued into the 5G era. In recent years the operators have signed deals to use the Chinese company’s kit for radio access networks (RAN) — the equipment that sits on masts and rooftops to connect phone calls.

But even before the new bill was being finalised, the companies had started to move away from using Huawei systems in the “core” — the intelligent part of the network where customer information is processed.

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