US-China Tech Cold War Puts Europe in the Middle

A view of Vilnius, Lithuania

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A view of Vilnius, Lithuania

But President Trump and other U.S. officials should seize the opportunity to strengthen transatlantic ties.

A decade ago, a European scholar asked a Chinese scholar, “What does China-European strategic partnership look like?” The Chinese scholar responded: “We hope that when China goes to war with the United States, Europe will at least remain neutral.”

The looming “tech cold war” between the United States and China may now provide an initial test of that proposition. In May, Google became the first of many U.S. tech firms to announce its split from Chinese telecom giant Huawei in compliance with a new U.S. Commerce Department regulation. If implemented stringently, the regulation—which prohibits U.S. firms from doing business with Huawei without a government license—would shake the tech and telecom industries worldwide, potentially delay Europe’s 5G rollout plans, and begin to decouple the U.S. and Chinese tech sectors in the name of national security. Stuck in the middle will be Europe.

Europe is emerging as the telecom battleground in the new U.S.-China technology Cold War. For Google, the Commerce rule means that Huawei phones – which constitute roughly one-quarter of the European market – will no longer carry the licensed Android operating system or Google’s suite of apps including Gmail, YouTube, and Chrome. For U.S. microchip firms that supply Huawei, it means cutting ties. Even if Huawei finds alternatives to U.S. hardware, ultimately European consumers could face a stark choice: cheap Huawei phones or YouTube.

Moreover, the blacklisting of Huawei attempts what Trump administration pressure in Europe over the last four months has failed to do: slow down the integration of Huawei into Europe’s 5G networks. The House intelligence committee made its views clear back in 2012: using Huawei-made components in critical networks poses an unacceptable national security risk. But U.S. diplomats, who have offered neither a viable 5G alternative nor convincing risk assessments, have failed to convince key European allies. 

Related: A New Consensus Is Emerging On How to Handle The Risk from China’s 5G

Related: The US-China Tech War Is Being Fought in Central Europe

Related: Cyber Deterrence Done Right: The Coordinated Actions Against Huawei

The new blacklisting is a far more aggressive tool. (Though it still lacks a 5G plan.) Huawei smartphones and wireless infrastructure rely on U.S. telecom components, from processors and modems to programmable and switching chips to high-performance radio frequency parts. In the wake of the announcement, Spanish firm Telefonica (who works with Huawei on 5G) has said that it is reviewing the order for its implications. UK’s Vodaphone and EE pressed pause on using Huawei handsets in 5G network launches. Beyond Europe, Japanese mobile carriers Y! Mobile and KDDI have delayed sales of new Huawei smartphones due to security concerns.

Europe has been thrust in the unenviable middle because of its deep economic ties with China. If it stays there, there will be profound and dangerous implications for security. Huawei’s economic embedding in Europe has all but taken the smart national security choice off the table. For the UK and Germany to invest in secure 5G infrastructure, it would mean rejecting the cheaper Huawei alternative. In some cases, it would also mean voiding political promises of national connectivity tied to rural economic development. Extricating Huawei from European 5G networks is an enormous financial and political undertaking. To avoid more costly security risks in the future, it is a necessary one. 

The speed with which companies announced their withdrawal from Huawei following the Commerce department restriction serves as a reminder of the power of government policy to influence corporate behavior—even in the world of high-tech, where it sometimes feels impossible. The United States now has an opportunity to wield that power to strengthen its transatlantic ties, give Europe an alternative economic choice on 5G, and in so doing invest in collective security that pulls Europe out of its middling state. 

For one, we can drop the “us-versus-them” mindset when it comes to our allies and support the development of European advanced technology industries—telecom and artificial intelligence most critically. Joint funding arrangements, translational capacity-building that takes innovations from the lab (which Europe excels at) to the market (which it doesn’t) or DARPA-like models that look to the future would be a start. Second, the United States needs a 5G plan – or even a 6G plan – that it can sell to its allies in place of the Huawei model. There will be financial costs and likely delays in rollouts. But if rejecting Huawei in 5G networks is a bitter economic and political pill that needs to be swallowed (and it does), our allies need a path forward.

This week, President Trump personally relays the anti-Huawei message across the Atlantic: Intelligence sharing over 5G networks that are one security update away from sending information to the Chinese Communist Party are not viable means of communicating U.S. national secrets. He should couple that admonition with a plan that takes both the United States and Europe forward economically and technologically.

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