Huawei is a paralyzing dilemma for the west

Geopolitics is a difficult enough subject. When it's wrapped inside impenetrable technical jargon and fiddly gadgets, it can become paralyzing. This, roughly, is what's happened to western countries as two things collide: the ominous rise of authoritarian China and the global shift to fifth-generation wireless data infrastructure, the basis of the so-called Fourth Industrial Revolution.

That's because a Chinese company, Huawei Technologies Co., sits at the intersection of those two developments, and the West has to decide whether it can be trusted to build its new 5G networks. The US, China's geopolitical foil, has banned Huawei from its own market and wants allies to do the same. Australia and Japan have in effect followed. Others thinking about excluding Huawei include New Zealand, Canada, India, Denmark, the Czech Republic and Poland.

Other western states, while still agonizing about the dilemma, seem inclined to allow Huawei to participate in the 5G build-out, albeit within certain parameters. They include France, the U.K., Germany and Norway. Most countries that have given Huawei a green light are outside the geopolitical West, including Russia, Turkey, Saudi Arabia, the United Arab Emirates, Thailand, Malaysia and Indonesia.

So who's right? It's hard to know. Huawei, based in Shenzhen, is not owned by the state — being Chinese, it's somewhere between collectively and privately owned. It was founded by Ren Zhengfei, who once worked as a researcher for the People's Liberation Army. But he and his firm insist that Huawei never has built, nor ever would build, so-called "backdoors" into its equipment that would let it spy on, or sabotage, its customers' networks.

There are arguments for giving Huawei the benefit of the doubt. First, it tends to be cheaper than its rivals, which include the European companies Ericsson and Nokia Oyj. Second, it seems to be quicker. Earlier this year, Deutsche Telekom AG, a German cellphone operator, claimed that rolling out 5G without Huawei would delay its network by at least two years and add billions in cost.

Then there's the risk that excluding Huawei could antagonize China on trade and investment. In Germany, the bureaucracies opposed to Huawei are the spy agencies and the interior ministry, both tasked with security, whereas the economics ministry and the chancellery, both concerned with the overall Sino-German relationship, are more accommodating.

Finally, there are the principles of fairness and economic openness. There's no evidence that Huawei has spied on its customers. And part of what makes the West "western," or at least liberal, is that it doesn't close its markets to others without good reasons.

Huawei's critics, of course, have plenty of reasons for its exclusion. First, it's implausible that any Chinese company can avoid becoming an arm of the state and the Communist Party. China's National Intelligence Law of 2017 requires all the country's companies to "assist" in national intelligence, and to keep that assistance secret. An earlier law defines national security as including economics and culture.

Second, 5G isn't any old phone network. Unlike 4G, it's the infrastructure for machines and devices to talk to one another on the so-called Internet of Things. If it works well, it will make entire cities "smart" and enable autonomous cars to drive themselves through them, all the while exchanging reams of data. Think of the human body: If 4G is the ears, 5G is the entire nervous system. Would you want China to have control over it?

The fear is not overblown. Whoever provides the software and hardware for 5G will also have a head-start in eventually transferring that prowess into 6G and 7G. And once a technology is baked in, a simple software update could turn a harmless feature into a mole. A banal analogy would be your smartphone, when its maker schedules an update that adds emoticons but suddenly seems to drain the battery much faster — and all of this coincidentally just before the launch of a new model.

So caution is advisable. Even at the risk of slowing down the roll-out, regulators would be wise to assure diversity among suppliers. They should also ring-fence the most sensitive parts of the infrastructure. Procurement rules can't discriminate against individual companies, but they should establish criteria of trustworthiness. Suppliers that can't fully meet them would be allowed to play only in the network's periphery.

Just as important, the western allies must coordinate their approach. It makes little sense for, say, Denmark to exclude Huawei while Germany next door includes it. Autonomous cars, trucks and boats, geo-tagged goods in containers, patients with heart monitors: All of these and other connected nodes on the network will be moving across the border, constantly communicating with different "clouds" of server computers in the background. The data have to be safe on both sides of the border.

The West and its allies must therefore come to a common position on Huawei — and ideally on both China and data security generally. 5G and its successors have an almost utopian potential to solve many human problems. They also have a dystopian potential to turn our freedoms into a surveillance hell. The democracies need to confront this reality.

Disclaimer: This article first appeared on Bloomberg.com, and is published by a special syndication arrangement.