Geopolitics

The 5G Debate: Time To Choose Sides In China-U.S. Showdown?

Allowing Beijing to have a hand in the new, faster mobile network would entail significant risks. But in Germany, debate about 5G is also a question of who you like more: China or the U.S.

Five Eyes on Huawei's 5G
Julianne Smith

-Analysis-

MUNICH — For months now, the German government has been discussing whether they should allow high-risk suppliers to be involved in setting up the 5G mobile network. Unfortunately, this important debate keeps getting side-tracked, as Donald Trump's government is pursuing a misguided campaign to pressure Germany into ruling out Chinese supplier Huawei, thus turning the problem into a standoff between the U.S. and China.

Who do the Germans trust more? Which relationship is more important? It doesn't seem like Washington has much chance of success, given that three-quarters of Germans say they don't trust the U.S. president. However, Germany's 5G debate shouldn't be turned into a referendum on Donald Trump.

Chancellor Angela Merkel's decision is about much more than whether or not she should rely on a reasonably priced but highly risky supplier from China. It is about Germany's values and democracy. The greatest irony here is that, although the Trump administration has a very strong opinion on the matter, they can't offer an alternative supplier to Huawei. The other options are based in Europe — Nokia and Ericsson — or South Korea.

These facts are getting lost in all the noise: threats from the Americans, threats from the Chinese and news articles in the German media questioning the trustworthiness of Silicon Valley and the U.S. government. Of course it's difficult to separate this debate from worsening transatlantic relations or from recent revelations about the Swiss encryption company that for decades has secretly been owned by the CIA and the German intelligence services. But it's vital that the German government now focuses on what is really at stake.

Assuming that the European project is at the center of German foreign and economic policy, the EU's position on this question should hold the greatest sway. It considers that using a company based in a country with no democratic or constitutional control mechanisms would pose a significant security risk.

It's about much more than technological solutions for technological problems.

The EU has published security recommendations for its members, and although these are not binding, they should shape the debate. Most important is to consider a variety of non-technological questions, such as where a potential supplier's headquarters is located, its relationship with the government of that country, the legal position on surveillance of telecommunications and the likelihood of complaints about possible espionage, sabotage or political blackmail being properly investigated.

As well as looking to the EU, the German government could also learn from the experience of other democracies. Last summer, Australia announced a ban on Huawei. Unlike the United Kingdom, Australia does not believe that limiting the high-risk supplier to a part of the network, the periphery, and shutting it out from the sensitive core truly reduces the risks.

A Huawei 5G phone — Photo: Yang Suping/SIPA Asia/ZUMA

As well as examining why the members of the Five Eyes Intelligence Alliance (the USA, Australia, the UK, Canada and New Zealand) have come to very different conclusions in their risk assessment, it could be interesting for German politicians to ask their Australian colleagues how their decision has affected bilateral relations with China. What have been the consequences? Have Australia's economic and trade relations with China been irreparably damaged by the Huawei ban? And, just as importantly, what alternatives is Australia now considering?

Germany should also work closely with France, a country that is similarly facing severe pressure from the U.S. and China. Unlike Germany, France's networks only partly use Huawei technology, which makes the decision easier. French telecoms company Orange has announced that it will probably use Nokia and Ericsson.

It's about much more than technological solutions for technological problems.

If Europeans want to establish a continent-wide policy that relies on the EU's regulatory powers, France and Germany must take the lead in telecommunications policy. The recent joint meeting of the German parliament's Committee for Foreign Affairs and the National Assembly in Berlin, which discussed telecommunications, is a good starting point. Under the right conditions, Germany and France could later aim to develop an alternative transatlantic network with the U.S.

I hope that when Germans see Huawei posters claiming that 5G is about "values," they will agree. Huawei's right about this. As the EU has made clear, it's about much more than technological solutions for technological problems. At its core, this is about how democratic states protect their societies and economies from authoritarian states and from possible blackmail in the future. Germans undoubtedly understood this before Huawei began its advertising campaign. Now the government must reach a decision about 5G that endorses and protects the values that are important to the German people.

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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