“Navigating this threat without unnecessary repercussions for America’s diplomatic and economic relations worldwide, will be a delicate dance.”
Lawmakers in Washington are in a unified effort to block Chinese mobile communications companies from entering the US market.
Earlier this week, reports emerged that a group of senators and House members were urging cell carrier giant AT&T Inc, the number two wireless company in the world, to cut commercial ties to Chinese phone maker Huawei Technologies. The prods of Congressman from both sides of the isle come as AT&T was negotiating a plan to offer their customers Huawei devices.
At the same time, the Chinese cell service provider China Mobile Ltd. is being actively blocked from gaining licensing to operate in the US by the Federal Trade Commission (FTC). China Mobile had applied for the licensing from the FTC almost seven years ago in 2011. The company request is still pending, and has drawn renewed opposition from lawmakers in the wake of the AT&T-Hauwei co-op plans.
The same members of Congress are also pushing AT&T to discontinue collaboration with Huawei on one of the next big leaps for mobile technology: the anticipated 5G network. According to reports, AT&T has been working closely with Huawei for some time to set the standards and develop infrastructural solutions for this coming upgrade to the world of mobile data.
What exactly are the objections of this bipartisan effort to obstruct the efforts of Chinese firms entering the American market?
Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, a non-governmental research body set up by Congress, gave some insight with a statement to the media: “The next wave of wireless communication has enormous economic and national security implications. China’s participation in setting the standards and selling the equipment raises many national security issues that demand strict and prompt attention.”
The same members of Congress are also pushing AT&T to discontinue collaboration with Huawei on one of the next big leaps for mobile technology: the anticipated 5G network.
The “national security” concern that Wessel is referring to is of course the ominous threat known as the Supply Chain Hack, namely the danger of devices and programs becoming infected with malware at some point before reaching the consumer. This danger that has become increasingly more central in the world of IT security over the past several years. This isn’t even the first time Huawei has been subject to this type of scrutiny. In 2012, the company was the subject of a US investigation into whether their equipment provided an opportunity for foreign espionage and presented a threat to critical infrastructure in the United States.
Addressing the threat of the Supply Chain Hack has now become one of the main focuses for federal authorities, especially the current administration.
Back in September, in an incident highly reminiscent of the above current events, the Department of Homeland Security (DHS) issued an announcement ordering federal agencies and departments to cease using software produced by Russian firm Kaspersky Lab, citing potential risks to U.S. national security.
According to reports, DHS based its decision on suspicions that ties between certain Kaspersky employees and the Russian government may indicate a threat to the secureness of these programs. Kaspersky, one of the largest vendors of its kind in the world, specializes in endpoint security and virus detection. These programs when installed give broad access to a system. If there were in fact malware designed to divert data contained in one of these Kaspersky programs, highly sensitive government files would be under risk of being compromised. The order gave all federal agencies 30 days to remove the now prohibited programs.
To be certain, the threat of the Supply Chain Hack to national security is real and certainly needs to be taken into consideration by policymakers.
While the claim of the threat of Kaspersky products remains unsubstantiated (The company founder Eugene Kaspersky fervently denied any Russian government connection and even agreed to an interrogation before Congress) the ban brought to the fore the serious risk of the supply chain threat to hardware. The ban was not without its ripple effects. It triggered increased scrutiny of devices and hardware used in governmental organizations, including the US military. Reports have since been released detailing how US Army units have begun to remove Chinese manufactured security cameras from their bases.
So what to make of this clear emerging trend within the US government of cracking down on foreign manufactured tech?
Is there actually merit to the slew of bans, regulations, and threats from politicians, or is the whole thing one big digital witch-hunt perhaps motivated by political considerations or irrational fear?
To be certain, the threat of the Supply Chain Hack to national security is real and certainly needs to be taken into consideration by policymakers. Members of the US intelligence community certainly still remember one of the biggest intelligence breaches of US assets in Afghanistan, pulled off through a simple, yet ingenious supply chain hack.
In 2008, Russian intelligence officers successfully breached US information systems in Kabul. Their employed method involved planting bugged thumb drives in kiosks near NATO headquarters in Kabul, hoping that an American serviceman would buy one of the drives and plug it into a secure computer. Which is exactly what happened.
While, the losses of a few private firms may not resonate as a major problem, it is important to consider the long term costs of setting such a trend.
The brilliance of the Russian planners did not only lie in the creativity of this hack, but also in their ability to identify the vulnerability to this type of attack in particular. American technicians and analysts in Kabul, while no doubt competently guarding the integrity of their systems, were likely not keeping their eyes open for a sophisticated cyber intrusion.
The Afghans are not particularly known for their cyber prowess. Not expecting such an attack meant that security protocols–i.e regulations on permitted sources for tech devices–did not account for it. This left US personnel wide open for a Supply Chain-type attack.
So yes, the Supply Chain threat is real. It has hit us before and it can hit use again.
With that said, addressing this threat needs to be approached with a high level of prudence.
Announcements such as these, where federal authorities target companies over security issues, tend to have tremendous economic backlash. Lawmakers are now advising U.S. firms that if they have ties to Huawei or China Mobile, it could “hamper their ability to do business with the U.S. government” according to one Congressional aide, who remained anonymous.
Similar consequences resulted from the Kaspersky ban. Almost immediately following DHS issuing the ban, American retailers such as tech store-chain giant Best Buy, began removing Kaspersky products from their shelves.
Another more recent example actually involved another Chinese company, by the name of Ant Financial, a subsidiary of the online shopping company Alibaba. Earlier this month the federal Committee on Foreign Investment blocked Ant Financial’s intended purchase of the Texas based cash transfer company Moneygram.
According to news sources, the “protection of personal data” raised concerns for US regulators. Both sides suffered from the breakup. Ant Financial will reportedly pay a $30 million termination fee. Ant Financial agreed to buy MoneyGram for $18 a share. MoneyGram shares plunged following the news that the deal was off, falling from$18 a share to around $12 in the course of one day, a decrease of nearly nine percent.
While, the losses of a few private firms may not resonate as a major problem, it is important to consider the long term costs of setting such a trend. The US private sector does not want to develop a reputation as being an unviable business environment due to the government breaking up deals and delegitimizing products based on national security concerns.
Navigating this threat without unnecessary repercussions for America’s diplomatic and economic relations worldwide, will be a delicate dance.
This concern was highlighted in the response of the Chinese government to the above reports. Chinese foreign ministry spokesman Lu Kang told US media that he was disappointed that American policymakers were trying to prevent AT&T’s cooperation with Chinese firms, but hoped “other countries” would provide China with a fair operating environment.
“We hope that China and the United States can work hard together to maintain the healthy and stable development of trade and business ties. This accords with the joint interests of both.”
