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War or peace, Chinese firms pose a security risk

By B Raman
May 10, 2010 12:55 IST
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Prudence demands that in our enthusiasm for expanding our economic ties with China, we should not allow suspect companies such as Chinese telecom giant Huawei a free run of our country and access to our communications network, says B Raman

There has been increasing focus by Indian counter-intelligence agencies on the expanding presence, activities and business of the Chinese telecom giant Huawei, which is stated to have the largest mobile telephone business network in the world after Ericsson.

Since the 1990s, there have been concerns in Western countries over the suspected links of the company with the People's Liberation Army and Chinese intelligence agencies. The concerns initially originated from the fact that the head of the company is a retired officer of the PLA. There were subsequent suspicions and allegations that many of its employees in China and its overseas offices were either serving or retired officers of the PLA or the Chinese intelligence.

In fact, on the basis of the allegations made by the Washington Times in 2007, the Committee on Foreign Investment in the US made a review of the security implications of business deals between Huawei and some American companies. It called for a report on the subject from the office of the director of national intelligence.

Huawei, which greatly values its business in the US, took note of the security-related concerns being increasingly voiced in America about the dangers of doing business with it and allowing it to acquire US companies, and reportedly volunteered to employ American citizens to supervise its contracts, which could have security implications. This offer was made following reports that it might be interested in acquiring a unit of Motorola.

Wikipedia gives the following instances of security-related fears and enquiries relating to Huawei in different countries:

• A report of the US government's Strategic Studies Institute on Argentina published in September 2007 described Huawei as 'known to bribe and trap clients'. The report further detailed its alleged unfair business practices, such as customers being given 'full-paid trips' to China and monetary 'presents'.

• In February 2009, the president of Indonesian mobile carrier Excelcomindo Pratama confirmed a data theft attempt by a visiting Huawei employee who 'snuck in to the general manager's network planning office'.

• In 2005, the possibility of Huawei's bid for British telecommunications company Marconi led to a request from the Conservative Party to the British government to 'consider the implications for Britain's defence security'. Marconi was later acquired by Swedish telecommunications giant Ericsson.

• In a 2008 military report to the US Congress, the Pentagon stated that Huawei 'maintains close ties' with  the PLA. In the same year, the proposed acquisition of US-based communications company 3COM Corp by Huawei led to a US Congress investigation and subsequent determination by the director of national intelligence that '3Com-Huawei merger would undermine US national security'. 

• In March 2009, Alex Allan, the chairman of the British joint intelligence committee briefed members of the British cabinet about the 'threat' allegedly posed by Huawei's equipment in the British national telecom network BT. ( My comment: The British media reported that the JIC chairman had told the cabinet at a special briefing  that 'Huawei components that form key parts of BT's new network might already contain malicious elements that could be activated by China and which could remotely disrupt or even permanently disable the network. Such action would have a significant impact on critical services such as power and water supplies, food distribution, the financial system and transport, which were dependent on computers using the communications network to operate.')

• In September 2009, the Australian security and intelligence organisation started investigating the alleged links between local Chinese Huawei employees and the Chinese military. ( My comment: This enquiry was started following complaints made to the Australian government by some serving and former Australian employees of the Chinese company about its alleged suspicious activities).

In the US and other Western countries, the intelligence and security agencies keep a close watch on its activities. At the same time, this has not been allowed to come in the way of Huawei's legitimate business. This is evident from the way it has been able to expand its business in the US and Europe despite all security-related fears and enquiries. Western countries follow a policy of allowing it to operate freely in areas and fields where there are no security-related concerns and curbing its activities where such concerns exist.

The suspicions and fears of the Indian intelligence agencies regarding the expanding presence and activities of  the Chinese company arise from the results of the enquiries faced by the company in other countries, allegations of its close links with the PLA which cannot be dismissed lightly, the dangers of allowing it to operate from sensitive places such as Bengaluru where it has an expanding research and development centre and the vulnerability to which our critical infrastructure could be exposed in times of a possible military conflict with China, if we depend on hardware and software supplied by Chinese companies.

One should not forget that Saddam Hussein lost his first Gulf War with the US in 1991 even before it started because the American firm from which he had procured most of his communication hardware and software managed to paralyse them before the troops went in. The headquarters of Saddam's army in Baghdad was totally cut off from all communication with its units in other parts of the country.

Prudence demands that in our enthusiasm for expanding our economic ties with China, we should not allow suspect companies such as Huawei a free run of our country and access to our communication network, which could facilitate their collection of intelligence in times of peace and war and paralyse our critical infrastructure during any military conflict.

Indian intelligence agencies have done the right thing in sounding the wake-up call. Instead of taking their warnings seriously and examining what mid-course corrections are called for in our policy of giving a free run to Chinese telecommunications companies, Minister of State For Environment Jairam Ramesh has chosen to ridicule the intelligence agencies and the home ministry for imposing what he has described as needless restrictions and for being paranoid about Chinese investments. He has been quoted as saying: 'We are imagining demons where there are none.'

One could not think of a more unfortunate, ill-informed and worrisome remark.

The writer is additional secretary (retired), Cabinet Secretariat, Government of India, New Delhi, and, presently, director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre for China Studies

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B Raman