Gordon Campbell on the Chinese cyber security threat   28 Mar 2012

Gordon Campbell

On paper, the decisions to partner with the Chinese firm Huawei in the roll out of ultra fast broadband (and rural broadband) in New Zealand were taken locally, by the Enable Networks in Christchurch, and by WEL Networks in the Waikato. Yet could those decisions really have been made without any consideration of the national security implications of such involvement? Did, for instance, the SIS and GCSB conduct any evaluation of the security implications of Huawei’s involvement – and if not, why not ?

After all, New Zealand spent a lot of time in the mid 2000s worried about being a ‘soft touch’ on terrorism. Or agonised about being seen as a ‘soft touch’ on illegal immigrants. Or only a few days ago, bit its fingernails about being seen as a soft touch on homegrown terrorists.

Such were the concerns that the reactionary likes of Winston Peters spent a lot of time in the mid 2000s urging the Clark government to pre-emptively abridge the human rights of asylum seekers, in the name of national security. Peters used to be very, very concerned that this or that refugee or asylum seeker could be – or could be seen to be – a potential sleeper agent for Al Qaeda, and suggested that such complacency would only encourage the real Al Qaeda operatives to regard us as a soft portal for further mischief.

All that evidently goes out the window when there are bucks to be made from doing trade with China. Might taking action on potential security risks get us in China’s bad books? Well, better not do anything. Thus, the fact that our defence and security partners in Australia and the United States have barred Huawei – on security grounds – from bidding in key telecommunications contracts in those countries has been brushed aside.

The performance by Communications Minister Amy Adams under softball questioning on RNZ this morning did nothing to allay concerns. Adams claimed not to be able to answer questions about individual firms – but then proceeded to cite the good news about Huawei’s work in Singapore and the UK. She also said that New Zealand relies for security intelligence on ‘very robust systems’ and has ‘excellent’ sources of information on such issues.

 

Right. Would that be the same excellent sources of intelligence information that New Zealand relied on in the Ahmed Zaoui case? Someone should be telling Adams that simply saying “trust us, we know what we’re doing” really doesn’t cut it any more on national security issues. The credibility of governments on security issues has to be earned, not merely asserted.

So who is Huawei, and why do our friends in Australia and the US feel so concerned about its activities ? The New York Times report on the banning of Huawei from involvement in Australia’s telecommunications work is here. The Washington Post story on the same subject is here.

According to the Australian Financial Review, which broke the original story, Huawei was informed late last year of the Gillard government’s decision to bar it from competing for a share of the $US38 billion rollout of fibrere optic cable to 93% of Australian homes and workplaces by 2020. Amusingly, the first casualties of this decision were the ACT Brumbies rugby team, and the Canberra Raiders NRL team, both of which Huawei had hoped to use as a vehicle to enhance its corporate image among ordinary Australians:

 

Intrigue surrounds Huawei’s withdrawal from the sponsorship of rugby union side the ACT Brumbies just before Christmas. The sponsorship deal had been signed off by Huawei’s board and jersey designs incorporating the company’s logo had been approved. Brumbies sources say Huawei’s excuse for withdrawing from the talks was that it had been advised by the government there were doubts about its future business prospects in Australia.

The case against Huawei is set out in this opinion piece in the Australian Financial Review.

It goes like this: China is the current source of most of the cyber attacks being made on Western government and corporate websites. Huawei was founded by its chief executive, Ren Zhengfei, a former officer of the People’s Liberation Army in China. Furthermore:

 

Huawei’s failure to disclose that the chairman, Sun Yafang, had been a senior official within the Ministry of State Security, the country’s primary and largest agency for foreign intelligence gathering, will not have helped its cause…

The structural relationship between Huawei and the Chinese government – and the role of telecommunications within Beijing’s strategic planning – is also of relevance:

 

Telecommunications is designated as one of seven “strategic” sectors by the State Council. Beijing expressly seeks to maintain absolute control of these sectors, which are considered vital to China’s core national and security interests.

This usually means taking a controlling interest in building up these “national champions”, offering them privileged and protected access to markets, cheap capital, tax incentives and other subsidies and, for those with offshore interests, diplomatic support… Huawei is openly spoken of as a “national champion” by Chinese political and military officials. Being so in a “strategic” sector has given it privileged access to below-market rates as well as special tax and subsidy support.

In return, strategic national champions are expected to pursue Beijing’s strategic and political objectives in addition to their own commercial goals.

Canberra is well aware that more instances of cyber attack and industrial espionage originate in China than anywhere else in the world. Despite Beijing blaming these on rogue citizens, their level of sophistication means that many can only be by instigated by government agencies or large firms.

Some of the criticisms of Huawei can be laid at the door of US firms using security concerns as a trade barrier. For instance, some of the lobbying in the US against Huawei for supplying surveillance equipment to the mullahs in Iran for use against the democracy movement in that country was probably not motivated by heartfelt concern about the plight of democracy in Iran. Yet do people in the Waikato and Canterbury know that the very same Chinese firm supplying them with faster broadband (and rural broadband) has also been helping the mullahs to cyber-eavesdrop on protestors in Iran using social media, activities which have led directly to their torture and execution?

 

Until late last year, Huawei dominated Iran's telecommunications business and garnered massive revenues from doing so. Unfortunately, there are also reports that it played a role as Iran's partner in crime as the regime went about tracking, silencing, and killing Iranian opposition figures.

In 2009, when Iranians took to the streets to protest President Mahmoud Ahmadinejad's election, Huawei reportedly installed tracking equipment for all of Iran's telecommunication providers that allowed the Iranian intelligence services to locate people through their cellphones, thus enabling the regime to pursue, jail, and often kill opposition members.

Given that track record, Huawei hardly seems a case of moral investment within our broadband rollout. (Reportedly, Huawei has responded to such criticism by scaling back its business operations in Iran.) As its defenders point out, Huawei is one of the world’s largest telecommunications companies, and has won telecommunications contracts in Singapore and the UK – apparently without incident, so far as can be detected, thus far.


Currently Huawei is also being mooted as a key provider in one of the planned trans-Tasman fibre-optic undersea cable options.

 

Huawei Marine and a second Chinese company, Axin, have proposed an Auckland-Sydney submarine cable, with state-owned Kordia vying for the right to manage it.

Once again, if this option went ahead, it would raise security and intelligence conflict between New Zealand and Australia – given that Huawei is not only being blocked from participation in the national broadband rollout in Australia, but will also almost certainly be barred from any participation as well – for obvious reasons – from this fibre optic cable project linking Perth with Singapore:

 

The key undersea cables that link Australia to the outside world are set to be the latest cause of friction between Chinese tech giant Huawei and the Gillard government. The government is understood to be investigating submarine cable provider Huawei Marine Networks and its potential for security breaches.

In January, Melbourne-based ASSC-1 announced plans to build a cable from Perth to Singapore for up to $300 million using Huawei Marine Networks technology…..Sources in the federal government indicated ASSC-1’s cable could be reviewed under Foreign Investment Review Board regulations due to its location within Australia’s exclusive economic zone…..In a 2011 report by the US-China Economic and Security Review Commission, concerns about Huawei’s submarine cable business were repeatedly raised.

“Hacking into optical fibre is not overly difficult,” the report said. “Whether fibre is cut by accident, by design to disrupt communications, or hacked to intercept sensitive data the threat to national security can be significant.”

So, what should New Zealand now do? The Greens have argued that the matter should be dealt within the secretive Intelligence and Security Committee, which is of little help – given how infrequently the committee meets, and how nothing of its deliberations ever sees daylight. All we would get at best, is a multiparty version of “trust us”.

Labour? David Shearer? Again, they seem to have nothing to say. Instead, Labour’s priority today has been to issue a press release lamenting the cutbacks to the nation’s military bands. It would be interesting to be a fly on the wall as new Defence Minister Jonathan Coleman tries to justify New Zealand’s laissez-faire attitude to China’s cyber threat, within the next Five Power Defence Arrangement discussions.

New Zealand has already proven itself to be a soft and unreliable player in defence and security arrangements. Much of what the world knows about the Echelon monitoring and surveillance system was gathered by the penetration of the system’s weak point in New Zealand, by investigative reporter Nicky Hager in his book Secret Power. It will not have escaped the attention of the Chinese that New Zealand – ever eager and credulous in its trade and diplomatic dealings – offers a similar soft entry point for its further cyber penetration ambitions.

The Australians have got it right this time. Plainly, Huawei should be barred from any future role in building our telco infrastructure. Put it this way: Huawei is the sort of tainted corporate player that – if it were an asylum seeker – we would be clapping it in solitary confinement and trying to deport it as quickly as possible. Unless if course, as in this case, it chose to offer us a lot of money. But sacrificing your country’s basic security for short term trade benefits rarely ends happily.

 

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