Chinese premier Li keqiang's welcome at Premier House. New Zealand's hawkish stance on Huawei could be problematic for our relationship with China. Photo: Supplied

The GCSB’s decision on Huawei technology could be a problem for New Zealand given our junior place in the Five Eyes alliance, writes Thomas Coughlan

Trade Minister David Parker said New Zealand could be an “honest broker” between the United States and China earlier this month, but the GCSB’s identification of “significant national security risks” in Spark’s Huawei-build 5G network has proved how difficult that will be. 

Spark on Wednesday announced the GCSB had declined Spark’s proposal to use Huawei technology in its 5G network. This means Spark cannot build the network unless it takes steps to mitigate the concerns identified by the GCSB. 

The GCSB took the unusual decision of releasing its own statement, confirming Spark’s announcement. 

Spark’s own decision to release a statement was unusual. Under the Telecommunications (Interception Capability and Security) Act, or TICSA, Spark could still choose to work with the GCSB to mitigate concerns raised, meaning the decline would only take effect if Spark chose not to address concerns raised by the GCSB.

The company said it was considering its options, but the decision to release a statement saying the GCSB had denied the network suggests the concerns identified could be difficult to mitigate. 

Should Spark choose to progress, it would initiate a process that could lead to GCSB Minister Andrew Little making the ultimate decision on whether the company is allowed into the 5G network. 

But Little told Newsroom the process was “nowhere near that point at this stage”.

He said the process was “ongoing”.

“This morning the director-general of the GCSB notified Spark of his assessment of the technology they wish to introduce, the next part of the process is that Spark and GCSB work together to see if they can mitigate the national security risk presented by the technology to the point where they can eliminate that risk,” he said. 

A technical problem and a political problem 

Huawei has been involved in the rollouts of New Zealand’s 3G and 4G networks. 2Degrees has credited their technology with lowering prices for telcos. 

Spark switched their networks to Huawei technology after problems with their 3G network, which used Alcatel-Lucent technology. 

The sector has also seen massive consolidation in the last decade. 2Degrees  Chief of Corporate Affairs, Mathew Bolland had told the New Zealand Herald a Huawei ban would leave just Nokia Networks and Ericsson as potential 5G partners.  

Bolland said yesterday the the decision was a “real disappointment for competition”.

5G is different

The concerns are elevated for 5G networks because of peculiarities in the technology. 

In previous networks, most computing is done in what is known as the “core”, which is the heart of the system. Huawei has stayed away from providing core services to New Zealand networks, sticking to technology on the “periphery”. 

But speeds demanded by 5G mean that more computing is done on the edges of the network, meaning Huawei technology would be used on parts of the network that could represent a national security risk if hacked.

This is a concern for New Zealand’s place in the Five Eyes security alliance. 

Security concerns have led Australia to ban Huawei and the United States to implement an effective ban. Senators from the United States lobbied Canada to consider a ban as well. 

Australian spy chief Mike Burgess said his country’s electricity grid and water supplies would not have been adequately protected had Huawei or ZTE, another Chinese firm, been allowed to build the country’s 5G networks. 

Burgess advised his government to exclude “high risk vendors” from the entirety of 5G networks, reported the ABC.

“A potential threat anywhere in the network is a threat to the whole network,” he said.

Former Pentagon advisor Paul Buchanan told Newsroom it would be “very difficult” for New Zealand to sustain its intelligence relationships if Huawei was allowed into the 5G network. 

He said there would have been many “private overtures” from the United States pressuring New Zealand to drop the telco.

Recently, those overtures have become more public.

Earlier this week, The Wall Street Journal said American officials had been lobbying allies to drop Huawei. 

Concerns over New Zealand’s use of Huawei could be even more acute, given our junior place in the Five Eyes alliance.

Buchanan said Huawei was considered a “Trojan horse” into critical telecommunications infrastructure and New Zealand was thought to be the “Achille’s heel” of the Five Eyes.

Buchanan believed that approving Huawei technology could lead to New Zealand being left out of some intelligence sharing. This could have implications not just on national security, but on the security of New Zealand troops deployed in the field. 

Diplomatic concerns

While allaying the concerns of our allies, the GCSB’s decision could raise the ire of China —one of our largest trading partners. 

But Buchanan believes that a direct response is unlikely. He said China will be “indirectly annoyed”.

“If they retaliate then it gives the lie to the idea that Huawei is a private company,” he said. 

Australia has copped some indirect criticism over its Huawei ban. The state-owned People’s Daily newspaper accused Australia of having a “strong idealogical prejudice on China” and “trying to politicise business operations, according to the Australian Financial Review.

But China could retaliate in less overt ways. 

Zack Cooper, a senior fellow at the Center for Strategic and International Studies in Washington, told Newsroom earlier this year that China can wield its influence in less direct ways.

“The Chinese government wields economic influence by, for example, telling package tour operators not to visit certain uncooperative countries for a period, or advising local authorities to close down shops owned by people from an unfriendly nation,” he said.

Australia is already feeling the brunt of this kind of trade diplomacy. Earlier this year exporters told the Sydney Morning Herald their products were facing long delays at customs linked to the then-Turnbull government’s hawkish line on China. 

The status of New Zealand’s relationship with China is already in question after Jacinda Ardern failed to secure a visit to Beijing this year. The Government cited scheduling issues, but there has been some suggestion it demonstrates a cooling in the relationship. 

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