Keith Krach, second to right, has played a key role in U.S. efforts to boost economic security and decouple from China. © Reuters

Keith Krach, second to right, has played a key role in U.S. efforts to boost economic security and decouple from China. © Reuters

US dangles financial aid to anti-Huawei campaign in Asia

Washington urges Japan and Australia’s cooperation on ‘clean’ 5G paths

NIKKEI Asian Review

KEITH KRACH, UNDER SECRETARY FOR ECONOMIC GROWTH, ENERGY AND THE ENVIRONMENT

July 24, 2020

WASHINGTON — Washington may include financial support in its campaign against the use of Huawei Technologies equipment in 5G infrastructure, a top U.S. diplomat said, as the U.S. looks to bring developing Asian countries in line with its policy.

Huawei is attractive to developing countries with limited resources because its products and services are usually cheaper than alternatives produced by Ericsson and Nokia. But those prices come with a hidden cost, Keith Krach, U.S. undersecretary of state for economic growth, energy and the environment, told a roundtable discussion with Nikkei and other Japanese media.

“Huawei is the backbone of the CCP’s surveillance state,” he said, referring to the Communist Party. “That’s why any country that includes equipment from either Huawei or ZTE in its 5G system is vulnerable to theft and surveillance at any time.”

Krach spoke as the Trump administration wages a campaign against Huawei and other Chinese tech companies, accusing them of posing a risk to the security of nations. While Huawei and others have denied the accusations, the campaign is beginning to pay dividends this month, with the U.K. banning Huawei from its 5G networks and France’s cybersecurity agency reportedly placing a de facto ban on the company.

Instead of relying on Huawei, which has become a worldwide leader in telecoms, the U.S. has options for countries to replace Huawei-made equipment, Krach said.

“There’s a lot of things we could do” to help developing countries replace Huawei parts, Krach said at Wednesday’s round table. He cited potential assistance from governmental agencies like the U.S. International Development Finance Corp., the Export-Import Bank of the U.S., and the U.S. Agency for International Development.

The administration of U.S. President Donald Trump doubled the capacity of government infrastructure investments under legislation passed October 2018. Krach signaled there could be a greater push coming communications infrastructure, possibly in cooperation with Japan and Australia.

Trustworthy telecom infrastructure is “part of our Indo-Pacific strategy,” he said.

For such countries as the Philippines and Thailand that have not eliminated Huawei products from networks, he said, “I think the first thing we want to do is we want to work with them to see if they can replace that or change that decision.”

Both countries are Washington’s military allies. The U.S. is concerned that Huawei gear could expose highly sensitive information to Chinese spies and interfere with effective communication during emergencies.

The Chinese government has denied using Huawei equipment for espionage.

Krach also said concerns over personal information collected by Chinese apps, such as TikTok and WeChat, were being sent to the Chinese government.

“Those type of apps are really dangerous because it can result in spying on our children,” he said.

The Trump administration is considering banning TikTok in the U.S. India’s TikTok ban “actually spurred us on,” he said.

But he stressed that whether Japan follows suit is ultimately up to its own government. “Our position is that we want to share with them our intelligence, share with them the reasons why we want to set an example ourselves,” he said.

Over the long term, Krach said the U.S. plans to extend its “5G Clean Path,” an initiative to remove vendors like Huawei and ZTE from 5G communications into and out of U.S. diplomatic facilities.

“We will soon be extending this clean path initiative beyond 5G, to include clean apps, clean systems, clean data centers, clean cloud, and clean underwater cable, in order to shine the light of transparency on China,” he said.

The U.S. is already urging the international community to curb their Chinese connections in these areas. It could start designating “clean” companies involved in these business to facilitate the shift.