Clean Network Results

Keith Krach, Undersecretary of State for Economic Growth, discusses U.S. efforts to create "clean" 5G networks with global partners in order to keep American data safe from foreign powers such as China. He speaks with Bloomberg’s Kevin Cirilli in Washington. (Source: Bloomberg) October 9, 2020

Kevin Cirilli: This is Kevin Cirilli, Senior correspondent for Bloomberg Television and for Bloomberg Radio, we’re here with the Under Secretary of economic affairs, Keith Krach. Mr. Under Secretary, you just returned from Europe and met with various counterparts as it relates to 5G technology. What happened?

Keith Krach: The tide has totally turned. Kevin, It was eight countries, 10 cities. You know, the big news is the integration of the Clean Network with the E.U. Clean Tool Box. And, you know, the countries I went to, Luxembourg now has picked nothing but clean vendors and 5G. This morning, Belgium announced it. The big one was Germany. And that is where they’re they’re about ready to issue regulations that, in essence, will exclude Huawei. And then we saw the same thing with regard to Austria, Portugal, Spain, Estonia, Albania. So now the transatlantic alliance in 5G is secure. So it’s about 25 of the 30 NATO nations.

Kevin Cirilli: Well, let me press you on this. Why the shift. Specifically with Germany. It seems that in recent weeks there’s been a shift with Germany. What changed?

Keith Krach: I really think it’s a combination of three factors. The first one is — and I spent a lot of time with NATO, with Deputy Secretary [Mircea] Geoana — and he said, "Look, we can’t afford to have a fractured NATO. We we need the 5G civilian networks in peacetime and war. We can’t have some that have trusted vendors and some that have untrusted vendors." So that’s factor number one. The second is the 5G EU Clean Toolbox. And I met with my old friend Thierry Breton, who is the EU commissioner. And a lot of people don’t know this, but he announced that the board of directors for the telcos in the EU have to make the decision. And if they choose a high risk supplier, which is basically the Chinese suppliers, and something goes wrong, they are personally liable. That’s huge. And then the third thing is that integration with the Clean Network and they can see that momentum all around the world.

Kevin Cirilli: Even if you look at some of the economic data of some of these Chinese telecommunication firms, whether it’s Huawei or whether it’s even supply chains like ZTE and whatnot, and they’re making a lot of money, even despite Europe moving elsewhere, their profits are booming. Does that concern you? How does the U.S. diminish some of the clout of these companies?

Keith Krach: Well, by the way, I think you’re going to see it show up in Huawei’s numbers eventually, you know, they’re private companies. So who knows with these guys? But I mean, you can see their deals are evaporating all around the world. Last February, they announced they had like ninety 5G contracts. The most we can count outside of China is seven.

Kevin Cirilli: And meanwhile, going back to China, you were just in Taiwan. I wanna ask you about that in a second. But specifically on Chinese payment, digital payments, you look at Alipay, for example. What is the administration going to be doing or what, sir, are you and your team doing about many of the national security, economic concerns pertaining to these companies?

Keith Krach: By the way, I can’t talk about our internal deliberations. You know, obviously, it’s a cause for concern. So that’s about all I can say at this point.

Kevin Cirilli: Meanwhile, you were in Taiwan, you were attending a funeral. And tell us what happened. How was that?

Keith Krach: Well, I went over for the funeral for President Lee. He’s their father of democracy. It’s like he’s like their George Washington. I was the highest ranking State Department official since 1979 when I went over there. The Chinese sent 37 fighters and bombers to break Taiwan airspace. But I can tell you, I had such a great meeting with President Tsai, and also many of the CEOs. We had an economic dialog on [unclear]. They are a great partner, a great friend. They’re a role model for capitalism and democracy in that part of the world.

Kevin Cirilli: Mr. Under Secretary, thank you so much, sir, for your time.

Keith Krach: Thank you, Kevin. I appreciate it.