Jeff Schubert, a Visiting Professor at the Higher School of Economics National Research University in Moscow, and a Professor of International Business at Irkutsk National Research Technical University joins the program.
A case in question is Huawei's 5G technology. Australia has banned the use of Huawei equipment in its future 5G telecommunications network, while the US has banned its use by official organizations. The UK and a number of developed countries may follow the Australian lead. Is this a move against Huawei or a move against Huawei and China? Jeff answers: "It's a move against both. The argument against Huawei, and I think that there is some truth in it, is that Huawei depends on a lot of Chinese government financing, and also conducts various unwelcome activities on behalf of the Chinese government. 5G is a big advance on the type of communications we have now. We had 3G before, now we have mainly 4G, but 5G is said to be a platform that will have a much bigger influence on society, for example, the Internet of Things, driverless cars, all of these will be much easier and better with 5G. The argument is that Huawei, being a leader of such 5G equipment sold in almost all countries, will be able to put in place spyware, so in the future, if the Chinese are in conflict with countries like America and Australia, they can put spyware into these devices to take down infrastructure, electricity networks, and things like that."
Host John Harrison asks that as the people who procure such equipment are not stupid, they are able to take equipment apart and analyze how it is constructed, are the new restrictions really a smoke screen designed to impose sanctions on companies and countries? Jeff replies: "The first point is that as things become more sophisticated, it is harder to take them apart and to work out exactly how they are made. Look at the Volkswagen emissions scandal. Some people in Volkswagen, we don't really know how high up this was authorized, put in place electronic mechanisms in the cars, so that when the cars were being tested to see whether they met emission standards, the devices reduced emissions. But once they were out of the testing environment, they increased the emissions. It took a long time for this to be discovered. As technology gets increasingly complex, in software and in hardware, it is harder to really know for sure whether the equipment is being abused or is open to abuse. Now having said that, I think that you are definitely right. There is also a fear amongst Americans in particular that they are falling behind in this technology; they see Huawei being subsidized by the Chinese government, so it is sort of a technological race on as well. I think what the Americans are doing is initiating a strike against Huawei the company and also a strike against China."
A Russian National Technology Initiative (NTI) document in 2016 described the world being increasingly divided into trading blocs defined by both economic and political issues. These blocs can set the rules for technology procurement, based on political constraints. How right is it that trade in technology should in this way be directly linked to political allegiances? Jeff says: "Two years ago, when I was first writing about the National Technology Initiative, which mainly focusses on the end market, the issue of Brexit had emerged, Donald Trump was going to get rid of the Trans Pacific Partnership, things like economic trade blocks were really going out of the door, and of course Trump was not interested in international commitments from America. So trade, economic, political driving factors receded, but now finally we have national technology and security issues coming to the fore and driving the whole thing, possibly to the same place. If you are attacking international supply chains in high tech, that's going to affect trade. You are doing it for a national security purpose, but the end result is the same."
Russia is in a difficult situation. It needs 5G equipment. Jeff comments: ‘Russia will not say that it does not need Huawei equipment. But nevertheless, I think that there will be some security concerns, just as the Australians, Americans and other countries have security concerns. Russia is in a more difficult position because America can find other sources, which are well advanced, particularly in semi-conductors, in countries which are friendly to America. Russia is not necessarily right now the flavor of the month with many countries, so even if Russia was to get equipment from Europe or from Japan or South Korea, there is the risk that these companies, under pressure from America, could put spyware into this equipment. Despite what the companies might say publicly, they would probably go ahead and do it as requested. So, Russia does not really have the opportunity to look at non-Chinese sources for 5G equipment.
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