June 10, 2020 / 10:08 AM / a month ago

Breakingviews - Britain has more to lose from a Huawei U-turn

The logo of Huawei is seen in Davos, Switzerland Januar 22, 2020.

LONDON (Reuters Breakingviews) - Boris Johnson is threatening to choose sides in the global telecom standards battle. Six months after granting Huawei Technologies a limited role in Britain’s next-generation mobile networks, the prime minister is facing renewed pressure to ban the Chinese giant entirely. That would carry big costs. It would also suggest that post-Brexit Britain is a weak negotiator.

In technological terms, nothing has changed since Johnson capped Huawei equipment at 35% of the less sensitive parts of the 5G network. However, mounting geopolitical tensions have prompted the United States to crank up the pressure on the United Kingdom. British relations with China have also chilled as the People’s Republic flexes its muscles against Hong Kong. That has spurred lawmakers in Johnson’s Conservative party, including some who campaigned to leave the European Union, to push for a Huawei ban.

Yet there are several good reasons why Johnson’s government should stand firm. Replacing Huawei’s kit is expensive. The U.S. Federal Communications Commission has asked Congress for $2 billion to help operators “rip and replace” the Chinese group’s boxes. Britain’s BT has already earmarked 500 million pounds for a more limited excision. A complete ban would prompt UK operators to seek compensation from an already stretched public purse. Consultancy Assembly also reckons banning Huawei would delay 5G roll-out by two years, scuppering Britain’s aspirations of technology leadership and squandering potential economic benefits worth 7 billion pounds.

Holding firm would risk a U.S. backlash which could complicate negotiations over a trade deal Johnson’s government badly wants. However, Washington has a history of issuing hollow threats against its closest European ally. In 2015, Britain upset President Barack Obama by joining the China-led Asian Infrastructure Investment Bank, but suffered few visible consequences. More recent mutterings by U.S. officials about limiting intelligence-sharing also appear exaggerated. Besides, it’s far from certain that heeding Washington on 5G would trump the vested domestic interests that will weigh on trade talks. And banning Huawei would risk reprisals from Beijing.

Johnson’s domestic room for manoeuvre may be more spacious than immediately apparent. His 80-seat majority means he can probably face down the legislators who rebelled over the Huawei decision in March. Britain’s foreign policy has been in flux since it voted to leave the EU. In the increasingly blustery waters between Washington and Beijing, the Huawei decision offers Johnson a chance to drop an independent anchor.

Breakingviews

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