Brussels is demanding proof from the Spanish Government that it has implemented an effective system to limit Huawei’s access to the 5G network. The European Commission already granted Spain in mid-March a two-month postponement for the evaluation of the fourth payment of European funds, endowed with 10,000 million euros and which includes milestones that should have been ready at the end of 2022. The electoral stoppages and The management of such an ambitious plan has caused the Spanish Government to accumulate more than a year of delay. The postponement has been justified because the unemployment benefit reform has not yet been approved and due to technical modifications that would make it easier to verify compliance with the objectives. However, there is more: according to knowledgeable sources, Brussels is putting pressure on the Executive to provide sufficient guarantees that restrictions will be applied to risky suppliers in the deployment of 5G. In practice, it would mean tightening the veto on the Chinese multinational Huawei so as not to leave European strategic autonomy in its hands. This is one of the milestones that would have to be completed for the fourth payment of funds and is currently being evaluated.
The Government considers the commitment settled: “It has been fulfilled with the approval on April 30 of the 5G security scheme. The steps are agreed upon and there is no debate,” says the Ministry of Digital Transformation. This royal decree establishes the possibility of designating risk suppliers and requires operators to carry out risk analysis and diversify the supply of technology. But Brussels has yet to decide whether sufficient guarantees are being offered. On the one hand, the Commission does not want, under any circumstances, for Community resources to be used to finance the development of 5G with Huawei technology. This has happened with the deployment of the rural network paid for with European funds. To ensure that Huawei did not enter, the Government and the Commission agreed that operators would assume the cost of replacing the supplier if it was classified as a risk. Faced with this threat, operators would avoid hiring Huawei. However, the Minister of Digital Transformation, José Luis Escrivá, has stated in public that he has no intention of drawing up a list of risk suppliers. And these statements have not been liked in Brussels, since if a list is not going to be published and there is no possibility of the risk suppliers being designated, then the threat would actually be diminished.
The other reason for discussion lies in the security of 5G. The approved scheme allows identifying and designating critical areas of the network. According to sources in the sector, Huawei is barely in the core of the backbone network of the main Spanish operators: Telefónica, Masorange and Vodafone. Nor in management services. But it is basically found in the antennas. The Commission would like to check how restrictions will be applied to Huawei in these sensitive areas.
The Government alleges that with the security scheme it has already established a format to declare Huawei a risk supplier. And the simple threat is already making operators not contract with the Chinese multinational. Escrivá has to convince the Commission that his scheme will be effective.
The vetoes against Huawei began with the Government of Donald Trump in the United States, when in May 2019 it included the Chinese multinational on the list of threats to national security, arguing that it was at the service of the communist party and that it could use its equipment for espionage. This forced Google to withdraw Huawei’s permissions so that its phones could use the Android operating system and, therefore, applications such as Gmail or Maps. And he made Meta take away WhatsApp. Companies like Intel or Qualcomm stopped selling chips. And the Chinese business conglomerate was prohibited from accessing 5G networks. Countries like Canada or Japan have also imposed this type of veto. And the Biden Administration has continued these policies.
Tour in Europe
In Europe, the Commission initially gave free rein for states to do what they considered appropriate. But after the war in Ukraine, Brussels has learned the lesson about strategic autonomy: it did not seem reasonable that in Europe there would be more exposure to Chinese 5G than to Russian gas, especially when this is going to acquire great importance and can be pirated for having a open architecture. European Internal Market Commissioner Thierry Breton already urged member states last year to act quickly and effectively: in a June statement he said that Huawei and ZTE “represent substantially greater risks.”
But, according to sources in the sector, Spain has put itself in profile and has not been as forceful as the Commission recommends: although it has established in legislation the possibility of identifying 5G suppliers as high risk, it has done so without the concreteness that Brussels would like. For example, in the royal decree that has been approved on the 5G security scheme, it says that the Government “may classify certain 5G suppliers as high risk.” But in no case does it stipulate the obligation to do so, which basically leaves open the possibility that it will never be done. This is how article 15 appears. According to consulted experts, the text leaves the burden of responsibility on the operators and is ambiguous enough so that the Executive can raise its hands and do nothing.
The Government and several experts consulted argue that the fact that this mechanism has been created is already ensuring that operators do not hire Huawei. However, the Commission is pushing forward, taking advantage of the fact that this is a committed milestone for the fourth payment of European funds. This says that Spanish law has to comply with the European toolbox on 5G security. And it specifies: “Imposition on telecommunications operators of obligations regarding risk assessment and management in relation to security; imposition of obligations regarding supply chain diversification in order to avoid technological dependence; means to identify high-risk and medium-risk sellers and possible limitations on using them.” This last point is where Brussels now wants to focus the conversations.
The Commission will have to assess whether the Government strictly complies with these requirements. Two years ago, the then Secretary of State for Telecommunications, Roberto Sánchez, said that he would not publish the list of risk providers. And the current minister of the branch, José Luis Escrivá, has declared that he will not or will not publish the list. The Government defends that it has regulated enough and that it is doing the same as other countries. However, in reality almost everyone is sticking to the Commission’s guidelines. The Scandinavians, the Baltics, France or Italy are already putting operational barriers to Huawei. For example, Portugal, despite Chinese pressure, approved a list of risk suppliers that it did not make public but provided to operators. However, the Spanish Executive can rely on the fact that Germany is addressing the problem in a very similar way to Spain. Berlin has never wanted to antagonize the Chinese, whom it considers essential trading partners.
Chinese capital is now gaining importance in Spain at a time when the Government needs private investors for the reindustrialization of the country and for its strategic projects financed with European funds. These are the cases of Envisión with the battery factory in Extremadura, the Nissan plant that Chery has entered, or the Airbus plant that Zhenshi has purchased to produce wind blades.
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