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US Fails to Convince Allies to Ban Huawei, Resorts to Plan B
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After months of coaxing allies to issue a blanket ban against Chinese telecom equipment manufacturer Huawei, the United States has reportedly failed to convince other sovereign countries to fall in line. As Washington braces for a post-Huawei era, officials are finetuning Plan B to stay secure and fortify its technological resources to avert data siphoning.
Setback for Plan A
Over the past few months, the United States has extensively used its diplomatic channels to urge its allies to shun Huawei from their 5G wireless networks, citing security threat and espionage by the Chinese government. However, barring Australia, none of the federal countries have agreed to it despite the perceived risks.
Ignoring the vociferous U.S. lobbying, the European Commission has also turned down its security advisory for a blanket ban and instead issued a series of its own cybersecurity recommendations across the member states of the EU. The Commission has urged the EU countries to assess the threats to 5G infrastructure in their national markets on an individual basis and accordingly take a decision. Even a NATO-affiliated research center report has ratified “nuanced approaches … instead of a blanket ban" by the member nations.
Is the Caution Warranted?
The United States has long suspected Huawei to be an extension of the Chinese government due to the close ties of its founder with the military. Incriminating documents revealing the supposed ties of Huawei with two obscure companies, using which, its CFO allegedly deceived international banks into clearing transactions (worth millions of dollars) with Iran despite U.S. economic sanctions, corroborated its suspicions. Huawei was also accused of trade secret theft at the behest of R&D team based in China by T-Mobile US, Inc. (TMUS - Free Report) .
The fact that Huawei products are remarkably cheap owing to the huge subsidies by the Chinese government to undercut other 5G equipment manufacturers, such as Nokia Corporation (NOK - Free Report) , Ericsson (ERIC - Free Report) and Samsung Electronics, further evokes a feeling of mistrust. Jim Lewis, a cybersecurity expert with the Center for Strategic and International Studies, observed, “… the Chinese government is not paying hundreds of millions of dollars to build another country’s telecom infrastructure because they admire its cuisine.” The implication of the vested interests surely warrants a caution among the U.S. policymakers.
Moreover, the superfast 5G networks will facilitate the transfer of a larger pool of data, making them more vulnerable and prone to cyber theft. 5G is also likely to result in $12.3 trillion of global economic output by 2035 (per data from research firm IHS Markit). Critics contend that countries could go to any extent to gain a greater pie in this trillion-dollar market in order to have a political, economical and technological advantage.
Backup Plan to the Rescue
To avert such potential crisis, U.S. government officials are devising ways to better encrypt communications to thwart snooping attempts. In addition to robust communication networks through anti-spying mechanism tools, the Homeland Security Department has launched a supply chain initiative to secure the telecommunications and other key industry sectors. The Pentagon is also reportedly working on ways to segregate vital communications to eliminate the risks from compromised networks.
However, such technical fixes are beyond the reach of several countries as they lack both the technological and financial capabilities and have to largely depend on the low-cost Huawei equipment for developing the 5G infrastructure. Consequently, the significance of the U.S. deterrence plan to combat the risks has increased manifold to stay secure in a post-Huawei era.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
Image: Bigstock
US Fails to Convince Allies to Ban Huawei, Resorts to Plan B
After months of coaxing allies to issue a blanket ban against Chinese telecom equipment manufacturer Huawei, the United States has reportedly failed to convince other sovereign countries to fall in line. As Washington braces for a post-Huawei era, officials are finetuning Plan B to stay secure and fortify its technological resources to avert data siphoning.
Setback for Plan A
Over the past few months, the United States has extensively used its diplomatic channels to urge its allies to shun Huawei from their 5G wireless networks, citing security threat and espionage by the Chinese government. However, barring Australia, none of the federal countries have agreed to it despite the perceived risks.
Ignoring the vociferous U.S. lobbying, the European Commission has also turned down its security advisory for a blanket ban and instead issued a series of its own cybersecurity recommendations across the member states of the EU. The Commission has urged the EU countries to assess the threats to 5G infrastructure in their national markets on an individual basis and accordingly take a decision. Even a NATO-affiliated research center report has ratified “nuanced approaches … instead of a blanket ban" by the member nations.
Is the Caution Warranted?
The United States has long suspected Huawei to be an extension of the Chinese government due to the close ties of its founder with the military. Incriminating documents revealing the supposed ties of Huawei with two obscure companies, using which, its CFO allegedly deceived international banks into clearing transactions (worth millions of dollars) with Iran despite U.S. economic sanctions, corroborated its suspicions. Huawei was also accused of trade secret theft at the behest of R&D team based in China by T-Mobile US, Inc. (TMUS - Free Report) .
The fact that Huawei products are remarkably cheap owing to the huge subsidies by the Chinese government to undercut other 5G equipment manufacturers, such as Nokia Corporation (NOK - Free Report) , Ericsson (ERIC - Free Report) and Samsung Electronics, further evokes a feeling of mistrust. Jim Lewis, a cybersecurity expert with the Center for Strategic and International Studies, observed, “… the Chinese government is not paying hundreds of millions of dollars to build another country’s telecom infrastructure because they admire its cuisine.” The implication of the vested interests surely warrants a caution among the U.S. policymakers.
Moreover, the superfast 5G networks will facilitate the transfer of a larger pool of data, making them more vulnerable and prone to cyber theft. 5G is also likely to result in $12.3 trillion of global economic output by 2035 (per data from research firm IHS Markit). Critics contend that countries could go to any extent to gain a greater pie in this trillion-dollar market in order to have a political, economical and technological advantage.
Backup Plan to the Rescue
To avert such potential crisis, U.S. government officials are devising ways to better encrypt communications to thwart snooping attempts. In addition to robust communication networks through anti-spying mechanism tools, the Homeland Security Department has launched a supply chain initiative to secure the telecommunications and other key industry sectors. The Pentagon is also reportedly working on ways to segregate vital communications to eliminate the risks from compromised networks.
However, such technical fixes are beyond the reach of several countries as they lack both the technological and financial capabilities and have to largely depend on the low-cost Huawei equipment for developing the 5G infrastructure. Consequently, the significance of the U.S. deterrence plan to combat the risks has increased manifold to stay secure in a post-Huawei era.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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