Iran and the Huawei controversy

Iran and the Huawei controversy

Recently the Australian media has been focused on news that the Australian government blocked the Chinese telecommunications giant Huawei from participating in the national broadband network (NBN). Huawei is a private Chinese company that was founded in 1987 by its chief executive, Ren Zhengfei, a former officer in China’s People’s Liberation Army.

The Australian Security Intelligence Organisation advised the government that Huawei’s involvement in the NBN could compromise national security due to the rise of cyber hacking by the Chinese Government and the view that Huawei could provide a helping hand to the Chinese government or at least be vulnerable to pressure. The ABC 7.30 Report said that it understands advice from the US Government and intelligence agencies was also a key factor in the Australian government’s decision.

While most commentators are discussing the cyber security concerns, few are raising Huawei’s questionable activities in Iran. However, the Age today featured a particularly thoughtful article by Katharine Murphy that discussed both these issues, in which she wrote:

“Given the significant global concerns about China and egregious cyber-security breaches, the truth is that Huawei was always going to be up against it when it came to getting a chunk of the NBN. The United States is deeply suspicious of the company and its motives. There are inquiries by the US House of Representatives Select Committee on Intelligence into Chinese economic espionage, in which Huawei is one of the organisations in the spotlight – and a State Department investigation into whether the company breached US sanctions on Iran. Security agencies here are aware of those facts.”

Huawei involved in tracking Iranian dissidents?

The Wall Street Journal (WSJ) reported in October 2011, that it believed Huawei was complicit in providing technological services that enabled the Iranian regime to track and locate Iranian dissidents during the 2009 Iranian demonstrations – many of the dissidents were killed by the regime.

According to the WSJ, “Huawei signed a contract to install equipment for a system at Iran’s largest mobile-phone operator that allows police to track people based on the locations of their cellphones, according to interviews with telecom employees both in Iran and abroad, and corporate bidding documents reviewed by The Wall Street Journal”.

The WSJ noted that Huawei has provided support for similar services at Iran’s second-largest mobile-phone provider (MTN Irancell – which is majority owned by the Iranian government). The WSJ reported that during Huawei’s pitch to MTN Irancell, Huawei representatives emphasised that, being from China, they had expertise censoring the news, according to a person who attended the meeting.

The WSJ article also stated that in winning Iranian contracts,”Huawei has sometimes partnered with Zaeim Electronic Industries Co., an Iranian electronics firm whose website says its clients include the intelligence and defence ministries, as well as the country’s elite special-forces unit, the Islamic Revolutionary Guards Corps.”

Huawei denies the allegations that it helped the Iranian regime track down dissidents and claims its technicians only service Huawei equipment in Iran. But according to a WSJ article, “a person familiar with Huawei’s Mideast operations said that, Huawei carried out government orders on behalf of its client, MTN Irancell, that MTN and other carriers had received to suspend text messaging and block the Internet phone service, Skype, which is popular among dissidents. Huawei disputed that the company blocked such services.”

Huawei also argue that nearly all countries require police access to cell networks, including the US. However, the key difference is that in Western countries police are required to follow due process, for example obtaining a warrant – whereas in the hands of repressive regimes the technology can be used for surveillance and censorship to crush dissent.

Huawei breaching US sanctions on Iran?

Following the WSJ reports on Huawei’s involvement in the Iranian regime’s security network, in December 2011 US legislators wrote a letter to the Secretary of State Hillary Clinton requesting that the State Department investigate whether Huawei breached US sanctions on Iran. The letter stated:

“Last year, Congress passed the Comprehensive Iran Sanctions Accountability and Divestment Act of 20120 (CISADA)…Section 106 of this act prohibits the federal government from entering into or renewing a contract with a company that exports sensitive telecommunications technology to Iran…

We ask you to expeditiously investigate whether Huawei and other telecommunications firms have violated section 106 of CISADA by providing sensitive technology to the Iranian government that is or has been used to restrict freedom of speech or the Iranian people and the free flow of unbiased information in Iran, and that you ensure taxpayer funds are not being used to support companies engaged in such activity….

We also urge you to review whether telecommunications companies operating in Iran, including Huawei, are in violation of other US government sanctions, such as those prohibiting companies from engaging in business with the Islamic Revolutionary Guard Corps (which owns a significant portion of Iran’s telecommunications sector.)”

On January 2012 the US State Department agreed to investigate whether Huawei is breaching US sanctions on Iran. The Department of State Spokesperson Beth Gosselin said in an email that the State Department “shares the concern of any potential export of technology to Iran that is to be used specifically to disrupt, monitor or suppress communication of the people of Iran”. Gosselin also said, “This is a complex process and may take some time” and that “If we assess that a company has engaged in the kind of activity sanctionable under CISADA, we will take appropriate action.”

Huawei has tried to expand to the US, however, it has been met with strong resistance due to potential cyber security risks. The US Commerce Department prevented Huawei from participating in the development of a national wireless emergency network for police, fire and medical personnel because of “national security concerns.”

In February 2011, Huawei withdrew its attempt to win US approval for acquiring assets and server technology from 3Leaf Systems Inc. of California, citing opposition by the Committee on Foreign Investment in the United States. The Committee reviews US acquisitions by foreign companies that may have national-security implications. US regulators have also blocked Huawei’s bids on major telecommunications infrastructure projects, as well as acquisitions of American companies, over security concerns.

In order to appeal to the US market, Huawei has volunteered to scale back its business in Iran to existing customers. However, given that Huawei already dominates the Iranian mobile phone industry – this step does not appear to adequately address the criticisms of its activities in Iran.

In light of the national security risks and Huawei’s activities in Iran, it seems both more than reasonable and unsurprising that the Australian government has blocked the Huawei bid on the NBN.


Sharyn Mittelman