Merkel to ratchet up Huawei restrictions in concession to hawks

Chancellor Angela Merkel’s government is prepared to make a key concession to security hawks by tightening barriers aimed at Chinese equipment supplier Huawei Technologies Co., according to people familiar with the plans.

A draft of security measures being rolled out by the German government aims to block Huawei components from entering the core network of the country’s ultra high-speed fifth-generation technology, the people said on condition of anonymity. The new rules may assuage officials in Merkel’s intelligence services and the U.S. administration who have warned about the risks of Huawei’s ties to the Chinese government and 5G’s susceptibility to sabotage or espionage.

Telecom executives are prepared to accept such a restriction in the key areas of next-generation infrastructure if Huawei’s products aren’t barred from the less sensitive parts, where they’re needed to ensure an efficient build-out, according to an industry official familiar with the talks.

The German leader, who has cultivated relations with Beijing and insisted that her government won’t single out a Chinese vendor, has come under increasing pressure to toughen her stance on Huawei to ensure that German data is protected. Security hawks have accused Merkel and her allies in the Economy Ministry of taking a soft line on China in an effort to bolster trade relations.

Now Berlin’s planned move could potentially upset Beijing which has lobbied governments across Europe and the West to resist a U.S. campaign against the company. Moves to restrict Huawei’s market access have already strained Beijing’s ties with nations ranging from Australia to the Czech Republic.

The debate has mirrored the one in the U.K., where government action has been ensnared by a division in the administration and the public. The government in London will defer a decision on Huawei and 5G until after the general election next month.

Merkel hinted at the shift toward greater security last week, saying Germany will “significantly strengthen” standards for 5G, even as the government won’t single out individual companies. Chinese components make up a significant share of previous generation networks, she said.

“Huawei is a partner, or a provider, that has already been active in Germany for the construction of the 2G and 3G networks,” Merkel told reporters in Berlin last Friday. “We know that we will have to significantly strengthen security standards for the 5G expansion.” Patrick Donahue, Birgit Jennen & Stefan Nicola