THREAD Failure to address Moscow's growing dependency on @Huawei will help Beijing embed Russia in a China-centred technological order, a digital #PaxSinica with worrying, global ramifications, I argue in my new piece for @FT. Here is why 👇 1/ ft.com/content/f36a55…
2/ As US-led pressure campaign against @Huawei starts to bear fruit, and now @10DowningStreet even contemplates an alliance of democracies to provide developing countries with alternatives to Huawei in 5G, this effort overlooks one key battleground: Russia thetimes.co.uk/article/downin…
3/ If @Huawei succeeds in establishing control over 🇷🇺 5G buildout, that will strengthen 🇨🇳 position in the battle for other EMs. Influence of example is key. If proud and technologically sophisticated Russia believes that Huawei is safe, why should Brazil or South Africa resist?
4/ Why is @Huawei well positioned to dominate 🇷🇺5G? There are at least 4 factors. Factor №1: money. Huawei provides great technology, but cheaper than Western competitors due to 🇨🇳 government subsidies, as @YapCW documents in this @WSJ piece wsj.com/articles/state…
5/ @Huawei has a well-established presence in 🇷🇺 3G market. For many years the big 3 local cell phone operators, especially @megafonru, have been used to and relied on 🇨🇳 equipment (Huawei + @ZTEPress) alongside hardware supplied by @nokia & @ericsson.
6/ Factor №2: national security considerations. The 🇷🇺 debate on @Huawe is very different from the one in the West. The Kremlin knows well that Russia is unlikely to produce its own 5G hardware any time soon, and waiting for @RostecRussia may delay 5G rollout for years
7/ Local cell phone operators believe that @RostecRussia will not be able to deliver on its promises till 2024, and the working group under @GovernmentRF has recently quietly supported this view by removing a demand to use only 🇷🇺-made hardware for 5G 👇
8/ That leaves the Kremlin with an unpleasant option to rely on foreign hardware. The dilemma was once explained to me by a high-level 🇷🇺official: "We are either bugged by @NSAgov or 🇨🇳MSS, so we need to chose a lesser evil. 🇺🇸 sanctions us, 🇨🇳 helps us, so the choice is obvious"
9/ Besides intel collection through backdoors in 5G hardware, 🇷🇺 security state is paranoid about the "killer switch." @DeptofDefense might force western vendors to knock out 🇷🇺5G networks, the theory goes, potentially unleashing political&economic chaos leading to regime change
10/ China is the lesser evil again, as no one in the Kremlin loses sleep worrying that Beijing might try to topple Vladimir Putin. This @FT piece by @maxseddon & @HenryJFoy is a must-read to understand 🇷🇺 concept of "sovereign Internet" ft.com/content/93be92…
11/ Factor №3: Huawei's sophisticated GR strategy in Russia, as the Chines company has a high-caliber team working on the issue led by senior vice-president Lin Ruiqi 林睿琦, former head of @Huawei Moscow office and a fluent Russian speaker
12/ @Huawei has been active in building relationships with Russian research institutions, and has portrayed this effort as support for @GovernmentRF's priorities to diversify 🇷🇺 economy and prevent brain drain. Good explainer by @DimitriASimes in @NAR asia.nikkei.com/Business/China…
13/ At the same time, recruitment of 🇷🇺 scientists (mathematicians, algorithms pros etc.) is in line with @Huawei's strategy to integrate non-Western talent in order to offset 🇺🇸 pressure. See this very well-researched piece by @FT's @YuanfenYang ft.com/content/c69932…
15/ The most comprehensive story on this was done by @kommersant. @Huawei dropped a $30m investment that would have marketed cloud solutions under its own brand in Russia, and became the backbone of SberCloud offering instead kommersant.ru/doc/4275431
16/ By doing so, @Huawei has cunningly exploited @USTreasury sanctions against @Sberbank that have discouraged US tech giants like @Azure & @awscloud from partnering with it, particularly since both are locked in a legal battle over giant Pentagon project businessinsider.com/pentagon-recon…
17/ Ability to hitch its wagon to @sberbank’s client base and the influence of CEO Herman Gref, a longtime Putin confidant, is invaluable for @Huawei. In order to understand the role of Sberbank for 🇷🇺 tech sector, this piece by @maxseddon is still a must ft.com/content/3450c8…
18/ Factor №4: impact of COVID-19. The pandemic has sharpened Kremlin interest in 🇨🇳 digital surveillance as a tool of political control, and @Huawei products such as Safe City (平安城市) have impressed the 🇷🇺security establishment. huawei.com/uk/industry-in….
19/ With all of these factors combined, at least for now @Huawei looks like on its way to dominate 🇷🇺 5G, and thus bring Beijing one step closer to embedding Russia in a China-centered tech&digital order, a #PaxSinica
20/ Given the importance of Russia's example for other developing markets on 5G for reasons discussed above, as well as even more important issue of Russia becoming China's obedient junior partner, what are the options available to the West to address this important challenge?
21/ So far, there is a lot of magical thinking. The Kremlin, it is hoped, will see dangers of partnering with China/Huawei, and will disengage. @AmbJohnBolton tried this line on 🇷🇺 interlocutors several times as he worked for @realDonaldTrump.
22/ There is also @EmmanuelMacron's hope that “🇨🇳 hegemony is not compatible with 🇷🇺 sense of pride,” expressed in @TheEconomist interview. However, the Kremlin will not abandon @Huawei, as stable ties to 🇨🇳 are a must even if someone like @navalny is in the @KremlinRussia_E
23/ What the West can realistically do, in my view, is exploit desire of private companies like @VympelCom or @ru_mts and parts of the state to hedge their bets and prevent total 🇨🇳 dominance in 🇷🇺5G. The way to do so is to help EU/US companies like @nokia, @ericsson, @Cisco etc.
24/ These companies have a positive history in 🇷🇺, and in ideal scenario Moscow would like to combine hardware from Western&🇨🇳 vendors, and rely on national IT (esp. algorithms). One potential risk that 🇷🇺 officials mention is potential widening of US/EU sanctions to include 5G.
25/ The story on 🇷🇺 mind is deactivation of Austrian compressors for @Gazprom via satellite last October. Something similar, the theory goes, can potentially happen to 5G hardware as result of future sanctions (a worse case scenario, of course) uawire.org/austrian-compa…
26/ A nimble Western approach will require a more honest conversation about the collateral damage from US-EU sanctions, and the incentives they create for Sino-Russian co-operation. A good start can be found in this work by @JarrettBlanc & @andrewsweiss carnegieendowment.org/2019/04/03/u.s…
27/ Of course, the conversation should be not about abandoning principles and dropping existing sanctions in order to plant mythical wedges between Moscow and Beijing. It should be about calibration of use of existing sanctions, and strategic approach to this tool going forward.
28/ Today's @FT op-ed is part of broader @CarnegieEndow research project on #PaxSinica. A detailed case study on @Huawei presence in Russia is on its way, and you can follow our analysis of this important topic on the project's webpage 👇carnegie.ru/specialproject…
