[Analytics] Ignoring the US, Philippines goes with Huawei

Despite warnings from home and abroad, the Philippines is wedding its telecommunications future to China. It’s a decision that may give the nation a step-up on regional business rivals but could also jeopardize strategic ties to the United States. Richard Javad Heydarian specially for the Asia Times.

Philippine President Rodrigo Duterte’s rapprochement with China has extended to opening the nation’s telecom sector to Huawei’s latest 5G network technology. State-run China Telecommunication Group, meanwhile, will be an integral part of a new consortium set to roll out a new network built and designed by Chinese engineers.

The decision by one of the world’s fastest growing economies – until now known for its lagging online connectivity – to welcome China’s telecom giants will give a boost to Beijing’s broad efforts to expand its global technological footprint while winning a grip on strategic nations’ critical infrastructure.

By adopting China’s next generation technology, including for an eventual 5G network rollout, critics claim that Beijing will be able to monitor, manipulate, hack, sabotage and redirect information flows over the networks Chinese companies have designed and built.

True or false, China’s links into the Philippines’ telecommunications infrastructure could also impede future intelligence-sharing with the US, which has warned allies against allowing Huawei to build or supply telecommunications equipment due to spying concerns.

Huawei, which is privately owned, has consistently denied that it would assist the Chinese government in spying or espionage.

The Philippines is emerging as an important partner and showcase example in China’s strategy to leverage new transformative 5G technology into diplomatic and strategic gains.

This month, the Philippines’ newest telecom carrier, Mislatel, will roll out its services using technology and engineering support of China Telecom. The China state-backed company holds a 40% stake in in the Udenna Corporation, which owns Mislatel.

The new telecom entity, known as Dito Telecommunity, is expected to spend up to US$5 billion over the next five years to expand its network across the Philippines.

China Telecom, in response to criticism of possible surveillance, has reiterated that it’s “deeply committed to the security of its network” and that it will “ensure it handles user data in strict compliance with the data-protection regulations”, according to media reports.

Meanwhile, the Philippines’ other two major telecommunications companies, Globe Telecom and Smart Communications, have also welcomed adoption of Huawei’s 5G technology for their evolving and competing networks and services.

“We’re very confident that we’re well protected,” Globe Telecom president and chief executive Ernest Lawrence Cu told Bloomberg earlier this year, following a “clean bill of health” audit given by British and Israeli consultants.

The China Telecom deal was struck after Duterte offered Chinese premier Li Keqiang to operate a third telecom carrier in the Philippines during a bilateral meeting in November 2017.

Beijing chose China Telecom for the job, Philippine officials quoted by the Wall Street Journal said.

Huawei is also expanding its 5G presence in traditional US allies such as South Korea and the United Arab Emirates, part of a plan to integrate up to 130 countries around the world, including in Europe, into a burgeoning global network.

That global expansion marks a setback for the US, which has repeatedly warned allies against using advanced Chinese telecommunications technology.

The US now seeks to isolate and weaken Chinese national champions such as Huawei over alleged technology theft, unfair competitive practices and security threats.

Those warnings, as elsewhere, have fallen on deaf ears in the Philippines. During a visit to Manila earlier this year, US Secretary of State Mike Pompeo called on regional allies and partners to shun Chinese-made telecommunications technology.

“We believe that competition, whether it’s in 5G or some other technology, ought to be open, free, transparent, and we worry that Huawei is not that,” the US diplomatic chief said in questioning the wisdom of adopting Huawei’s 5G technology.

“Our task has been to share with the world the risks associated with that technology, the risks to the Filipino people, the risk to Philippine security,” Pompeo warned.

For the past century, the Philippines has been an integral part of America’s network of alliances in the Asia-Pacific. Amid China’s recent rising military assertiveness, the two allies have maintained robust bilateral security cooperation, governed and defined by their 1951 Mutual Defense Treaty (MDT).

Under subsidiary security arrangements such as the Visiting Forces Agreement and the Enhanced Defense Cooperation Agreement (EDCA), US forces have enjoyed expanding access to the Philippines’ strategic bases in recent years.

This year alone, the two allies are expected to conduct close to 300 joint military activities and exercises, focusing mainly on counterterrorism, humanitarian assistance and disaster relief operations, as well as maritime security.

The two allies are currently conducting a comprehensive review of their MDT, with a view of enhancing their security cooperation to contain China’s expanding military footprint in the adjacent South China Sea.

Yet, by openly embracing Huawei and China Telecom, the Philippines risks undercutting its defense alliance with the US at a crucial strategic juncture, security analysts say.

The presence of Chinese telecommunications equipment and networks close to or embedded in strategic Philippine bases where rotating US forces are active, including for intelligence-gathering and potentially to pre-position weaponry aimed at China, could represent deal-breaking security concerns.

As Pompeo warned, “America may not be able to operate in certain environments if there is Huawei technology adjacent to that.”

A number of countries, from Australia to Vietnam to European powers such as France, have shunned or restricted the use of Chinese 5G technology in nods to US-advanced security concerns.

China’s foreign ministry officials, however, have accused critics of “trying to politicize normal business cooperation” between Chinese companies and new partners such as the Philippines.

Independent Filipino statesmen and opposition figures, meanwhile, are deeply worried about the national security implications of China’s expanding technological footprint in the country.

Earlier this year, a group of senators successfully blocked a major surveillance technology deal between Philippine security agencies and China International Telecommunication and Construction Corporation (CITCC) that aimed to install tens of thousands of Huawei-made CCTV cameras to monitor traffic and crime in major cities.

Now that Chinese telecommunications giants are embedded in the country’s infrastructure, the Duterte administration has broadly brushed off security concerns as misplaced, noting that Chinese technology companies have already been operating in the Philippines for several years.

“We will be the one monitoring them,” former Information and Communications Technology Secretary Eliseo Rio told the Nikkei Asian Review in June. “They should make sure that they will not be a threat to our national security or else they will lose their license.”

In April, Rio said Huawei has been doing businesses in the Philippines for about 10 years and that there had been no evidence to show that the company’s products were threats to Philippine national security.

“As long as there is no conclusive evidence of Huawei being a threat to our national security, and we have been going on for 10 years … there were no serious incidents that would tend to show that this is a threat to our national security,” Rio said.

To allay concerns, Manila is instituting a new platform, known as the Cybersecurity Management System, which will monitor the activities of Chinese telecom players operating in the country in order to safeguard the integrity of key infrastructure.

But as China builds, designs and deploys the next generation of the Philippines’ telecommunications infrastructure, the future question will increasingly be who is monitoring whom.