Huawei threatened to pull investment from Denmark in response to new screening law

The head of Huawei Denmark sent a letter to the Danish Prime Minister indicating it would rethink its involvement with the country if special security requirements were imposed on it.

The story was broken by Danish paper Berlingske and followed almost immediately by a similar story from Politico. Both are paywalled, but we’ve been able to have a look at the Politico one. At the core of the story is a letter sent by Jiang Lichao, CEO of Huawei Denmark to the Danish PM Mette Frederiksen, on 17 December 2019, which Politico has published here.

“There has been a perfect storm lately around Huawei 5G in the Kingdom of Denmark,” it opens. “The high diplomatic and political waves have almost thrown over a small boat called ‘Huawei Denmark’.” To understand what prompted the use of such a dramatic metaphor, we need to refer to a Berlingske report from a week earlier, which isn’t paywalled and has been published in English.

‘Banned recording reveals China ambassador threatened Faroese leader at secret meeting’ is the headline of the story. It covers an audio recording in which it is claimed that the Chinese Ambassador to Denmark threatened the Trade Minister of the semi-autonomous Faroe Islands, which are part of Denmark, with the withdrawal of a free trade agreement if Huawei didn’t get a 5G contract.

If that did happen, not only is it a scandal in its own right, but it calls into question Huawei’s repeated claims that it has no direct relationship with the Chinese state. It looks like the ‘hot mic’ recording was never published, but the furore generated by the story was apparently so great that Huawei felt compelled to appeal directly to the PM.

“Our relationship with the Chinese government is no different from normal business-government relations for private companies in other countries,” continues the letter, noting reports of a proposed new screening law for foreign investments. “Huawei welcomes laws and regulations as long as they are applied equally to all players… We are willing to dedicate our efforts to continue contributing to the Danish telecommunications networks. However the recent noises made us feel great uncertainty.”

In a bid to resolve that uncertainty, the letter asked the PM for answers to the following questions:

  1. If Huawei is still welcome to participate in developing telecommunication infrastructure, including 5G network rollout, in Denmark based on normal business terms and conditions?
  2. Will the same security requirements and standards be equally applied to Huawei as to other telecommunication equipment suppliers?

While not overtly stated, the clear inference is that if the answer is negative to either of those questions then Huawei will be forced to have a rethink about its participation in the Danish market. In isolation that’s not such a contentious position to adopt, but just a month later Huawei seemed to have no problem with the UK, and then the rest of Europe, imposing exactly the kinds of restrictions it had warned Denmark to avoid. That position was reinforced in its recent submission to the UK’s review of its Huawei decision.

For a local perspective we spoke to Danish telecoms Analyst John Strand. “Huawei usually says that they share our values and that they do not have close ties to the Chinese government,” he said. “The letters to the two Danish prime ministers contradict that. For one, the letters state that they work in concert with the Chinese government, something that their website and public statements have consistently denied. Moreover the notion that the Danish Prime Minister would muzzle the press at Huawei’s request is not consistent with our values.”

While the letter is now five months old, and Huawei may well have changed its position since then, this apparent evidence of Huawei and the Chinese state seeking to pressure governments over their security decisions is very uncomfortable for the Chinese vendor. It comes as Denmark embarks on a review of its critical infrastructure policies in the light of vulnerabilities exposed by the coronavirus pandemic and could well have implications beyond that country.