The Huawei case: the EU at a crossroads

Since Trump took office in 2017, American foreign policy turned its back on nearly any initiative Obama had undertaken in his two mandates. Trump’s rhetoric, whether we like it or not, is direct, perhaps not elegant and neither diplomatic.

Yet, this peculiar approach shall not mislead us in the process of understanding his foreign policy. Trump has a Master Plan, which I dare to summarise as pivot to China. His predecessor approached Asia by reassuring regional allies, by strengthening economic and military cooperation and by avoiding a conflictual relation with China. Indeed, after the 2007 financial crisis, Beijing capitalised on the bad time Western countries were experiencing in dealing with the financial chaos. In the last decade, China’s stance on critical national issues was more resolute and aggressive than ever before, as it was the case for the maritime disputes in the South and East China Sea as well as the launching of the One Belt, One Road Initiative to conquer the pockets of involved countries.

In such context, it came with no surprise the Huawei case. The recent ban bestowed by the Trump Administration on the Chinese multinational company is indicative of Trump’s willingness to mitigate the pace of the Chinese ascension to world-class hi-tech producer. Huawei, in fact, does not operate in the mobile industry alone. Huawei is a leading company in the solar industry – it produces digital solutions for photovoltaic panels – as well as it has considerable expertise in telecommunications network of the future, the 5G. The EU is aware of this predominance and yet the EU imports of high-tech products from China reached 34% of the total amount in this category, followed by the United States and Switzerland, with respectively 27% and 6%. According to Eurostat, such category of goods includes aerospace, computers & office machines, electronics-telecommunications, pharmacy, scientific instruments, non-electrical machinery and armament. Huawei has already entered into agreements for the 5G development in the Netherlands and UK.

It is legitimate then, by the US, to perceive China as an uncomfortable actor that has the potential to overtake America as world hegemon. In relative terms, Beijing has taken important steps to reduce the gap to the top. The erosion of the American influence has induced Trump to take extraordinary measures against an adversary that keeps on catching up, although not at a two-digit pace anymore. It follows that the US supremacy must be asserted in every area. A rise in national military spending for 2020 is under scrutiny after Trump’s proposal to a boost of almost 5% over the 2019. Moreover, Washington has already vowed his dissatisfaction to the Europeans’ unwillingness to meet the NATO military budget. Looking at geopolitics, recent turmoil in Iran might also be interpreted as a twofold strategy, on one hand destabilizing the Middle East by leveraging on historical grudges between Saudi Arabia and Iran, on the other hampering Chinese imports of energy commodities. Afterall, the IEA world outlook estimated that the shale oil and gas revolution has provided America with a bonanza of oil and natural gas. Driving out Iran from energy markets will benefit US exports, especially in Europe, and damage the Celestial Empire. Should the situation deteriorate and Iran threat to close the Hormuz Strait, China would be in great grief.

China’s side of the story is different. Deng Xiaoping’s historical motto “Hide your strength, bide your time” has been a mantra in Chinese foreign policy. However, it is high time China relinquishes its submissive stance in the wake of American taunts. It is more questionable than ever whether China’s peaceful rise narrative will persist notwithstanding Trump’s attitude in sparking skirmishes.

To put it in a metaphor, Washington and Beijing look like two adversaries engaged in a sparring session. They are carefully evaluating the opponent, landing hits and adjusting for the next move in relation to the foe’s response. The Huawei ban is certainly a low kick. However, Xi Jinping’s response was mite, so far. In this setting, the recent visit of President Xi Jinping to a rare earth mine in Shanghai appears as a cloaked threat to US’ tech industry dependence on strategic minerals.

Ultimately, will Trump’s “Make America Great Again” and China’s “Peaceful Rise” co-exist in the long run? Shall we expect the sparring session to increase in intensity and eventually lead to a world championship competition? And, finally, what’s the role of Europe? Will Europe keep aside national divergence and design a Grand Strategy? Or is it doomed to be driven by national interests that are likely to be even more divisive, with a steady shift towards China on behalf of some, and a rapprochement towards US by others?

Despite growing security concerns, the EU is facing a dilemma. On one hand Huawei offers cutting-edge technology for a lower price of its EU market competitors, Ericsson and Nokia. On the other, Trump’s modus operandi might suggest the Huawei ban to be a move to strike a better trade deal with Beijing. What is for certain is that amid increased volatility, the EU is at a crossroads. With economic growth estimates halved by the EC together with the political turmoil resulting from Brexit, the EU might not be in the best shape to take on China over these strategic matters. It is time to speak up and act together so to design a forward-looking policy that factors in these risks, far from national fault lines across member states and economic/strategic dependence on foreign actors.

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