The fifth generation of mobile technologies (5G) has become a fundamental concept in the discussion of the future of daily life, economic affairs, and national security, on which nations are swiftly developing a robust and forward-thinking stance. Within Europe, Germany’s defiant stance on the Huawei case, and its December 2020 draft IT Security Law, place it at odds with the approach of most EU Member States. This could be described as a middle ground, as Germany seeks to balance the push to ban certain 5G providers from many of its Western allies with the advantages of keeping its options open. While Germany’s middle ground may partially protect it from the geopolitical pressure of the major political powers on either side of the debate, key questions remain: will Germany’s 5G strategy be sufficient to ensure its desired autonomy in this field? How will the results of this approach impact corresponding EU policy and its effectiveness?
If Germany’s current approach succeeds in developing an autonomous stance on digital efforts, it will be given an impetus to become a leader in 5G innovation and future technologies. This is equally true for the EU in attaining ‘tech sovereignty’ amidst the ‘technological war’ between the US and China. While the German strategy may be to the detriment of a coordinated EU-wide approach, Germany could take on a pioneering role in pushing the EU to make headway if consensus can be reached within Europe and innovation begins to progress soon.
The benefits and pitfalls of 5G technology
The potential benefits of 5G are undeniable and various. From a consumer’s perspective, 5G unleashes a wealth of new products and applications, such as automated vehicles, virtual reality devices and cutting-edge entertainment services. Meanwhile, it will also generate new business opportunities, accelerate the automation of industrial production, and enable critical infrastructure to run more efficiently, providing major drivers for economic growth that could serve as a vital lifeline to post-pandemic economies worldwide. At the same time, the COVID-19 pandemic has highlighted the critical nature of technology within our societies. Accordingly, 5G is increasingly considered a component of critical infrastructure requiring protection.
It is precisely this critical 5G usage, and the importance of protecting its infrastructure against outside threats, that has prompted Western governments and institutions to scrutinise their policies regarding the up-and-coming technology. There is a growing awareness of the potential national security threats that could emanate from 5G infrastructure being compromised. This is a call headed by the United States, who have been particularly vocal regarding major 5G provider Huawei’s alleged close ties to the Chinese Communist Party (CCP) government. Since May 2019, US companies have been banned from trading with Huawei amongst other firms by way of an executive order citing a national security risk. In August 2020, the US banned the use of Huawei through its ‘Clean Network Initiative’ (an effort aimed at developing internationally-recognised digital trust standards and listing trusted suppliers), identifying Huawei as an “arm of the PRC surveillance state”. As of August 2020, all EU members besides Hungary had become members of this network. In the same month, the White House extended the ban to third-party firms who use US technology. The EU itself has also voiced concerns regarding 5G protocols, with the European Commission recommending its Member States in January 2020 to “avoid dependency on suppliers considered to be high-risk”.
Germany as the latest player to make a move
Following the US bans, over recent months European countries such as the UK, France and Sweden have been gradually enacting policies to exclude Huawei and other Chinese companies such as ZTE from the rollout of their national 5G networks. In a bid to clarify and coordinate a shared European stance on the issue, in January 2020, the EU released a set of policy recommendations for its member states known as the 5G Toolbox. Most EU Member States have since been referring to this document as their main authority on the subject, but Germany is taking an individual approach to the roll-out of its 5G network. In December 2020, Germany’s new IT Security Law 2.0 was passed, expected to come into force later in 2021. This law is likely to introduce a two-part assessment mechanism for would-be vendors, and theoretically will provide the German government with the ability to ban any individual vendor. Significantly, it is very unlikely to ban Huawei entirely in practice. Furthermore, in December 2020 Telefonica Deutschland (one of Germany’s 3 major network operators) struck a deal with Huawei to partially build their 5G network – the first operator in the country to publicly commit in this way. This move was viewed as bold and potentially risky by outsiders, given the possibility of a future ban and the recent blow dealt to Huawei by a new US ban on the use of any American technology in microchips that power Huawei products.
The German approach symbolises walking a fine line between US political pressure on one side and Chinese economic dependency on the other, instead opting for a non-political approach that does not intend to ban any particular supplier. While aimed at avoiding getting caught up in throws of geopolitical tensions over 5G, Germany may be inadvertently creating tensions with its fellow EU Member States by failing to fully commit to EU advice. Whether or not this creates more friction between members will depend on how each party channels its efforts towards cybersecurity. A fragmentented approach will unlikely bear fruit in the long-term, whereas marrying these differences in a collaborative but multi-pronged approach to EU 5G governance could allow the institution to dramatically build its regional capabilities.
Economics vs politics: a trade off
The German case perfectly encapsulates the broader trade-off between economic, political and security considerations that EU countries have had to evaluate when determining their responses to the Huawei case. States will have to find new ways of addressing these issues in the future as the interlinkage between such considerations – and between countries – become evermore complex. On the one hand, the desire to ensure a swift post-pandemic economic recovery and to maintain positive economic ties with China encourages members to exercise caution against banning Huawei outright. This force is particularly strong for Germany, who has an especially strong trading relationship with China relative to the majority of EU Member States. Furthermore, Germany’s Deutsche Telekom operator is currently Huawei’s largest customer in Europe – and hence there are significant sunk costs on the German side, as a ban on Huawei technology would require a significant overhaul of existing equipment and thus delay 5G rollout. Equally, losing a major customer would also create significant problems for Huawei. Part of the internal debate, therefore, concerns the availability of similar alternative suppliers to Huawei, as their presence or absence determines the economic cost of either switching from or staying with the firm.
On the other hand, while economic forces encourage nations to side with Huawei, political pressure from the US, fellow EU Member States and domestic groups all encourage the introduction of stricter measures. These political forces exist alongside legitimate security concerns, including the risk of critical national infrastructure being hacked or compromised and the geopolitical implications of an overdependence on the technologies of one foreign nation. These concerns serve to only further complexify this trade-off, although mitigating actions can be taken. A diversification of suppliers represents a viable strategy advocated for by stakeholders at all positions within this debate, and one that encapsulates the political, security and infrastructural implications for a state of overreliance on any one source of critical technology. Stuck between two major powers, and economic and political motivations, the best way for European states to balance competing pressures may be to take a middle ground similar to Germany’s. Furthermore, this would also prompt a less hostile reaction from Beijing than a complete ban would. This path could involve an investment in homegrown capabilities to reduce overdependence on external suppliers, and to fortify defences of critical digital infrastructure.
Germany towing a middle line may well be an example of an EU Member State seeking to attain ‘digital sovereignty’ – defined by a European Parliament briefing paper as the ability for a state (or the EU) to craft its own digital policy independent of economic or social pressure from foreign companies. Motivations for pursuing a strategy of digital sovereignty are numerous, but are predominantly for political, economic and security purposes. This concept is a core feature of contemporary EU digital policy, and is reflective of the broader EU ambition to achieve ‘strategic autonomy’ in its foreign affairs.
However, to achieve this end, Europe cannot rely on its pre-existing regulatory power alone. To avoid being trapped in the evolving battleground for the great power struggle over tech supremacy, Germany, as well as other EU Member States, needs to become an innovator in the field and develop its own digital capabilities. Indeed, the lack of German action to become a leader in this field to date is somewhat surprising given its history, especially in view of Germany’s competitive advantage in the tech and electrical sectors partly due to product quality and strong R&D efforts. While it is arguably too late to enter the 5G race as a feasible player, 5G marks only the beginning of digital competition, and the race will soon progress to 6G and other vital technologies. Moreover, superconductors are still the ultimate keyholder to the tech industry – and thus a potentially lucrative avenue for future German efforts – as continued global reliance on one Taiwanese supplier risks vulnerability and overdependence from all states. As it currently stands, the Taiwan Semiconductor Manufacturing Corporation (TSMC) dominates the semiconductor market, providing major tech firms on both sides of the US-China divide with the critical technology. If Germany were to be able to assert itself as a semiconductor supplier ahead of other budding suppliers such as the US and China, the essential nature of the product would ensure them a substantial degree of control over the tech industry.
The need to innovate in the field is as true for Europe as a whole as it is for the German case. The EU needs to prioritise becoming a ‘first mover’ in the rolling out of forefront technologies if it is to maintain its economic competitiveness and achieve its desired technological autonomy. Moreover, to achieve the related goal of becoming a ‘global digital player’, investment in internal capabilities is vital. As of January 2021, European investment per capita in 5G remained significantly lower than in the US or Japan, and 5G rollout to date has been considerably more limited than in these regions. One of the key setbacks preventing swifter investment in and deployment of this technology is the delays to auctions that are needed to free up necessary spectrum bands before 5G can be rolled out in a country. Furthermore, Europe needs to undertake more comprehensive and substantial reform in digital affairs more generally if it is to achieve this desired status, including in target areas such as internet standardisation.
If Germany maintains its defiant approach, it could indeed conflict with the common European strategy and risk jeopardising European aspirations for its collective assertion into the league of global digital leaders. However, there are ways in which this battleground does not have to become a zero-sum game for Europe, and Germany can pursue a unilateral approach while also contributing to the EU’s long-term goals. Indeed, there is already a precedent for German companies and research entities spearheading EU-funded projects, highlighting that it is possible for Germany to take a lead on digital innovation while benefiting from EU-wide backing and funding. Germany (or indeed any other European frontrunner in the digital sector, for example Sweden or Finland) has the possibility of first developing its internal capabilities and becoming a frontrunner in critical technologies, before bringing the rest of Europe into the loop to become a larger, more formidable digital leader. This would allow Germany to largely follow its own path and develop a name for itself as a global leader, while also contributing to the digital sovereignty and security of the broader EU community to which it is so deeply linked. In the coming months, this might involve pushing ahead with pre-existing initiatives such as the 5G Innovation Programme, while considering how to boost these programmes through broader EU cooperation. If the EU struggles to obtain the cohesion needed to move ahead with its own digital ambitions quickly enough, it may see German innovation as a desirable second route for achieving greater digital sovereignty.
The feasibility of this strategy does, however, rely on EU unity. Notwithstanding the current policy deviations of members such as Germany, EU Member States clearly do not possess a united stance on the subject of 5G, as evidenced by the varying ways in which members have been interpreting and enacting 5G Toolbox regulations. A more streamlined EU approach may thus be required. Furthermore, given the EU’s continued political allegiances with the US and its infrastructural dependence on China, it is unclear at this stage the extent to which the EU would be willing to forfeit these relationships in pursuit of ‘true’ digital sovereignty. These variables will hopefully become clearer over the coming months, as 5G continues to roll out in Europe and further afield. Most of all, Europe should prepare itself for the roll-out of 6G and the generations beyond.
Author: Holly O’Mahony, Junior Researcher
Photo Credits: tec_estromberg, flickr.com