The US wants to give a penny to Poland. For excluding Huawei from 5G [NEWS SW+]

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– These regulations directly interfere with how entrepreneurs are to run their businesses. They can e.g. force them to replace the used hardware and software as a result of a decision made by a group of decision-makers on the basis of unclear premises, probably politically motivated - says Andrzej Malinowski from Employers of Poland. The National Chamber of Ethernet Communications (KIKE) associating local telecommunications operators and KIGEIT also warn against the high cost of replacing equipment.

This is also an argument that has been raised strongly by Huawei itself for a year. Such conclusions follow from the report published earlier this year by the consulting company Audytel and the law firm Dentons "Legal and economic effects of limiting competition among 5G network equipment suppliers in Poland". This report indicates that mobile network operators, both in terms of increased costs and decreased revenues over the period of 10 years, are expected to incur losses of PLN 14 billion in total. For fixed and cable networks, the cost of replacing devices would amount to PLN 6.8 billion. In turn, Huawei would suffer losses in the total amount of PLN 9.4 billion over 10 years. It is worth noting that this report was ordered by Huawei itself.

The second cost that, according to many analysts, Poland may incur if Huawei is blocked is, in a nutshell: China's revenge. – The Chinese can cut our supply channels – says Bogdan Góralczyk, professor of the University of Warsaw, lecturer at the European Center of the University of Warsaw, political scientist and expert on relations with China, in an interview with Newseria. a few days ago at a conference at the Ministry of Agriculture: – We are receiving signals that Poland intends to displace the Chinese Huawei network from the market. This is absolutely unacceptable to me. We absolutely cannot allow conflict with China. Poland is one of the largest exporters of agricultural and food products to China, and China, in turn, is the largest market in the world, without which Poland cannot live. We must do everything to nip these attempts in the bud so that we can continue to trade.

Izdebski worries that Huawei's exclusion means blocking Polish pork exports to China.

The interpellation was written in a very similar tone by MP Jakub Kulesza, chairman of the Konfederacja parliamentary group.

- It is very difficult to predict what China will do. Much depends on how Polish decisions will be presented and implemented. But what is very important, the possible exclusion of Huawei will not be a shock, after all, most European countries have already introduced or are introducing their solutions in one form or another. In a sense, Huawei is a lost battle for China, a story from the past, believes Jakub Jakóbowski, an expert from the Center for Eastern Studies. And as an example, on the one hand, he points to Sweden, which quite sharply, almost pointing a finger, blocked Huawei, which actually met with a sharp reaction from Beijing. On the other hand, there is Romania, which is proceeding with regulations similar to Polish ones, and the only response to them was a critical letter from the Chinese embassy.

An even clearer example is Lithuania, which not only excluded Huawei from 5G, but the local Ministry of National Defense also issued a recommendation to public institutions a few weeks ago to "not buy new Chinese phones and get rid of those already purchased as soon as possible." Reason? Xiaomi smartphones sold in Europe are to have a sewn function of detecting and blocking such terms as "free Tibet", "long live Taiwan independence" or "democracy movement".

China reacted. – However, mainly due to the fact that Lithuania was the first in the European Union to agree to the opening of a diplomatic representation whose name includes the word "Taiwan". Because for China, the issue of recognition of Taiwan is much more crucial, also in the context of the fight for semiconductor supply chains. After all, Taiwan is one of their largest producers - emphasizes Jakóbowski. How much Lithuania can lose on its attitude, the government daily "The Global Times" explained to this Baltic state, calling Lithuania a "buffoon" and reproaching Wang Yiwei, director of the institute of international affairs on Renmin Peking University of China that it is "acting as a pawn in the US anti-China strategy, risking real trade gains"

Freight transport to Lithuania has indeed been suspended, negotiations on new food export permits have been suspended, and the Chinese state credit insurance agency has lowered credit limits and increased prices for Lithuanian companies - which means that it has become more difficult to settle for goods from China . But on the other hand, the most serious scenario, which claimed that China could even stop trains running along one of the Silk Road lines through Lithuania, did not come true.

US Offensive

Voices about all these potential costs of considering Huawei a risky supplier and thus ordering operators to clean their infrastructure of its equipment within five years (such a time range is in the KSC amendment) break through strongly and loudly. No wonder: they are impressive.

On the other hand, a diplomatic offensive is quietly underway in the United States, which is intended not only to Poland, but also to other Central European countries to block China in the construction of 5G. If the American project is implemented, it may defeat a large part of the arguments of opponents of the blockade.

The essence of the Transatlantic Telecommunication Security Act (under the patronage of both parties) is to create and offer assistance to Central European countries that decide to exclude Chinese companies from the construction of next-generation networks. And not only logistically or diplomatically, but also financially.

The TTSA says that the U.S. The Development Finance Corporation (DFC) is to be authorized "to finance the development of 5G telecommunications infrastructure for European allies to counter China's influence." The document also mentions issuing a recommendation to the Secretary of State that his office "prioritize diplomacy and support European allies in the development of 5G markets."

It is the new prerogatives - and probably also the budget - for the government agency DFC that are crucial here. DFC, the development bank of the United States, was established less than two years ago to invest in development projects mainly in lower and middle-income countries. The DFC replaced and merged several institutions, offices and funds that provided loans, credit guarantees and insured development projects in poorer countries. The reason for this new agenda was officially related to better fund management. - Practically, the point is to take all development funds under one umbrella and manage them so that they become a weapon in the fight against China's expansion in those areas where China has so far been more active, i.e. in 5G - explains Jakóbowski.

That is why it was from DFC that funds went to, for example, the Connect Africa project, i.e. the expansion of IT infrastructure in Sub-Saharan Africa (one billion dollars were allocated for this) or the construction of the so-called a "peaceful highway" between Serbia and Kosovo (Niš-Pristina) in order to improve contacts between these countries. Both in Africa and in the Western Balkans, China has a very strong position, and the US has decided to start competing with them.

DFC, which is theoretically established to help poor countries, has been successively opening the door to expanding investments (and thus American influence) in our region in recent months. At the end of 2020, the board of the DFC approved USD 300 million in support for the Three Seas Fund. These funds were directed to "help the countries of Central and Eastern Europe to strengthen their energy security". The Three Seas Initiative is a political and economic initiative established in 2015 on the initiative of the presidents of Poland and Croatia, and the Fund itself was founded by the Polish Bank Gospodarstwa Krajowego and the Romanian EximBank.

Just some of the countries of the Three Seas Initiative (Poland, Estonia, Latvia, Lithuania, Slovakia and Slovenia) plus Kosovo and North Macedonia are listed as countries whose embassies supported the latest TTSA project.

This was confirmed to us by the Polish embassy in Washington: - The countries of Central and Eastern Europe express political support for the TTSA, because its main goal is to support these countries in the development of telecommunications infrastructure, especially in the construction of the 5G network. TTSA is also intended to improve the security of their telecommunications systems against emerging threats from China and Russia - explains Nikodem Rachoń, head of the Communication Department at the Polish embassy. It confirms that the embassy was not only informed of the referral of the TTSA to Congress, but also positively reacted to this intention. Rachoń also mentions that in addition to the aforementioned DFC, another U.S. government agency The Trade and Development Agency is to be authorized "to financially support such projects in the countries of Central and Eastern Europe, including the Three Seas Initiative."

Interestingly, the Digitization of the Chancellery of the Prime Minister, when asked by us about its attitude to TTSA, replied that the Americans had not consulted this project with them.

One of the few American institutions that support this bill is the Atlantic Council. It is an influential think-thank operating for 60 years, bringing together prominent experts and politicians, which analyzes the relations of the United States with European countries, Russia and China, and then issues recommendations to the White House on this basis. One of the members of the Council is Ian Brzezinski, former US Deputy Secretary of State for European and NATO Affairs, and privately brother of the candidate for the US ambassador in Warsaw, Marek Brzezinski. At the beginning of this year, she was also joined by Georgette Mosbacher, the former US ambassador to Poland.

– You can see that the US is going on the offensive. Despite a significant cooling of Poland's relations with the United States, subsequent diplomatic mishaps, brawls around TVN, they show that our region is so important to the US that they are ready for such actions. Although, of course, there is no need to cheat ourselves: we are important in the context of attempts to block further expansion of China. The US is aware that Central Europe and Poland are simply an important communication channel on the way to Western Europe, an expert in telecommunications and digitization tells us.

– So far, the United States has rather pursued a policy of "disconnectivity", i.e. attempts to exclude China and Russia from areas of interest to them. This is even the Clean Networks plan calling for the exclusion of Chinese suppliers. Here, however, we have an attempt at "connectivity", i.e. the United States itself with a competitive offer - explains Jakóbowski. And he emphasizes that it is absolutely crucial whether this offer will actually be competitive. - Yes, it is a big nod that this act treats Central Europe as a kind of exception, because DFC funds were rather planned as support for the Global South, i.e. developing countries. But there are also different needs than in our country - he adds. Indeed, it is crucial whether the US offer - if approved - will be interesting at all for our region and for Poland itself. Especially in terms of the amount of possible funds. Because with the overall global DFC budget of USD 60 billion and the idea of ​​distributing part of it in Central Europe, these amounts may not be staggering.

- It's hard to assume that there will be money that can actually cover the differences resulting from the increase in costs after the exclusion of Huawei. I would rather bet on access to preferential loans and such an image signal that since the American office is a partner in activities aimed at support, it may encourage more funds and global financial institutions to join the project "slapped" by the US - judges Jakóbowski. He adds that for telecommunications players from Poland, it is not so much the lack of cash that is crucial as the unstable legislative environment. – That they are not entirely sure about the next government actions, because they are entangled in global politics. And here, in fact, relying on this new American offer could be a real value.

Huawei or not Huawei?

In Poland, successive officials, headed by the secretary responsible for digitization, Janusz Cieszyński, repeatedly emphasize that the Polish amendment to the KSC does not mention any company by name, or even a specific country to which the restrictions could apply. And there really isn't.

The name of any supplier does not appear in the KSC amendment, but it is clearly emphasized in its justification that it is the 5G network that is considered as the key to protection. And the mechanism that is to be used for this is the possibility of recognizing a hardware or software supplier as a "high-risk supplier".

Companies that are at risk of being included on such a list must meet several conditions: be under the control of a country outside the territory of the European Union or NATO. Moreover, in their country of origin, the assessment is to be made of "laws regulating relations between the supplier of hardware or software and that country", what is the protection of personal data there, what is the ownership structure of the supplier and how big is the "capacity of this state to interfere with the freedom of economic activity" ".

So although the conclusion about China breaks through here, and Huawei has long been the black horse of this hand, in fact no one in Polish law definitely points their finger.

American politicians, however, no longer play diplomacy. “China's growing influence is one of the most serious threats to the West, both in terms of economic competitiveness and the stability of our democracies. As our communities transition to 5G, the United States and our allies must take steps to ensure we are not dependent on Chinese infrastructure. He adds: “We can't just encourage our European allies to stand firm against China's malign influence – we need to provide them with financial support to invest in resilient telecommunications infrastructure. That's why the bipartisan bill introduced with Senator Portman to increase funding for investment in non-Huawei telecommunications systems in the United States and across Europe is so important."

Senator Portman officially spoke in the same tone: - It is very important that the countries of Central and Eastern Europe receive the support they need to protect democracy through a free and open Internet. Allowing communist China to invest in Europe's 5G networks and implement their standards would undermine democratic institutions and threaten the national security of many countries.

It is an open secret that the decision to cancel the 5G auction in Poland in May 2020 was made precisely because the government was trying to somehow bite the problem of the controversial Chinese Huawei. For years, this company - or rather its links with the Communist Party of China - has been warned by the services of other Western countries, led, of course, by the United States. But at the same time, it is a company offering the most modern and very competitively priced equipment for the construction of telecommunications networks.

However, just after the government in September 2020 showed the KSC and announced that the new law would come into force, in December 2020 the presidential election in the United States was won by Joe Biden. Polish-American relations have drastically cooled, and Poland has stopped rushing to pass the 5G law.

The next version of the amendment was presented in January. After its presentation for consultation (although both the plan to establish a national operator and the aforementioned black list of suppliers caused a lot of excitement and controversy), again for a few months all spirit around this project was lost. And this despite the fact that the Ministry of Digitization and then the Digitization of KRPM ensured that it was just around the corner. And even though without it there is no chance of re-announcement of the 5G auction.

Meanwhile, at the end of September, the TTSA bill was submitted to the US Senate. Interestingly, at the same time, work on the amendment to the KSC, which had been delayed for months, was accelerated.

- There are many indications that the government is waiting for decisions on what is more profitable for us: an alliance with the United States or not spoiling contacts with China. It seems that this is even more important than the quick announcement of the auction so that we can finally start building 5G, an expert working with the government tells us.

For now, one thing is certain: in a moment it will be two years since the announcement of the first 5G auction, and the network is gone.

Cover image: Sudtawee Thepsuponkul / Shutterstock.com

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