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Note: this piece originally appeared in Portuguese in Revista Relações Exteriores, a Brazilian publication which provides analysis of major international events. Fernando Vieira works as a columnist in the field of political intelligence, macroeconomic analysis, and Brazilian foreign policy.
To read the original piece, click here.
Throughout 2020, the debate on the implementation of 5G technology in Brazil, and across the world, has intensified. Huawei, the main Chinese provider of 5G, has published a video to counter accusations that it conducts cyber espionage for the Chinese Communist Party (CCP). In order to comply with his administration’s foreign policy, secure data safety, and national sovereignty, President Jair Bolsonaro is now faced with the decision of whether to allow, or remove, Huawei’s network infrastructure from the country.
Espionage and Cybersecurity
Although Huawei’s video is strong, and empirically correct as far as the data breach in the U.S. and Australia is concerned, it is still insufficient to mitigate suspicions regarding the colluding of the telecommunications company with Pequim.
The U.S. espionage program that leaked in 2013, including the wiretapping and tracking of traditional allies with the collaboration of Google, Apple, and Facebook, has reduced faith in the privacy of data management and the autonomy of technology companies under pressure from their governments. Despite the rhetoric and apparent efforts of cooperation in combating cyber espionage, surveillance will not be suppressed, let alone discouraged, as a tool for intelligence agencies.
A remarkable example of it, according to Edward Snowden’s reports, is the exchange of information between the United States, United Kingdom, New Zealand, and Australia, through an alliance better known as the “Five Eyes.” Throughout the 20th century, the U.S.-U.K. partnership against Germany during World War 2 has metamorphosed into a structured network of mutual cooperation between the intelligence agencies of those countries, not only to foresee terrorist activities, but also to monitor and keep track of suspicious nations cybernetically.
All five countries have already ratified a commitment not to join the Huawei network and some of them have even started removing older-generation equipment. London, irresolute at the beginning, was persuaded by Trump’s rhetoric in late-May when he fully banned the Chinese company from the future U.S. network and in part due to the lobbying of Congressman Iain Duncan Smith, who was criticized for his sinophobic statements and initiatives in the United Kingdom.
National security laws opposed by Huawei can be correctly interpreted as potential threats to the misuse of personal data and the violation of the sovereignty of other countries. However, mere comparisons between the Chinese legal system and equivalent norms in the West, as well as the fragile narrative of an alleged autonomy of data control by Huawei’s subsidiaries around the world compared to its headquarters in Shenzhen does not provide sufficient evidence of transparency or reliability on the security of data on its network. The difference between Huawei’s competitors—the U.S., Sweden, and Finland—consists of the free operation of the press and civil society in verifying government actions. The means through which the disclosure of information is carried out in those countries would not be possible in a state whose thought manifestation and internet access are restricted according to what the CCP arbitrarily interprets as subversive or not.
The criticisms and accusations on the part of Huawei, though truthful, do not comply with the purpose of contention and reversion of financial losses. The company cannot eliminate the distrust of other countries (e.g. Brazil and Germany) considering the implementation of the 5G technology, nor can they coerce reconsideration from those in which it has already been banned.
In the sidelines of this geopolitical technological dispute, Brazil has now stepped closer to alignment with the U.S. government. For the first time, on June 11, President Bolsonaro commented on the deadlock over the implementation of 5G in Brazil.
In past statements, the administration denied any political bias in the decision making, instead espousing that free competition, through strictly technical and economic calculations, orientated the government’s policies. Considering that Huawei is the leading holder of 5G network technology patents and that it already has a widespread coverage of consolidated 3G and 4G infrastructure, as well as a lower cost to implement the new equipment, it is reasonable to assume that it would be the best choice for Brazilian telecom companies.
The geopolitical polarization between China and the U.S. and the guidelines of Bolsonaro’s foreign policy already lowered the likelihood of China contributing to a Brazilian 5G network. However. it is necessary to clearly understand the probable political and economic developments for each of Brazil’s potential paths forward, as well as the arrangement of internal stakeholders attempting to persuade the president.
In May, Todd Chapman, then newly installed North American ambassador to Brazil, showed the possibility of financing a 5G network infrastructure in Brazil provided that Huawei was completely banned from the country. Through the International Development Finance Corporation (IDFC), which was created to finance infrastructure projects in developing countries, the United States even supported rival, Western companies. Given Brazil’s historical record and the company’s strong global presence, the Swedish Ericsson is viewed as the most likely to be awarded the contracts and secure the funding if Huawei is removed. This may have been the turning point for President Bolsonaro. The costs of upgrading the infrastructure would be mitigated in order to hold down the final price and subsequently avoid delays in the dissemination of the high-speed internet.
The other government agencies still differ as to which way to go. The Ministry of Foreign Affairs, under Ernesto Araújo, and the Institutional Security Office (GSI), under Augusto Heleno, are advocating for the strengthening of political and economic ties with the U.S., which would be the most beneficial route in the long run. Eduardo Bolsonaro is also advocating for the signing of new military and defense agreements with the Americans in the wake of support for Brazil’s entry into the Organization for Economic Development Cooperation (OECD) and the granting of the status of observer country in the North Atlantic Treaty Organization (NATO), which requires banning the Chinese from the Brazilian network.
The group in favor of the Chinese participation is led by Vice-President Hamilton Mourão, followed by Tereza Cristina, Minister of Agriculture, Livestock and Supply, Marco Pontes, Minister of Science, Technology and Innovation, and Secretary Wesley Cardia, head of the Investing Partnership Program (PPI in Portuguese). Congressmen, such as the Chamber of Deputies President Rodrigo Maia, defend a “non-ideological but pragmatic” approach. Following Maia, the Agriculture Parliamentary Front (FPA), a congressmen board composed by defenders of Brazilian agribusiness, have repudiated the hostile statements and behaviors to the Chinese presence in Brazil. This group is united by the low-cost, the disbelief in the accusations of data insecurity, and the country’s commercial dependence on China.
United by the lower cost judgment, the disbelief in the accusations of data insecurity and the strong commercial and investment dependence from China, the opportunity cost here is guided in accordance with the macroeconomic statistics of the present and the short term. Economic growth in 2021 depends on Brazil’s ability to attract foreign investment and maintain its commercial surplus, both of which depend on Chinese investment capital and demand. Both have undergone recent deteriorations, and could be abruptly reduced and thus compromise Brazilian economic growth.
For a government whose electoral base is forged in the austerity and fiscal balance playbook— coupled with support from agribusiness—the political risk could be fatal. One solution could be the expansion of public spending, a previously disastrous and demonized formula, since the global recession will make the competition for investments in emerging countries more competitive.
Considering the panorama of current circumstances and trends in the political game, the Brazilian government is only capable of overcoming vulnerability and economic dependence on its partners through financial stimulus in the national and autonomous development of a cutting-edge technological industry. For instance, the 5G network and the Internet of Things will impact key areas such as medicine, defense, and transportation. The agriculture sector, which corresponded to about 21% of the Brazilian Gross Domestic Product (GDP) in 2019, had only 29% of its production sites and facilities within areas with internet coverage, according to the last census published by the Brazilian Institute of Geography and Statistics (IBGE). Whether Brazil bans or embraces Huawei, the implementation and dissemination of 5G technology in the coming decade is set to integrate industries and drive increased productivity across Brazil.