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October 18, 2019

The horrifying implications of Merkel’s 5G decision

After our note on Angela Merkel’s unilateral decision to allow Huawei full access to the German 5G markets, we saw an interesting comment by François Godement, a French historian and China expert. We focused on Germany’s vulnerability after years of underinvestment in telecommunications technology, which left Merkel with no realistic choice but to accept Huawei. But Godement looks at the impact of her decision - uncoordinated as ever - on the rest of the EU.

The first point Godement makes is that the decision renders the entire independent EU risk assessment effort of the threats to cybersecurity null and void. This was the process the EU had agreed to follow. Secondly, Merkel is now opening the doors to other EU member states to do likewise, and thus destroys any hope of building up a European alternative. We find it interesting that the US is subsidising Huawei’s two main European competitors, Nokia and Ericsson, which means that these two companies are now effectively American. And third, consider the impact on other sectors. This decision will worsen the EU’s leverage in every direction. The national interest argument will rule in industrial policy.

We agree with Godement, and arrive at a similar pessimistic conclusion. The real danger to the EU is not a formal breakup, but over-dependence on others, lack of investment, and loss of technological leadership. European countries had ownership of the key technologies of the 20th century. But they are industrial niche players in the 21st. 

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