The Government seems unlikely to get any help from the GCSB in relaxing what amounts to a ban on Huawei equipment being used by Spark for its proposed 5G network.
There are Ministers who are nervous that if the ban becomes permanent, New Zealand could face economic retaliation from China.
But a strong warning about the dangers of using Huawei from one of Britain’s top intelligence officials is likely to have a big impact in Wellington.
So far, the refusal to approve Huawei equipment has only resulted in some strong commentary in Chinese media and the apparent refusal of the Chinese Government to agree to the details of a planned meeting between President Xi Jinping and Prime Minister Jacinda Ardern scheduled for some time this year.
But senior Ministers are watching the situation closely and are well aware of the bans that have been placed on Australian coal imports by five Chinese port authorities.
Any move like that on New Zealand dairy or log exports could have devastating effects on the New Zealand economy.
New Zealand is caught between the United States and China on this issue.
The Government is being forced to balance national security and economic sustainability.
The GCSB is empowered to make the decision entirely on its own, but there is an avenue whereby the decision could be referred to the Government.
However, for the emantime anyway, the decision is not actually in the Cabinet’s hands but is being made by the Government Communications Security Bureau (The GCSB).
Inevitably in a situation like this, both sides will be lobbying Ministers.
A senior security source told POLITIK that the only political pressure that had been placed on the Government had come from China.
However political soruces say that US Ambassador Scott Brown has been forthright in meetings with Ministers over the security risks any use of Huawei might pose to New Zealand.
There was an explicit outline of those threats ten days ago in a speech in Singapore by Britain’s GCHQ Director, Jeremy Fleming.
He singled out four countries that had launched cyber attacks against Britain; China, Russia, North Korea and Iran.
About half of the 1100 cyber attack incidents handled by the National Cyber Security Centre (a part of GCHQ) had been launched by state actors, he said.
“The strategic challenge of China’s place in the era of globalised technology is much bigger than just one telecommunications equipment company…it’s a first order strategic challenge for us all
“Part of being a Cyber Power is facing up to that challenge and those posed by technology more broadly.
We have to understand the opportunities and threats from China’s technological offer.
“We have to understand the global nature of supply chains and service provision irrespective of the flag of the supplier.
“We have to take a clear view on the implications of China’s technological acquisition strategy in the West and help our Governments decide which parts of this expansion can be embraced, which need risk management, and which will always need a sovereign, or allied, solution.”
These comments will have been avidly studied in Wellington by the GCSB, and POLITIK understands they are being taken seriously here.
Fleming set out three conditions which Britain was applying to its decision on whether to approve a supplier for Britain’s 5G networks.
“First, we must have stronger cybersecurity practices across the telecommunications sector,” he said.
“Second, telecoms networks must be more resilient.”
And his third point would seem the most challenging for Huawei in New Zealand with his call for sustainable diversity in the supplier market.
“A market consolidated to such an extent that there are only a tiny number of viable options will not make for good cybersecurity,” he said.
“That’s regardless of whether those options are Western, Chinese, or from somewhere else.”
Alex Younger, the head of Britain’s foreign intelligence service, MI6 said three weeks ago that I was not inherently desirable “that any piece of significant national infrastructure is provided from a monopoly supplier.”
However, China is challenging what amounts to a concerted reaction against it from the Five Eyes security partners. The “Five Eyes” are the US, Canada, UK, Australia and New Zealand.)
Australia has banned Huawei from its 5G networks and a fortnight ago found its coal exports were being slowed down through a number of Chinese ports.
Australian Trade Minister, Simon Birmingham, has persistently denied this is related to the Huawei ban.
“We take the word of the Chinese Government at face value that they’re undertaking assessments in terms of import approvals, environmental assessments, and that we will see these shipments processed in a timely way,” he said in Adelaide last week.
And yesterday, China’s Foreign Ministry spokesman, Lu Kang also denied the slowdown in processing was due to the Huawei ban.
“The relevant Chinese authorities carry out normal border inspection according to laws and regulations,” he said.
“I don’t think it makes any sense to see this as a deliberate move taken by the Chinese side.”
And yesterday Huawei held a high profile international press conference in its headquarters city of Shenzen to announce that it was suing the United States Government over policies banning the use of the company’s equipment by the government.
Perhaps understandably, the Chinese actions have made some Ministers here nervous.
China is New Zealand’s largest customer for dairy products, logs, red meat and second after Australia as a source of tourists.
A Ministerial source told POLITIK that it was imperative that the Cabinet balanced the economic consequences of any ultimate ban on Huawei against the national security concerns.
An indication of how nervous the Government is of adverse Chinese responses that yesterday Parliament’s Justice Committee, chaired by Labour MP< Raymond Huo, decided not to hear late evidence on foreign interference in elections from the controversial Christchurch academic and critics of China, Anne-Maree Brady.
Brady has previously alleged that Huo has connections to a Chinese organisation operating in New Zealand to promote Chinese policies and views.
Currently, the application by Spark to use Huawei equipment is in a state of limbo as the GCSB waits for arguments from Spark that might overturn their original determination last November.
From what Flemming said in Singapore, particularly about market dominance, it would seem those arguments might be challenging to find.
Ultimately the GCSB can refer the matter to their Minister (Andrew Little), but that is not a mandatory requirement in their legislation.
However, given the political sensitivity of this issue and the possible consequences of any decision against Huawei, political referral must remain a possibility.