Huawei-US Showdown: Economic Risk for Nigeria

Published on 11th June 2019

If the United States President, Donald Trump’s sentiments and utterances are anything to go by, one will have to conclude that all of his predecessors in office have been fools for allowing other countries to “take advantage” of the US in trade and economic interactions. “Look, we build their economy,” the President claimed, of recent, in reference to China. He said that in total oblivion of the fact that it is the Chinese who have been bailing out the US economy for the last decade through the purchase, and holding of over a trillion dollar US “Treasuries” (government bonds), needed to shore up America’s manufacturing industry.

Trump would like his electorate to think that in him, they have a saviour of American jobs; a champion of blue collar workers, who would fight to put “America first.”There can be nothing more myopic coming from the “leader of the free world”; a phrase used often prominently by Western democratic leaders to massage America’s ego in exchange for its “nuclear umbrella” and a guarantee of free trade. Past American Presidents have been astute enough to understand the potency of the “soft power” that their leadership of world capitalism gives them. It is that, even though the US does not get economic parity in many areas of international trade, this is ok as long as the rest of the world kow-tow to the US strategic vision of the world in other areas. It is a delicate balance full of booby traps at times, on both sides. Nonetheless, it is what it is: unspoken, unwritten, but glaringly obvious. A delicate balance that Trump is now busy upending.

Under Trump, the US has decided to jettison the “leader of the free world” sobriquet, because the sacrifices required to maintain that role are simply too much to bear for the workers, or so the President thinks. The ongoing trade spat between the US and the Chinese telecom giant, Huawei, is emblematic of this shift in focus for America. It is an immutable fact that China will soon overtake the US as the largest economy in the world. It is an economic dose of reality that grates and irks the “neo-cons” (right wing ideologues) inside and outside governmental machine in America. Trump is a willing participant in their chorus of disenchantment of this reality. He is even cheerleading their visceral reaction to the impending Chinese global economic dominance. To them, Chinese economic expansion may be unstoppable, but at least, they can use America’s current financial leverage globally to clip the wings of the Chinese; to make life as uncomfortable as possible for them in their march towards the summit of economic power. This is, effectively, the dawn of a new “Cold (economic) War”.

In this wise, China is being accused of all sorts of economic misdemeanours imaginable: currency manipulation, price-fixing, dumping of goods, intellectual property theft, stifling competition, draining developing countries of their natural resources while saddling them with unaffordable debt, etc.

The short response to the above is that, yes, China is guilty of many of the sins they are alleged to have committed and indeed committing, but who says the US or any of its allies in the industrialised West is free of similar sins committed against less powerful nations around the world? Is it not said that those who live in glass houses should avoid throwing stones? If indeed China is exploiting the developing world and stripping them of their resources, what has the Western world been doing pillaging Africa’s economic resources for the last two hundred years? What is this newfound desire to protect Africa’s economies from “rampaging” Chinese interest based on anyway? Is it based on guilt or the fear of losing the continent to Chinese influence for the foreseeable future?

It is within this context that we can best understand the ongoing legal/diplomatic tussle involving the US and Huawei. The US Commerce Department recently added the company to its “Entity list,” which means the US firms will require special permission to engage in business dealings with Huawei. Google is the very latest Internet giant to pull out of a deal with China as a result. That means, Huawei will immediately lose access to updates to the Android operating system, and the next version of its Smartphone outside China will also lose access to popular applications and services including the Google Play Store and Gmail application. A big blow to Huawei’s bank balance, no doubt, but it is something that will force them to invent and innovate for alternatives. The UK had earlier signed off on letting Huawei to help build “non-core” of the country’s 5G infrastructure, including antennas and other network components despite fears that Huawei is a front for the Chinese intelligence. Trump has put pressure on the US allies to desist from doing business with Huawei. Huawei’s equipment occupies every step of the network chain between your laptops and phones through to the data centres hosting the content you access.

According to experts, Huawei’s equipment is especially prominent in the parts of the network closer to the data centres — network switches, gateways, routes, and bridges — the kit that controls how and where data is sent. These core infrastructure devices are said to touch everything traversing the Internet and are critical to its functioning. Based on the foregoing, the US and others do have a legitimate concern, but it is not one that calls for boycott and killing off a rival. Huawei’s capability for installing surreptitious espionage devices in their system can easily be matched by the US countermeasures in the same terrain.

As pointed out earlier, the US interest in punishing Huawei is less about its ability to effectuate security breaches of other countries’ devices on behalf of the Chinese state, and more about chipping away at the Chinese economic global dominance, curtailing it, and rendering it less potent than it would otherwise be. Nigeria is likely to get sucked right into the middle of all this when the US starts instructing us as to which Chinese company we should and should not engage with. Huawei will not be allowed to install the much desired 5G network for us in this country, even for free, as the US has placed the company on a blacklist, with which we are naturally expected to comply. In that case, a strategic advantage to the US, is an economic loss to us.

America still holds sway on our politics and economic life even though they mainly import a small quantity of oil from us; they produce the largest barrels in the world. On the other hand, the bulk of our imports these days are from, you guessed it, China (31.5%), India (8.1%), Germany (4.7%), the UK (3.8), The Netherlands (2.6%), and France (2.2%). That notwithstanding, America is home to the IMF and the World Bank; the institutions we mostly rely on for our finances. America also has the military presence in Africa that China neither has nor is interested in having. It is only a matter of time before Nigeria will be made to choose between a badly needed Chinese capital and America’s global ability to punish recalcitrant nations.  

By Tayo Oke

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