Estonia is the second EU member state, after Poland, which effectively rules out Chinese companies as suppliers of software or hardware for its 5G networks.
When it comes to the development of next-generation 5G mobile networks, Estonia has been caught on the horns of a dilemma. As a self-styled digital trailblazer, it needs all the innovative edge it can get—and 5G technology would appear to be essential. Estonia’s precarious security situation, nestled alongside a Russia which is presumed to present a real threat, means it is very receptive, however, to pressure from its main supplier, the United States. Thus it came as no real surprise when the Estonian Prime Minister Jüri Ratas signed a ‘memorandum of understanding’ in Washington on 31 October 2019 with the US Vice President Mike Pence which effectively rules out Chinese companies as suppliers of software or hardware for Estonia’s 5G networks.
Estonia is the second EU member state to take such a step, after Po- land, which signed a similar Memorandum of Understanding (MoU) in early September. Both countries have pivoted sharply towards the United States in recent years, calculating that in increasingly uncertain times good relations with Washington remain the safest bet. The United States has been concerned about Chinese intentions and ‘backdoor’ access to critical infrastructure for the best part of the decade. It has found a sympathetic ear among the so-called “Five Eye” nations which routinely share sensitive intelligence: comprising, apart from the United States, United Kingdom, Canada, Australia, New Zealand—although the UK has still not come to a final decision on whether to refuse Huawei and other Chinese companies access to 5G network construction.
Things have come to the head under the presidency of Donald Trump and the United States has upped the pressure on the most vulnerable allies. The MoUs accordingly reiterate key US concerns when it comes to building cutting edge communication networks: suppliers should be independent and transparent in financing and ownership—and above all not subject to control by a foreign government which in turn must be subject to independent judicial oversight. All of this would seem to rule out Chinese enterprises. Both the Chinese government and Huawei deny that the company is controlled by the state.
Like Poland, Estonia remains out of step with its “old” European neighbours. Both Germany and Finland, respectively, have refused to rule out Huawei’s participation, at least in some capacity, in 5G network construction.
A Question of Trustworthiness
Prime Minister Ratas made clear, after the signing ceremony with US Vice President Pence, that both its digital future and the possible concerns about market access restrictions take a back seat to security concerns. “For Estonia, as a digital country, the trustworthiness of new technologies is of paramount importance—and in the field of national security, the United States remains our most important ally.”1
Estonian officials say that the considerations listed in the MoU do not specifically target Huawei, but affect all manufacturers of 5G technologies. Nevertheless, the thrust of the message is clear. “We’ll assess on a case-by-case basis whether a technology constitutes a security risk for Estonia, or not,” says National Cyber Security Policy Director Raul Rikk.2 Already in the spring of 2019, the Estonian Foreign Intelligence Service reportedly concluded that Huawei does not meet this criterion.
Like Poland, Estonia remains out of step with its “old” European neighbours. Both Germany and Finland, respectively, have refused to rule out Huawei’s participation, at least in some capacity, in 5G network construction. Estonia’s isolation is all the greater as neither of its southern Baltic neighbours— Latvia and Lithuania—have so far yielded to US pressure to sign similar MoUs.
In fact, the Estonian position presents an outright paradox, consider- ing that it was Estonia’s Minister of the Economy, Kadri Simson, who placed what is thought to be the very first international mobile phone call using 5G technology. The call was made from Tallinn on 27 June 2018 to Simson’s Finnish counterpart Anne Berner, and its reported content was entirely innocuous.3 To add to the irony, the call was meant to celebrate the simultaneous opening of the world’s first 5G networks in Tallinn and the Finnish city of Tampere on the same day by the Finnish operator Elisa. Elisa is the only mobile telephone operator in Estonia which has not ruled out using Huawei’s technology in its 5G networks. The other two, Telia and Tele2 have said they would opt for Nokia or Ericsson.4
The Details Remain Unclear
The change in Estonia’s position can be traced back to the March 2019 elections, which returned Simson’s Centre Party (with its leader Jüri Ratas remaining Prime Minister) to power, but this time heading a new and distinctly right-wing coalition. The two minor coalition partners this time, one a mainstream conservative party, the other representing the extreme right, advocate and practise seeking as close as possible security ties with the United States—if need be at the expense of Estonia’s other allies in NATO and the European Union. Prime Minister Ratas has been unwilling and unable to check this shift as his Centre Party, which picks up the lion’s share of the ethnic Russian vote in Estonia, has tried to solve its associated credibility problem since taking power in November 2016 by leaving foreign and security policy to its coalition partners.
The details, however, of how the terms of the MoU signed with the United States are to be implemented remain unclear. Estonian officials state that security regulations are not generation-specific, with the same rules applying to 3G, 4G and 5G networks. Estonia follows a global trend here, with concerns relating to network and data integrity has been acute for at least a decade. This would seem to suggest that Elisa’s existing collaboration with Huawei has so far passed muster with the Estonian authorities—and would make it difficult for them to cogently argue for the exclusion of the company in the future. Huawei, in their response to the US-Estonian MOU, indicated it would challenge any such move in courts.
The Removing of Huawei Opens up Doors to its Competitors
Experts also note that mobile telephone networks accrue technology over time, the layers of which are not easy to unpick. Existing support stations, using 3G or 4G technology, are said to be easy to convert, for example, to accommodating 5G network traffic. All this requires is the addition of a 5G radio sender and the installation of new software. Meanwhile, the rest of the network—apart from the radio transmission component—remains the same. This means any restrictions—such as those aimed at denying Huwaei, for example, access to the entire network—would need to be extended to earlier technologies as well. When assessing technological security risks, Estonia has thus far officially made no distinction between radio and “backbone” network equipment.
There may be a silver lining, however, to Estonia’s alignment with the wishes of the United States—of which the government need not be unaware. Removing Huawei and other Chinese companies from the contention open up doors to their competitors. In Europe, the two main alternative large- scale suppliers of 5G technology are Finnish Nokia and Swedish Ericsson. Ericsson especially has been subcontracting Estonian hi-tech companies to manufacture parts for 5G technologies which are then sold worldwide. Urmas Ruuto, Ericsson’s head of sales in Estonia, says that the number of such contracts awarded to Estonian suppliers extends to double figures. He also states that the United States has become a particularly lucrative market for Ericsson as there is no competition from Huawei and massive investments are made into 5G networks.5
Not a Part of Estonia’s IT Success Story
Estonian entrepreneurs have recently tried to make the case that the government should try and keep politics out of business.6 Estonian Foreign Minister Urmas Reinsalu stated after the signing of the MOU with the United States that it not directed against Huawei. He said that China is an important trade partner for Estonia, with imports totalling €594 million and exports €185 million in 2018. There are reports that Chinese enterprises would be willing to contribute funds towards the construction of an undersea tunnel between Helsinki and Tallinn.
Should it materialise, the tunnel could become an important link in a prospective new transport route extending from the Arctic Sea via Norway and Finland to Tallinn, whence it would carry on as Rail Baltic through Latvia and Lithuania to Poland. Both the Finnish and Estonian governments, however, while rhetorically supportive of the idea of a tunnel, have been loathe to commit themselves to any practical measures thus far. Part of the Estonian government’s reticence has to do with the way China has used its financial leverage in Hungary, the Czech Republic, Cyprus, Greece and elsewhere for its own political ends—the most visible of which are attempts to manipulate EU foreign policy. Interestingly, there have been reports that a previous Estonian IT and foreign trade minister in the current government was forced to replace her Huawei phone with an iPhone.7
There has been very little debate on the issue outside expert circles. The public appears to be inured to appeals to national security, trumping all other considerations. The mobile networks, whatever their logistical value, are not seen as part of Estonia’s IT success story. That, in turn, tends to be an increasingly ethereal affair from the point of view of the Estonian state and society, as globally successful Estonian start-ups—such as Taxify or Transferwise—tend to make the real money elsewhere and thus contribute little in real terms. Estonia’s e-governance drive has also seemed to stall over the past few years.
While the volume and coverage of public IT services remain impressive—there is little in the way of a bureaucratic procedure that cannot be done online—it is increasingly suffering from funding issues. Ambitious data centralisation projects languish as a result of budget overshoot and the entire government-citizen interface is looking increasingly out of date. The Estonian ID-card with its computer chip, used for services as diverse as medical prescriptions and electronic voting, has increasingly been beset by security problems.
- For a recent example, see www.aripaev.ee/arvamused/2019/11/03/raivo-vare-kapis-pole-hirmsat-hiinlast
Share this on social media
The support of our corporate partners, individual members and donors is critical to sustaining our work. We encourage you to join us at our roundtable discussions, forums, symposia, and special event dinners.