Thursday, January 24, 2013

China's String of e-Pearls?


This Wednesday, ET reported that India's intelligence community was worried about Huawei's and ZTE's overtures to governments in South Asia. 

"The Research & Analysis Wing, India's external intelligence agency, raised an alarm in early December about China's growing partnerships in the region, which could potentially compromise the integrity of telecom and Internet communication between India and its neighbours." (Economic Times)

I couldn't quite put my finger on why the story bothered me when I first read it. Having met the reporter professionally, I know his sources are beyond reproach. But something still nagged away. Why does this not make sense? An email from a colleague this morning helped the penny drop. 

Here's the bit that that crystallised my thoughts:
"In a December 10 note, R&AW reported that the Maldives foreign affairs ministry had approached China for "concessional financing" of $60 million from its Export Import Bank to develop the island nation's IT infrastructure. The agency also reported that Chinese telecom giant Huawei had signed an MoU to develop the IT infrastructure of Maldives under the 'Smart Maldives' project.
The development in Maldives come months after the agency had warned of a similar move in Nepal, where Chinese vendors Huawei and ZTE were installing next-gen networks for Nepal Telecom.... In a separate October 2012 report, the agency had also asked India to take counter measures after ZTE secured a $44-million deal to build four high-tech data centres for Nepal's privately held Ncell."

The concern R&AW has expressed about the "integrity of telecom & internet communication between India and its neighbours" seems to me a red herring. Why? Huawei is already India's biggest telecom equipment supplier. If our intelligence agencies were that worried about the integrity of networks, they’d have blocked Huawei from selling across India. Instead India has only blocked Huawei & ZTE from sensitive networks (many governments are doing this anyway). 

The real concern, as I see it, may be economic & diplomatic. China has been aggressively pursuing closer relations with India's neighbours by offering them huge ‘discounts’ as the ET story noted. Effectively, New Delhi has steadily lost influence in Nepal, Sri Lanka and the Maldives. Now, even our (fairly mature) IT & telecom industires are losing out, after infrastructure companies got the boot earlier. To me, this is the real trigger for the R&AW note in December. I'd be very surprised if South Block actually bought the line about "integrity" of communications with foreign countries. 

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