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A tech cold war.


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Approximately 7000 miles separates the US and China, but distance is no inconvenience for the trade war between these two countries. With new tariffs being imposed at an escalating rate, the hostility and lack of negotiations is spreading to other countries, presenting a threat to global peace and economic stability. The latest development in the US-China trade war concerns cyber security and technology, specifically the world’s second largest smartphone manufacturer: Huawei. Generally, the latest, smartest, fastest developments in tech are met with premium prices and queues at retail shop entrances. However the release of the fifth generation, or 5G, mobile phone has caused a worldwide commotion.

Simply, the involvement of Chinese 5G technology in countries other than China, is believed to pose a security risk. Last week, President Trump signed an executive order declaring a national emergency and preventing any US company from utilising foreign telecommunications equipment that could threaten the country. No specific telecoms companies were named but it is widely understood that the trade blacklist was aimed at Huawei.

The US is not alone in its concern. Australia has already banned any 5G involvement by Huawei, whilst Europe has been torn between the attractive tech prices and the risk to national security. Companies too are becoming involved; Panasonic has stopped supplying components to Huawei, joining the likes of Google and Intel in cutting all association with the conglomerate.

Very quickly, the trade war has escalated from US-imposed tariffs on over US$200 billion worth of Chinese goods and China’s retaliation of tariffs on US$110 billion of US goods, to a fear of espionage and sabotage by a Chinese telecoms giant. The items that have been tariffed range from LNG to soybeans, however, China has not imposed any tariff on US crude – though they have reduced the quantity of US oil imports.

It has been alleged that the oil and gas sector is the second most targeted industry by cyberattacks, with breaches disrupting pipeline operations and releasing confidential information. Attacks can be motivated by numerous factors, with espionage between countries an increasing concern.

Pipeline cyber security has been widely criticised in the US, with companies and lawmakers urging the Transportation Security Administration to do more. In Europe, the story is different. Bulgartransgaz has recently been approved by the European Commission for two cyber security projects that will be funded under the Connecting Europe Facility, Telecommunications sector. This is a positive step, but with the rapid advancements made in the digital world, it is surprising that energy companies are spending less than 0.2% of their revenue on protecting their assets from cyber threats.1

Whilst China and the US retaliate back and forth, they do agree on their fear of Russia’s dominance in the energy industry and becoming over dependent on Russian supplies. China and Russia have been unsuccessful in their discussions to construct a pipeline transporting Russian gas to China; meanwhile, US Energy Secretary Rick Perry has expressed his disfavour for Russia’s Nord Stream 2 pipeline, suggesting sanctions should be imposed over concern that the pipeline would be used as a political weapon. However, Huawei has already begun construction of a 5G network in Russia, so maybe the common ground between the US and China regarding pipelines is limited to solely that.

Every step in the digital age is a step into the unknown; assets need to be protected as cyberattacks can be detrimental to people, the economy and the environment. It is promising that companies and countries alike are concerned that the widespread adoption of Huawei’s technology could be a risk to national security, but perhaps more attention needs also be focused on the oil and gas industry’s protection against the threats of cyberattack.

1. Digital Energy Journal, 2019, ‘The best way to mitigate cyber threats.’