Although Hungary\u2019s significance is relatively small in NATO and EU decision-making because of the size of the country, it still plays an important role in the European debate on Huawei. Hungary\u2019s government regularly vetoes or blocks European decisions unfavorable to China\u2019s political leadership, and one of Huawei’s most important European hubs is in Hungary. The company has been involved in a number of Hungarian state telecommunications development projects in recent years, and even Hungarian security services appear to use some of the company\u2019s equipments.<\/p>\n
According to the Hungarian government, it is hypocritical to attack them for their relationship with Huawei, or the Chinese company itself, while large Western European telecommunications companies have been cooperating and contracting Huawei for years. But critics of Hungary\u2019s China policy say the Hungarian government is making exactly the same mistakes Western telecommunication companies have made in recent decades when they made Huawei equipment indispensable: they only look at the short-term economic benefits and avoid dealing with long-term risks.<\/p>\n
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Hypocrisy should be left finally behind<\/h2>\n
U.S. Secretary of State Mike Pompeo sent a clear message to the Hungarian government during his February 2019 visit. \u201cRussia is not the only power that wants to erode freedom in this region.\u00a0I raised with Peter [Szijjarto] today the dangers of allowing China to gain a bridgehead in Hungary,\u201d Pompeo said, standing next to the Hungarian Foreign Minister at a press conference after their talks. “Beijing\u2019s handshake sometimes comes with strings, strings that will leave Hungary indebted both economically and politically,\u201d the Secretary of State said, promising that, from now on, the United States would play an active role in stopping China in the Central European region.<\/p>\n
Such blunt messages and pressure are not common among NATO allies. Hungarian Foreign Minister P\u00e9ter Szijjarto pushed back on Pompeo\u2019s claims:<\/p>\n
\u201cIf you look at that Chinese company which is very often in the news nowadays regarding telecommunication, are they present in Hungary? Yes.\u00a0Who are their major contractors?\u00a0A German and a British company.\u00a0So when it comes to China, I think hypocrisy should be left finally behind,\u201d the Hungarian Foreign Minister replied.<\/p><\/blockquote>\n
This was not a simple spar, the U.S. is seriously frustrated over the Hungarian government\u2019s attitude. According to U.S. government officials talking with Direkt36, despite the fact that the Trump administration considers Pompeo\u2019s visit to Central Europe and his negotiations in Hungary \u201ea success\u201d, they feel that U.S. diplomacy achieved nothing when it tried to win over Hungary to support their anti-Huawei push.<\/p>\n
A few months later, Szijjarto went even further and said that it was Hungary\u2019s \u201eeconomic and strategic interest\u201d to continue cooperation with Huawei, since Hungary wants to take a lead in building 5G networks and overtake its rivals. A U.S. government official told Direkt36 on condition of anonymity that \u201eHungary wants to achieve this with the help of Huawei. And if that happens, other countries will point to Budapest to justify their own similar decision\u201d. According to the U.S. official, it is not Hungary itself that is important, the real risk is that Hungary could set a negative precedent and weaken U.S. efforts to roll back Huawei\u2019s reach within the European Union.<\/p>\n
Unlike the United States, Huawei was satisfied with Peter Szijjarto\u2019s reaction in February. \u201eSzijjarto\u2019s remarks are reassuring to us and it is obvious that Huawei will not be banned from the Hungarian market\u201d, Mariann Gecse, the communications director for Huawei Technologies Hungary remarked after the press conference. A few months later, Wu Biqiang, CEO of the Hungarian Huawei company told the Budapest Business Journal that \u201ethe Hungarian government made it clear that they do not consider our corporation\u2019s activities as a national security risk at all\u201d.<\/p>\n
Viktor Orban in talks with Huawei\u2019s regional and Hungarian head officials. Photo: kormany.hu<\/p><\/div>\n
During his joint press conference with Pompeo, Szijjarto also said that Hungary\u2019s share of the EU-Chinese trade is so small that any concerns about China and Huawei should be raised with powerful Western European countries, not with Hungary. However, one Western European diplomat pointed out to Direkt36 that this argument is misleading. \u201eIf China is really that unimportant to Hungary and its economy, then why is the Hungarian government always vetoing everything inside the EU according to China\u2019s interest?\u201d the diplomat asked.<\/p>\n
Hungary shows respect<\/h2>\n
Indeed, the Hungarian government has repeatedly blocked, either alone or with a few other countries, EU decisions and declarations that China would have not liked:<\/p>\n
\n
- In July 2016, Hungary, Greece and Croatia vetoed a joint EU statement welcoming a Hague international court ruling over the South China Sea, which was would favored the Philippines against China.<\/li>\n
- In March 2017, Hungary alone prevented the EU from signing a petition protesting the torture of detained lawyers in China.<\/li>\n
- In April 2018, the EU External Action Service attempted to issue a joint statement asking China to adhere to human rights and international law. The draft statement also required member states to leave out propagandistic expressions pressed by China from any kind of future bilateral agreements with the Communist country. Hungary first threatened with a veto, then refused to sign the document.<\/li>\n
- In October 2018, when Visegrad Group prime ministers met with the Japanese premier, no public statement was issued because Viktor Orban did not want to include references to maritime security and the South China Sea conflict.<\/li>\n<\/ul>\n
\u201cWhen it comes to China policy, Hungary is maverick […] This was already the case under the Socialist government,” explained Agnes Szunomar, researcher at the Centre for Economic and Regional Studies (formerly part of the Hungarian Academy of Sciences). According to her, Peter Medgyessy’s government (2002-2004) was the first to open up to China, and the timing was very good. The Hungarian opening coincided with the opening up of Chinese politics and the large-scale expansion of Chinese companies abroad. This policy was then pushed forward by the Gyurcsany and the Orban governments, Szunomar added. \u201cThe Hungarian government makes sure that Chinese delegations are not disturbed by protesters among other political gestures.<\/p>\n
\u201cFor China, at times, it matters far more that a country is \u2018friendly’, than the receipt of various economic benefits like lower taxes. It matters more that a country shows due respect and attention to China\u201d, the researcher said, explaining why such political gestures are important in attracting Chinese companies to Hungary.<\/p><\/blockquote>\n
As early as 2013, well before the launch of 5G networks, the Hungarian government entered into a strategic partnership agreement with Huawei. The company then established its European logistics center in Hungary, which now indirectly employs three thousand people. According to the researcher, the Chinese “do not bring a logistics center where leading politicians criticize China, where they travel to Taiwan. This is true not only for a state-owned company but also for a Chinese private company.\u201d<\/p>\n
Viktor Orban and Huawei Group president Guo Ping. Photo: kormany.hu<\/p><\/div>\n
A government official focusing on cybersecurity issues representing a Visegrad region country told Direkt36 that<\/p>\n
\u201cHungary acts like Western companies did fifteen years ago, looking at the short-term gains only. Hungarian politicians are aware of the risks but they think in four-year election terms and immediate economic gains. They just don\u2019t care about the rest\u201d.<\/p><\/blockquote>\n
The problem with Hungary\u2019s attitude, according to a U.S. government official, is that \u201cten years ago we could\u2019t have imagined what our mobile phones would be capable of. 5G is just like that: we can’t even see yet how it will transform our lives in ten years. That is why the security of the NATO alliance must be taken into consideration well in advance\u201d. But developing 5G networks is not the only connection between the Hungarian state and Huawei.<\/p>\n
Deep inside the Hungarian state<\/h2>\n
A few weeks after U.S. Secretary of State Mike Pompeo\u2019s visit, Rose Gottemoeller, the American Deputy Secretary General of NATO and her staff also met with Hungarian government officials in Budapest.\u00a0 According to sources familiar with the content of the conversation, among other topics, Huawei and Chinese influence also came up at the meeting. Hungarian foreign ministry officials tried to deflect responsibility and blame Western Europe and Western companies when explaining Huawei\u2019s presence in Hungary. They argued that the Chinese company was contracted by the largest foreign-owned mobile operators, Germany\u2019s Telekom and Britain\u2019s Vodafone. Moreover, they claimed that the Orban government does not really have much influence over telecommunications as Hungarian ownership in this sector is very low. (Deutsche Telekom affiliate Magyar Telekom told Direkt36 that, in the case of 5G, they have no contracts with Huawei.)<\/p>\n
At the meeting with NATO’s Deputy Secretary General, not only what was said was interesting, but also what was ommitted by the Hungarian officials. It was not brought to the attention of the Deputy Secretary General that Huawei had also received large government contracts.<\/p>\n
In Hungary, Huawei has won several public procurements where the company\u2019s devices play an important role in operating core state infrastructure. However, Huawei has mostly participated in state projects as subcontractors to major suppliers. In 2013, Huawei technology was used to establish a unified emergency call system (number 112) in Hungary, which is linked to the internal, closed radio system of emergency services (ambulance, firefighters, disaster management, police, etc.). According to Mariann Gecse, Director of Government Relations and Communications at Huawei Technologies Hungary, all hardware was provided by Huawei, but they have nothing to do with the data, data traffic or the management and analysis software. She also added that the company does not rank among the top ten\u00a0 IT-telecommunications suppliers of the Hungarian state.<\/p>\n
Subsequently, in 2015, Hungarian state-owned company Antenna Hungaria Zrt. together with Huawei won a state tender to build an LTE450 mobile network. It is a special state mobile network that can be used by Hungarian public administration agencies, emergency services, health and education institutions, state-owned companies and certain industrial costumers. When the opposition in parliament in the fall of 2015 raised concerns that it was risky to rely on Huawei to build this mobile network, Miklos Sesztak, the then Minister of National Development, responded by saying<\/p>\n
\u201cwe are not aware of any European Union and NATO guidelines or statements that would prohibit the use of Huawei devices in telecommunications developments.”<\/p><\/blockquote>\n
The minister also acknowledged in his response that while Hungarian national security services like the Constitutional Protection Office (AH) or the Anti-Terrorism Center (TEK) may operate their own communications networks, they may also decide to use the LTE450 network built by Huawei.<\/p>\n
\u201eThis is an ongoing project since 2015, it is operational, but it is currently untapped. There are way more opportunities in this technology and network. 450 is a low frequency that cannot grant high data traffic, but it provides a very good coverage. The original purpose of the project was to connect smart devices, for example, smart flow meters deployed in rural farm areas, in sparsely populated environment,\u201d Huawei Technologies Hungary\u2019s communications director said of the LTE450 mobile network. According to her, this network is not really used for mobile telephoning or mobile internet browsing. This was a public tender where Huawei was a direct supplier.<\/p>\n
The third Hungarian state-funded project that Huawei participated in is the Super-Fast Internet Program (SZIP), which is supported by the EU. Through this program, broadband internet access is brought to rural, otherwise unprofitable places with the help of EU and state subsidies. In the case of SZIP, one of the main winners of the state tenders was Deutsche Telekom\u2019s Hungarian affiliate, Magyar Telekom, which employed Huawei as the general contractor for the actual roll-out of the network. In other words, Telekom\u2019s high-speed Internet, which connects rural Hungary, also runs on Huawei devices. However, according to Gecse, these three are Huawei’s only major projects in the government sector, their other government contracts are insignificant in this market.<\/p>\n
Not only is Huawei tied to the Hungarian state through projects, but also through many of its former employees who have had careers in the Ministry of Foreign Affairs and Trade and other government departments, and vice versa. Currently, the diplomat in Hungary\u2019s foreign ministry in charge of reports on Chinese technology and Huawei was previously employed by Huawei for a year,\u00a0according to her biography. The Central Bank of Hungary\u2019s current China advisor used to be a Huawei employee as well.<\/p>\n
But a search of Linkedin profiles also reveals that Huawei recruiters also look for staff with previous experience in Hungarian government or state administration. Among other examples, one of Huawei’s regional sales managers has previously been an international legal expert at the Ministry of Interior and the Ministry of Justice for seven years. A customs officer from the Hungarian tax authority signed with Huawei to become a senior customs specialist and one of the company’s visa specialists was previously deputy head of department at the national immigration office. These transfers show that government experience is valuable knowledge to Huawei and the Hungarian state trusts those coming from the company.<\/p>\n
However, apart from joint projects and working relationships, Huawei has another type of connection to the Hungarian state.\u00a0The connection is through the devices of the company, and this is where the relationship of the Hungarian state with Chinese company is most inconsistent.<\/p>\n
Careless intelligence services<\/h2>\n
In 2015, the Special Service for National Security (NBSZ, the \u2018Hungarian NSA\u2019) has established the National Cyber Defense Institute (NKI) with the mission of\u00a0investigating vulnerabilities of government and private IT systems, and informing the public of cybersecurity threats. NKI puts out public reports on a regular basis about cybersecurity threats posed by both the Chinese state and Huawei. However, information published by NKI does not come from their own sources, they only repeat foreign warnings or publish news summaries on recent Huawei-connected developments of the U.S.-Chinese trade war.<\/p>\n
NKI also publishes specific warnings regarding vulnerabilities of end user devices. In these, the Cyber \u200b\u200bDefense Institute also indicates how serious each vulnerability is. Between 2009 and 2019, there have been 19 cases related to Huawei devices in their database. Of these 19, four cases were classified as high risk. The cases involved normal and mobile wifi routers and Huawei PCManager running on Macbooks. However, no Huawei vulnerability was classified as \u2018critical\u2019 and the database also listed vulnerabilities found in Western manufacturers’ devices.<\/p>\n
Huawei is also present among those approximately hundred companies that are authorized to import or export dual-use items, which are goods that can be used for both civilian and military purposes. According to a public list of licensed companies, Huawei Technologies Hungary Ltd. of Budapest, as well as Huawei International Co Ltd. of Hong Kong and Huawei International PTE Ltd. of Singapore, have been successfully registered to trade dual-use products. The permits were issued by the Budapest Government Office.<\/p>\n
Whether the Hungarian state itself has purchased Huawei\u2019s dual-use devices or devices specifically designed for national security or defense purposes is not public information, as purchases of these types of devices are classified. However, NATO has a public supplier list for Hungarian companies which does not include Huawei Technologies Hungary. Moreover, a former Hungarian counterintelligence officer told Direkt36 that there have been signals from NATO partner services in recent years to avoid using Chinese devices.\u00a0According to Huawei\u2019s Mariann Gecse,<\/p>\n
\u201call products in telecommunications can be used for military purposes\u201d. Despite Huawei holding a license for trading dual-use items, Gecse claimed that Huawei is not a supplier of the military.\u201cWe are licensed because dual-use items cannot be exported from Hungary without such a license. There are many dual-use products in telecommunications, and we have a lot of production in Hungary,\u201d Gecse added.<\/p><\/blockquote>\n
However, Huawei devices designed for civilian purposes have been used by Hungarian law enforcement and security agencies, according to Direkt36\u2019s information. For example, according to a former security official, Hungary\u2019s internal security service, the Constitution Protection Office (AH) has absolutely ignored the decree to not buy from Chinese manufacturers. Several sources have confirmed, that since Huawei’s devices are deemed cheap, they have been purchased as burner phones used in covert operations for years. But Direkt36 also found a 2018 public procurement<\/a> that shows that the Anti-Terrorism Center (TEK) had purchased, among other IT devices, three Huawei hotspots.<\/p>\n
The exact number of Huawei and other non-NATO manufacturers\u2019 devices used by Hungarian security authorities is unknown due to regulatory issues.<\/p>\n
In order for a company to participate in public procurement for security and defense purposes, it must be included in the so-called guiding list of the Constitutional Protection Office (AH). However, this list is not public and not even the Hungarian Parliament\u2019s Committee on National Security is allowed to browse it, they may only inquire whether a specific company is on it or not. Mariann Gecse told Direkt36 that Huawei Technologies Hungary is not listed as \u201cwe did not sell such products. We would need all kinds of security certifications for our premises and more, and we don’t have them. If we see them being asked for in a public procurement, we don\u2019t even bid.\u201d<\/p>\n
However, AH\u2019s guiding list only qualifies primary suppliers, but the regulation does not apply to subcontractors or the technologies and brands sold to the state, a source familiar with the works of the Committee on National Security told Direkt36. The source also added that<\/p>\n
\u201cit is politely defined that NATO compatibility must be taken into account\u201d when procuring technical equipment and technology, and that \u201cit would be a huge mistake to use Russian or Chinese devices that are not even officially NATO-compatible.\u201d<\/p><\/blockquote>\n
According to the source, on February 26, 2019, the parliament\u2019s Committee on National Security dealt with Huawei in a closed session.During the session, Hungarian intelligence services only briefly reported on international news, on the United States’ actions against Huawei and how the company is expanding. Nothing concrete was mentioned about Huawei\u2019s presence in Hungary and the potential risks thereof. “At least it was presented in a manner that was loyal to NATO allies. The briefing did not exonerate Huawei or suggest that U.S. measures were unreasonable,” the source added.<\/p>\n
Hungary\u2019s Ministry of Interior, which oversees AH, NBSZ and TEK, as well as the Ministry of Foreign Affairs and Trade, which oversees the Information Office (IH, Hungary\u2019s foreign intelligence) did not react to our inquiry about procuring Huawei devices and possible reservations about Chinese technology.<\/p>\n
Hungary maneuvering in a divided Europe<\/h2>\n
Hungary is not alone in trying to maneuver between its Western allies and China. To date, no EU or NATO unified position has been reached on Huawei , despite the fact that several European intelligence services have explicitly called Huawei a security risk in recent years.\u00a0For example, Latvia\u2019s State Security Service (VDD) stated in its 2018 yearbook that<\/p>\n
\u201eintelligence services in several partner countries warned of high risks in using technology made by Chinese companies\u201d. VDD also specifically advises \u201estate and municipal officials in charge of procurements to pay even greater attention to information security.\u201d<\/p><\/blockquote>\n
Another major Central European critic of China’s expansion is the Czech Republic. In December 2018, the Czech National Cyber \u200b\u200band Information Security Agency (NUKIB) issued a public warning against Huawei. According to a Czech government source familiar with background of the warning, the decision was also supported by Prime Minister Andrej Babis. However, according to the source, Babis’ business interests also played a role in the Prime Minister\u2019s support.<\/p>\n
One of the biggest business rivals of the Czech Prime Minister is Petr Kellner, the richest businessman in the Czech Republic and Central Europe, who is a dominant player in the Czech telecommunications sector. Kellner has a very close relationship with China and Huawei. He recently appeared in Hungary when his company acquired Norwegian mobile provider Telenor’s Hungarian and Balkan businesses. According to the Czech government source, the rivalry between Babis and Kellner also contributed to the Czech government turning against China and Huawei.<\/p>\n
Anti-Chinese sentiments can be motivated by many factors. According to China researcher Agnes Szunomar, for example, Poland said no to Huawei because the country wants to maintain its close relationship with the United States as \u201cthey need U.S. support against Russia\u201d. The case with the Czech Republic is different. \u201cIn the past, Andrej Babis had a bad experience with the Chinese, he lost a lot of money on Chinese projects as a businessman. (\u2026) So Even in a region as small as the Visegrad Group, there are different answers to the Huawei question, and everyone says yes or no to the company for different reasons,\u201d the researcher said. Even the Czech political elite and the government itself is divided on the China and Huawei issue. Despite NUKIB\u2019s warning against the company last year, Huawei won a public tender this year<\/a> to build and operate the IT infrastructure of the Czech Ministry of Finance.<\/p>\n
An official working for the U.S. Senate\u2019s Committee on Foreign Relations told Direkt36 that the Trump administration is expecting a domino effect in Europe. Their reasoning is that if a handful of EU countries \u2013 like the Czech Republic \u2013 would join the U.S. effort against Huawei, the rest could soon follow. The source also added that Hungary is an outlier in the Central European region. Other Central European governments do not take such an active mediation role anywhere else for both Huawei and other Chinese projects.<\/p>\n
\u201cHuawei’s relationship with the government is very important not only in Hungary but also elsewhere. If, for example, the Germans and the French had not seen Huawei as a reliable company, Huawei would not survive this series of attacks citing cybersecurity concerns.”<\/p><\/blockquote>\n
Huawei is preparing for U.S. pressure to continue, however, the company is still in a winning position: in September, the company victoriously announced<\/a> that it already has secured 50 contracts for 5G projects, with almost 60 percent coming from Europe.<\/p>\n
A former Hungarian diplomat defended the government\u2019s position by stressing that \u201eregarding this question, it is the EU, not the U.S., that we have to pay attention to, since we are in a common European market.\u201d According to the source, \u201ceven the Finns and Swedes preferred Huawei against their own vendors \u2013 Nokia and Ericsson \u2013 in many major projects. But the most important factor is that the Germans have also let Huawei to build their networks, and Germany is the biggest European market. We only have to take steps (against Huawei) if Germany flips (to the U.S. side).\u201d \u201cWe also see that Germany is the country that Hungary is watching, and we are very pleased with Germany\u2019s fact-based approach towards security issues\u201d, Huawei Technologies Hungary\u2019s communications director said. We sat down with her to talk the same day the news came out<\/a>: Germany\u2019s government will not prevent Huawei from contributing to the German 5G network buildout.<\/p>\n
The article is co-authored by Kata Tasnadi as part of Transparency International Hungary’s Mentor-mentee Program for Young Investigative Journalists.<\/em><\/p>\n
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