The PRC’ ‘soft power’ in the Netherlands_part II_Afke Schaart

image: ‘The age of smiling’: a smiling street vendor of Chinese cola, symbolizing the burgeoning entrepreneurship in the PRC in the 1980s.. Lingnan meishu chubanshe (岭南美术出版社), designer: Peng Ming (彭明) 1988 © No copyright infringement intended. All rights belong to their respective copyright owners, refer https://chineseposters.net/posters/e13-437

January 6 2022_After our part I about Dr. Ying Zhang, this second post highlights the PRC’ soft power in the Netherlands in the person of Afke Schaart, former VVD member of parliament, who has been actively involved in the telecom sector for decades and nowadays is Huawei’s ‘SVP of Global Affairs & Global Head of Impact.’

Afke Schaart first became known to the general public in 2010 when she made the switch from local politics in Wassenaar to the Dutch Parliament in The Hague, where she acted as the spokesperson for the VVD for Economic Affairs and Innovation, Technology and ICT. After studying political science at the VU/Free University in Adam and a year’s training in Clingendael (1999-2000), Afke began her career at KPN, the Dutch telecom company: there she was made responsible for KPN’s policy interests and government affairs in Europe as director ‘public affairs’ (Jan 2000 – Jun 2010). In that capacity, she already got to know Huawei and regularly traveled to the Far East.

KPN & Huawei

As described in part I, KPN was one of the first telecom operators in Europe to partner with Huawei, almost 2 decades ago, through its sister company Telfort: in 2021, this early collaboration has become the subject of an investigation by the Telecom Agency (AT) on behalf of the the Minister of Economic Affairs after recent media reports about wiretapping by the Chinese partner around 2009.

Telephony and eavesdropping are about as old as the invention of the telephone. Since the NSA wiretapping scandal in 2013, citizens have known that it was not difficult for American intelligence agencies to tap European politicians’ cell phones. We had hoped to learn from the AT before the end of 2021 whether Huawei was already doing the same at a much earlier date, we are still awaiting the promised report. I foresee that an unambiguous answer will not be provided. We’ll probably have to make do with a conclusion along the lines of “we haven’t been able to find conclusive evidence, but we can’t rule it out either.”

The fact is that from 2004 KPN entered into an increasingly close relationship with Huawei, in particular for the purchase of 3 & 4G equipment and for the delivery of very fast (so-called “point to point”) data connections for enterprises. With the transition to 5G, KPN initially also had the extremely cheap Huawei in mind as its main partner, including in the core of the network, because it could build on the previously installed 4G equipment. These plans were revised over the past 2 years under severe pressure from Dutch Parliament, which had been rudily awakened by the growing criticism from the USA as well as by growing EU concerns about the risks of engaging ‘unreliable suppliers’, which resulted in the General Administrative Order (AMvB) Telecom by the Rutte government at the end of 2019, stipulating additional safety and security measures for telecom equipment and networks.

Schaart as MP

It is not clear whether Afke Schaart played a prominent role in the establishment of close relations with Huawei in the period 2000-2010. She was no doubt aware of the ever closer ties, but most likely not directly and very actively involved in the business negotiations with the Chinese party as a director of ‘Public Affairs’.

After her switch to national politics, Afke made her mark during the discussions about so-called ‘net neutrality’. Under her leadership, the liberal party VVD defended the idea to keep the internet free and open on the one hand, but on the other hand to allow internet providers to attach different price tags to different mobile internet services. By sticking to this ambivalent position, the VVD gave the impression that it preferred to look after the interests of the telecom industry i.e. the KPN more than those of the consumer. Tellingly, Schaart’s former employer KPN had long demanded to be entitled to charge its clients extra for certain services, such as YouTube or Skype, on top of the regular monthly subscription fees…

With the support of the opposition and against the wishes of the ruling parties CDA and the VVD, CDA minister Verhagen finally had net neutrality laid down by law in 2012, which -at that time- also prohibited the blocking, pricing and throttling or additional taxation of specific services by internet providers.

Around November 2010 Schaart drew again attention to herself by asking the Ministers of Foreign Affairs and Economic Affairs about the export reductions of rare earths announced by the Chinese government, wondering what the effect of this Chinese policy change would be on the Dutch raw material supply guarantees in general and for some Dutch industries in particular. In January 2011 she also expressed her concerns about the increasing number of foreign cyber attacks on Dutch companies, without specifying whom she considered to be the main culprits. It is unknown whether she, with her KPN past, was already informed in those days about the alarming results of KPN’s own internal audit regarding Telfort and the Huawei wiretapping activity, which was kept from the general public till 2021…

GSMA

Despite all her noble efforts, Afke’s political career was short-lived. For the September 2012 elections, she was put so low on the VVD’s electoral list that she decided to quit national politics. She moved from The Hague to Brussels: Afke became head of Microsoft’s EU team for institutional relations, learning all the ‘ins and outs’ of the wheeling and dealings with and within European institutions. She then moved on to the GSM Association (GSMA), which represents the interests of mobile operators worldwide, drawing on a huge ecosystem of more than 750 operators and 400 companies. In other words, an influential interest group in mobile telecom.

She was appointed as VP and Head of Europe, Russia and Eurasia for the GSMA (2015 -Aug 2020), based in Brussels, focusing on public affairs. Given her VVD background and position in Brussels, it is likely that she kept in touch with VVD party members, including prime minister Rutte, whom she must have encountered several times in the corridors of Brussels or The Hague. It’s not farfetched to assume 5G and telecoms must have been a talking point in these kind of brief encounters.

The GSMA is well known for organizing the World Mobile Congresses (WMC) in Barcelona, LA and Shanghai. Those conferences and trade shows have seen tremendous growth over the past decade, reflecting the rapidly increasing importance of telecoms worldwide. The WMCs were/are also the most important source of income for the non-profit GSMA: visitors and especially exhibitors have to pay a fee to visit or participate in the trade show.

Huawei lobby in the GSMA

GSMA’s supervisory board consists of about 25 members, including the major Chinese telecom operators, China Mobile, China Telecom and China Unicom, all owned by the Chinese state and major buyers of Huawei equipment. All four companies have been heavily represented at the WMCs, and as a result have become the main contributors to the GSMA’s budget. When in 2019 more voices in the USA and several EU member states and MPs began calling for the exclusion of Huawei from the European networks, the management team of the GSMA was presented with a dilemma: how to address the Huawei security topic without upsetting its Chinese board members? What, if any, contribution could the GSMA make in this discussion: could it ever find itself in a position in which it had to advise its own members and European operators to distance themselves from Huawei?

https://telecoms.com/495291/gsma-set-for-crisis-meeting-at-mwc-over-huawei-bans-report/

In response the GSMA chose to make an ‘Economic Impact Assessment of 5G supply chain restrictions’ (=Huawei ban) in the EU. Yet the resulting ‘GSMA Intelligence’ study was withdrawn shortly before official publication because it failed to offer any substantiation for its astronomical figure of €55 billion in extra (replacement) costs and its conclusion that a ban on Huawei would result in a huge delay in the 5G rollout in Europe. Ericsson and Nokia nevertheless felt compelled to respond to the rumors surrounding the conclusions of this unpublished study, strongly denying and contradicting the report’s calculation and findings.

Refer https://www.reuters.com/article/us-huawei-europe-gsma-idUSKCN1T80Y3 en https://www.nokia.com/nokia-statement-regarding-gsma-internal-report-economic-impact-assessment-of-5g-supply-chain-restrictions-in-the-eu/ en https://www.ericsson.com/en/newsroom/ericsson-comments/statement-regarding-gsma-internal-report and https://telecoms.com/495291/gsma-set-for-crisis-meeting-at-mwc-over-huawei-bans-report/

In other words, in its lobbying efforts towards the European member states, the GSMA seemed to have leaned all its sympathies towards its Chinese patrons. Who was responsible for the report, did the Public Affairs department of GSMA Europe under Schaart perhaps also have a finger in the pie? I have not been able to confirm: however, it was obvious that the GSMA’s intention with the planned report was to put pressure on governments and telecom operators across Europe not to drop Huawei. During and after 2019 the GSMA repeatedly stressed that the member states had to stick to and hurry up with the original plans for the 5G roll-out, in which Huawei would play a very important part. The security question surrounding Huawei was left untouched by the GSMA.

ECTA

2020 also saw the ECTA, European Competitive Telecommunications Association, a pan-European ‘pro-competition trade association’ representing more than 100 new, young ‘challenger’ telecom operators and digital solution providers, sending a similar alarming message to the world, claiming that a Huawei ban would have far-reaching consequences for the timetable of the 5G rollout. Established telecom names such as Ericsson, Nokia, KPN, etc. are not members of this organization, remarkably Huawei is, even though the company is several decades old and not considered a start-up. https://www.reuters.com/article/huawei-europe-idUSKBN2711LD

The Chinese telecom giant itself has not missed any opportunity to also warn governments in Europe about the economic and social damage that the EU and its people would suffer from a Huawei ban. Though the costs of replacement are considerable for Europe, they don’t reach the total amounts that Huawei and the various lobbies such as the GSMA have proclaimed. In the UK, a country originally highly reliant on Huawei equipment just like Germany and the Netherlands, it has been estimated that the rip and replace operation to be completed by 2027 will cost around £1–2 billion. In Germany, those costs are probably around ~€2-3 billion. In the Netherlands probably about €100-200 million. A number of other Member States have already opted for Nokia and Ericsson at an early stage and are not faced with expensive replacement operations. If you add it up for the whole of the EU, you probably arrive at €5 – € 10 billion in extra costs: a substantial amount, but far removed from the aforementioned €55 billion.

Refer also https://www.rtlnieuws.nl/economie/tech-business/artikel/5168842/huawei-ban-kostenpost-5g-verbannen-mobiele-netwerken-china and https://www.computable.nl/artikel/nieuws/mobility/6951359/250449/5g-boycot-huawei-miljardenstrop-voor-eu.html

With regard to delays in the 5G rollout, factors such as COVID-19, legal issues/court cases (e.g. about the health risks of 5G), belated governmental laws and regulations (e.g. about the commercial terms of the involved frequency auctions) and political events (elections, formations) are more likely to (have) obstruct(ed) a fast roll-out than the time required for a (potential) switch to a reliable equipment supplier.

Phased 5G rollout

As elsewhere, the 5G rollout in the Netherlands takes place in stages, based on the guideline of three specific frequency spectrums as designated by the EU: up to 700 MHz, 3.5 GHz and 26 GHz. On 21 July 2020, the 700 MHz, 1400 MHz and 2100 MHz frequency bands were auctioned, an auction initially planned for the end of 2019 by the Dutch government. The EU condition was that the auction of 700Mhz spectrum should take place at least before June 30, 2020.

The cause of the Dutch delay was twofold: 1) the proposed acquisition of Tele2 by T-mobile had to be approved by the European Commission first, because it was initially expected that both companies would participate in the frequency auction and 2) the announcement of the AmvB by the Dutch government at the end of 2019, followed by the “EU 5G toolkit” that set new safety requirements for telecom operators for the deployment of 5G equipment.

In the end, the EU deadline was not met by the Netherlands by just 3 weeks.

The planned April 2022 auction of the 3.5Ghz frequency has been canceled because Mona Keijzer, until recently State Secretary of Economic Affairs, was stopped by the Dutch court after she tried on the basis of a Dutch government decision in 2014 to unilaterally force Inmarsat, the British satellite company based in Burssum that has been operating on the same frequency for years, to find themselves an alternative location outside the Netherlands to provide their services. Inmarsat offers crucial emergency and safety communications for maritime traffic via the same 3.5Ghz frequency, leading to concerns about system interference. Keijzer tried to push Inmarsat to just free up this frequency for the telecom operators: all those intermittent years, our dear Mona was unable or unwilling to negotiate a reasonable compromise with Inmarsat on the (compensation for a) required relocation.. https://dutchitchannel.nl/680374/uitstel-voor-ghz-frequentieveiling.html

Keijzer was recently fired for criticizing the decision of her own government team to introduce the corona pass and the -in her eyes- mandatory nature of the vaccination policy. The Ministry of Economic affairs has meanwhile promised to find a compromise with Inmarsat via an advisory committee: the installation of the committee is expected to take so much time that the April 2022 deadline can no longer be met, a new date has to be set…. In short, this delay is related to an incompetent Dutch Secretary of State who couldn’t work out a deal or solution with Inmarsat.

All the above just serves to demonstrate that delays in the rollout are not purely and by default related to the Huawei/China issue. The same story applies to other EU member states too.

Afke to Huawei

Due to the Corona crisis, the GSMA had to cancel all its 2020 WMCs. The organization was forced to lay off about 20% of its employees. Revenues declined rapidly, while giants Huawei and the Chinese telecom operators came under further American and international scrutiny. https://www.fiercewireless.com/wireless/job-cuts-hit-20-gsma-workforce-report

Afke Schaart too started looking/had to look for another job: she chose to move to…Huawei in August 2020, to the headquarters in Shenzhen that is, as ‘SVP Global Affairs & Global Head of Impact .’ refer https://www.facebook.com/watch/?v=5064334066960733. She is dividing her time between Shenzhen and Rijswijk, where Huawei’s Dutch headquarters are located.

Schaart thus formally became the highest-ranking Westerner at the Chinese telecom giant, the umpteenth in a procession of foreigners who began working for the Chinese company from 2012. They all have contributed, either intentionally or unintentionally, to the image that Huawei is a modern, normal multinational company from a normal, ‘Western oriented’ country with a policy based on transparency, openness and integrity. In other words a modern company from a country with a government that can be trusted and would cherish and share Western/universal values and norms….

Some of the most notable names of the past 10 years who joined Huawei: Frenchman Serge Abou, spent 30 years in various positions in the EU, most recently (2005-2011) as EU Ambassador to China before moving to Huawei. The French mathematician Laurent Lafforgue, one of the world’s experts in Algebraic geometry, the former Governor of Victoria, Australia, John Brumby, as well as the former Minister of Foreign Affairs of Australia, Alexander Downer and most recently Mike Rake, former President of British Telecom.

At the same time, we have seen an exodus of a number of Western execs who resigned after Huawei’s explicit role in the abuses in Xinjiang came to light…. see f.e. https://www.bbc.com/news/technology-55332671

Management/governance structure

If you ask all those Western Huawei execs about Huawei’s ownership, governance and organizational structure, they often beat the bush: the company is said to be 100% owned by a private holding company, 1% of which is held by founder Ren Zhengfei and 99% by its employees via a so-called ‘trade union committee’ : which Huawei managers/employees are supposed to represent that trade union usually remains unclear or unanswered. The company with an annual turnover of >$100 billion is not listed on the stock exchange and no one but the employees can invest in it. Very unique for such a large multinational…

a radio interview in Dutch https://www.bnr.nl/vanonzepartners/de-verbindende-factor/10428873/connecten-met-de-critici with Huawei’s GertJan van Eck (Chief Operating Officer Huawei Netherlands) and Jurjen Veldhuizen (Director Solutions & Marketing) by Robin Rotman, BNR december 2020, also discusses the ownership topic

In the PRC, a trade union exists only by the grace of the CCP, there is no independent worker-led union of any kind. Huawei’s trade union committee already implies that the State owns the company. And if the past year has proven anything, it’s that the Party can take full control at any time of all those Chinese tech companies that were often said to have grown into multinational corporations “without any CCP control” (refer to Alibaba, Tencent, etc etc etc). The Party is now busy preparing those tech companies and their managers for a potentially long confrontational relationship with the US: the CEOs who refuse to fall in line with Xi’s ‘rejuvenation of China’ march, have all been forced to step down or removed…

This intransparent corporate structure and the permanent risk of major Party/State influence did not initially prevent European telecom operators and governments from choosing Huawei when purchasing equipment for crucial national infrastructure. For the Netherlands, the price tag was most likely the main reason for the collaboration: state subsidized Huawei offered end-to-end solutions for prices that were sometimes up to 60% (!) below those of the Scandinavian competitors.

Cheap is turning out to be costly. Moreover, the Dutch government has been stuck with the Huawei problem for over 2 years now. The minister of Economic Affairs is trying to pass on the costs of a replacement operation of Huawei equipment – predictably enough – to the telecom operators. I guess ultimately the consumer will pay for it. The parliamentary discussion about Huawei’s remaining role in the Dutch network has meanwhile been classified a state secret, it has changed into another headache dossier for our prime minister. The Dutch citizen is left in the dark about Huawei’s role. The socalled ‘Rutte doctrine’ in full glory. “A publicly announced and full Huawei ban puts our other trade interests with the PRC too much at risk”, we hear Mark Rutte think aloud.

Interview with Afke

Time to return to Afke and to let her explain her choice for Huawei at this moment of time, in these challenging geopolitical times. She is of course wildly enthusiastic about her new job and says to the Financieel Dagblad on June 18, 2021: “My role may be global, but I am not expected to tell a story that I would not support or anything like that. You know, I’ve always been active in the corporate world and I really don’t think Huawei is any different from Microsoft, the GSMA or KPN where I’ve worked before… Because it fits what I’ve done before. And because I think Huawei is a great company that is at the forefront of AI, 5G, big data and can offer the best products at the best price. They are much further along in that than we are, and much further than America too. I just thought: nice, I want to be there….” Furthermore:

“I worked at KPN when Huawei started 3G in the Netherlands and that was a fantastic collaboration. As a Dutch society, we have benefited so much from this. I’ll never forget that moment…I’ve had much more to do with Huawei and I’m really convinced of Huawei’s good intentions and will to do good things with our partners. We are a company, not a political institution. Last week I opened our seventh cyber security center myself….

Human rights are an issue and there are a lot of parliaments that think so. But does Huawei have a role in that? Well no, just like Microsoft or Google do not have any role in Guantanamo Bay. That’s my opinion. In other parts of Europe, the link with our business and human rights is much less. And that link is really not right.”

And finally: “In ten years I will conclude that I was on the right side of history, I am sure. If I see the development in China and compare that with America with its major social problems and with the infrastructure that is not in order … In China it is much less. Then I think: that is the way forward.”

Hostage diplomacy

After the release of Huawei’s CFO Meng from Canada last September, Afke tweeted that she was very happy with the return of the Chinese executive to China and hoped it would mark the beginning of better international relations based on dialogue and cooperation. Obviously, she didn’t tweet about the simultaneous release of 2 Canadians arbitrarily detained and imprisoned by the communist regime in 2018 in retaliation for Meng’s arrest. Meng spent her house arrest in comfort at her villa in Canada supported by a team of legal experts who filed a lawsuit against the US government, the two Canadian citizens spent more than 1,000 days in solitary confinement in a cell in the People’s Republic, without legal aid..

Irrespective of what anyone thinks of Meng’s original arrest at the request of the US, the fact that the Chinese government immediately turned to hostage diplomacy by handcuffing random Canadian citizens should be a warning for people like Afke, who have a rather naive idea of how things actually go in the Chinese society under Xi.

I have no doubts about the good intentions of many Chinese employees within Huawei and the technical competence of the company: the problem is that the multinational is strongly linked to the military apparatus and has deep roots in the one-party state, which is completely controlled by an unreliable and often ruthless communist regime that can fully take over management of any company at any time, either directly or indirectly. And which under Xi Jinping has taken an extremely aggressive path in its foreign policies. And which condones that an army of hackers daily attacks Western, including Dutch, companies and institutions, including recently Afke’s former employer Microsoft! https://www.bbc.com/news/world-asia-china-57889981 Even the Dutch intelligence and security services and our counter-terrorism organization NCTV have now explicitly stated several times that China is one of the states that has an offensive cyber program that is aimed against Dutch interests….

Afke version 2021 vs version 2011

After reading the interview you wonder what ever happened to the worried Schaart from 2011? Does she really think that Chinese hackers can go ahead without the Chinese state knowing? Does she really believe that there is no higher risk for an even more vulnerable telecom network by allowing Huawei’s participation? Why offer the Chinese government an even bigger chance to spy on, hack or switch off the Dutch network, should the CCP ever deem it expedient? Does she really consider it a wise idea to hand over the Dutch national network to the services/equipment of a company that comes from a country, where Western telecom companies play a completely marginal role in its own telecom and network systems? Why increase your dependency on a state subsidized supplier from a country with such an untrustworthy government? The critical Schaart of 2011 clearly no longer asks herself these questions in 2021….

Apparently she also doesn’t know that the Chinese government can at any time require Huawei to transfer all collected personal data for “reasons of national security”. And that Huawei is the main supplier of the national Chinese security apparatus. And that she is mainly used as a billboard to improve the badly damaged international image and reputation of the Chinese multinational company, which had been the showpiece of the PRC’s technical prowess for many years.

She seems to really believe that she is free to do and say what she wants in her new position in communist China. Is Afke dumb or is she pretending to be? Is she keeping a finger on the pulse on behalf of the Dutch intelligence/AIVD or CIA in the headquarters in Shenzhen? Let me not throw wild theories at it, most likely the fairly simple answer is that she likes to practice her beloved lobbying hobby for whomever pays her the best. And China is indeed an exciting ‘place to be’, we can at least agree with her in that regard.

Finally, I would like to point out that she is still listed as a member of the Advisory Board of the TSOC, https://www.tsoc.nl/over-tsoc/raad-van-advies ‘a Dutch association with approximately 800 members and a platform in Technology, Media and Telecommunications for gathering knowledge and establishing and maintaining contacts in this sector. The members are representatives of companies, independent professionals, consultants or advisors. TSOC is the place where innovation in the sector is co-directed.’

As of July 1, 2021, the TSOC has also welcomed the Telecom Agency (AT) as a new member.

Let’s hope that the AT is not too soft against the soft power of Huawei in the TSOC…

And let me again be clear, Afke’s choice for Huawei is of course completely legal: whether it is a wise thing to do or should be applauded is a completely different matter. In any case, she seems not to be aware or care that she has been made part of the soft power machine of Huawei/PRC. But the reader of mijngroeve.nl better be if he or she ever happen to meet her – no doubt with a friendly smile – in one of those corridors in The Hague, Brussels or elsewhere in the world…

https://www.huawei.com/nl/nieuwsbrief/interview-afke-schaart

See also:

https://www.aspi.org.au/report/mapping-more-chinas-tech-giants

https://www.icij.org/investigations/china-cables/exposed-chinas-operating-manuals-for-mass-internment-and-arrest-by-algorithm/

https://newseu.cgtn.com/news/2020-07-09/UK-warned-banning-Huawei-will-delay-5G-rollout-and-cost-billions-RZtG7NGeSk/index.html

https://www.lightreading.com/5g/bt-says-huawei-ban-is-not-so-bad-after-all/d/d-id/762417

https://www.techradar.com/news/cost-of-replacing-huawei-kit-in-europe-could-be-pound28bn

https://www.ispreview.co.uk/index.php/2021/05/bt-begin-replacing-uk-4g-and-5g-mobile-kit-from-huawei-in-hull.html

https://www.lightreading.com/5g/deutsche-telekom-overplays-huawei-ban-as-armageddon-in-leaked-paper/a/d-id/761763

https://www.onemorething.nl/2018/05/5g-netwerk-drie-fases/

https://strandconsult.dk/gsmas-cash-cow-hit-by-virus-cancelling-the-mobile-world-congress-is-an-opportunity-to-reboot-the-event-next-year/

https://nos.nl/artikel/2377344-huawei-beheert-nog-wel-degelijk-kern-van-4g-netwerk-kpn (2021)

https://www.rd.nl/artikel/946152-onderzoek-naar-ongewenste-toegang-tot-kpn-netwerk-duurt-langer

https://www.lightreading.com/security/chinese-hackers-use-fake-huawei-jobs-site-to-get-5g-tech—report/d/d-id/768142

https://www.nbr.org/publication/a-concise-guide-to-huaweis-cybersecurity-risks-and-the-global-responses/

https://www.wired.co.uk/article/huawei-5g-uk-security

https://www.bbc.com/news/technology-55634388