John Sawers: Home-grown technology must be protected from foreign influence

With globalism failing, the ex-head of MI6 warned business leaders against giving up control to overseas investors

The rise of populism in the West has diminished the appetite for globalism. This has made many countries more insular, and when those countries are world powers, that can be damaging to historic allies.

Under Donald Trump's leadership the USA - as seen in Syria recently - is less committed to its friends and increasingly adopting a more transactional approach, said Sir John Sawers, the former head of MI6. Speaking at Digital Transformation Expo last week, he told delegates that this increases the need to protect locally developed technologies and home-grown firms.

"Allies like the UK or Germany or Japan or Australia are going to need to hold [on to] their own defence technology - partly because they can rely less on the United States for collective defence, and also because we need some traction over the USA. We need to be able to say [about] firms like Cobham - the British defence manufacturer which is subject to a takeover bid by a US private equity company - ‘Actually, we want to keep this technology in the UK, because the United States relies upon it. And if the United States has complete control it, why should they bother looking after British interests?'"

China is also attempting to buy European technology, in this case to plug holes in its own technological capabilities. Sawers discussed the case of Midea Group's buyout - and subsequent shift of focus to China - of Germany's robot manufacturer KUKA.

If we had 100 per cent Huawei and ZTE equipment in our systems then I think we would be very vulnerable to being exploited

This led to a discussion on Huawei and ZTE, both of which have been criticised for their lack of independence from the Chinese government, but are responsible for supplying hardware for critical telecoms infrastructure worldwide.

The potential espionage threat does need to be managed, but Sawers said "we have a good system [for vetting suppliers] in the UK." GCHQ checks all equipment from Chinese vendors going into our national telecoms infrastructure at a checking station in Banbury, Oxfordshire. "Never, in the 20 years we've used Huawei equipment, have we seen it used for espionage efforts."

Telecoms is vulnerable

A larger issue is the lack of suppliers to the telecoms equipment industry. There are really only four big companies: Huawei and ZTE in China, and Nokia and Ericsson in Europe. LG and Samsung, from South Korea, are in the market a little, but there are no big US suppliers.

"[T]he West needs to be able to have its own telecoms national infrastructure manufacturers, so we can rely on Western-made and Western-designed kit and not be totally controlled by Huawei and ZTE. If we had 100 per cent Huawei and ZTE equipment in our systems then I think we would be very vulnerable to being exploited."

End-to-end control of our own infrastructure would "mean that there are much better defences in place," said Sawers.

Later, in a separate Q&A session, he added, "There's an industrial policy imperative on the Western countries to ensure that companies like Nokia and Ericsson can compete with Huawei and ZTE, both in terms of the quality of the technology and, to some extent, on price."

When a small country cuts off trade relationships and adopts a policy of isolation, it affects its immediate neighbours. When a global power like the United States does so, it has repercussions around the world. One of these is to force other countries to adopt similar stances - as promoted by Sawers, in his urging government and business leaders to reject foreign takeover bids. Is this a solid long-term plan? Could it actually slow the spread of Asian influence? In Europe, perhaps, but there will always be other regions, with their own home-grown firms, that welcome the Chinese yuan.