Europe's loudest Huawei critic

Britain will allow Huawei into its national 5G network. Germany may not be far behind. But one European country has unequivocally sounded the alarm on Huawei: the Czech Republic.

Why it matters: Europe's giants are having trouble resisting Chinese inducements to open their 5G networks to Huawei's less expensive equipment. Despite its small economic footprint, the Czech Republic shows it's possible to turn back the tide of dependency on China.

Background: Just a few years ago, the central European country was heavily beholden to Chinese oil conglomerate CEFC China Energy, which had close ties to Beijing.

• CEFC built up its stake in media and real estate across the country, and the CEFC chairman was named a personal adviser of Czech President Miloš Zeman, who supported Huawei's 5G bid and whose staff all used Huawei handsets.

But in December 2018, the country's cybersecurity agency, NÚKIB, issued a legally binding warning stating Huawei posed a security threat.

• The surprise warning shocked the Czech government, including Zeman.
• NÚKIB's warning, and CEFC's unexpected collapse after its chairman disappeared amid domestic political intrigue, brought about a reckoning over China's influence there.

Between the lines: "The strong Huawei position is part of a larger backlash in the Czech Republic," Martin Hála, a leading Sinologist in Prague, told me. The two European countries with the most unfavorable view of China were Sweden and the Czech Republic, according to a recent Pew Research survey.

• That's because "both went through traumatic, but eye-opening episodes with their Chinese 'partners,'" Hála said.
• Sweden has faced a lengthy diplomatic standoff over China's kidnapping of Swedish citizen Gui Minhai.
• And Czech residents experienced China's thorough co-optation of the country's elites, only for it all to come crashing down after the fall of CEFC.

The bottom line: It was the superficial, and ultimately fragile, nature of Chinese economic investment in the Czech Republic that allowed a single rogue cybersecurity agency to push back so effectively against Huawei.

• But "the U.K. and Germany are in a very different position," Hála said. Their economic engagement with China runs far deeper. And so both have "much to lose if the relationship with China goes south."