The U.K. Just Chose Sides in the Huawei Dispute. What It Means for the U.S.-China Tech Cold War.
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“The national security crowd in the U.S. would like to severely limit or cripple Huawei.” Photograph by Wang Zhao/AFP via Getty Images
Despite pressure from the U.S. to boycott China-based Huawei Technologies as allies build out their 5G networks, United Kingdom Prime Minister Boris Johnson on Tuesday approved limited use of Huawei technology in the country’s 5G and telecom infrastructure.
While the headlines have focused on the trade war between the U.S. and China, analysts have said the bigger risk—especially after the phase-one trade pact—lies in technology, specifically U.S. efforts to constrain the rise of China’s tech sector. Huawei, a telecom and gear maker, has been at the center of a tech Cold War we first wrote about last year that is forcing countries to pick sides and putting chip makers and other U.S. suppliers in the middle of the crossfire.
The U.S. has been warning for months that Huawei’s telecom gear could be used by the Chinese as a backdoor to spying on networks. Last year, the U.S. put Huawei on its export restrictions list, which kept U.S. suppliers from selling the company components it needed—including chips. The move rattled chip makers and saw a major push by those companies to loosen some of those restrictions, which the U.S. has done on a temporary basis in some cases.
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The U.K. move is unlikely to sit well with the U.S. but isn’t likely to draw major blowback, such as the U.S. curtailing intelligence sharing, as was threatened, Paul Triolo, who heads up global technology policy at Eurasia Group, tells Barron’s via email.
The U.K. limited Huawei to a 35% market share and will keep it out of the sensitive “core” network—a way countries have sought to mitigate security risks from Huawei without upending their telecom infrastructure plans. Chip-maker stocks were up on Tuesday, along with the broad market. The iShares PHLX Semiconductor exchange-traded fund (ticker: SOXX) was up 2.1%, at $256.29, in recent trading.
With the U.K. dealing with Brexit, Johnson is in the difficult position of needing to strengthen economic ties with both China and the U.S. “Boris essentially had a lose-lose decision. Either block Huawei and provoke China to curtail trade with the U.K. or permit them a role and face tougher negotiations when it comes to striking a trade deal with the U.S.,” TS Lombard analyst Eleanor Olcott said via email.
Does the U.K.’s move mean the tech Cold War is about to escalate—or cool down? The experts lean toward a continuing battle given bipartisan support to take a tougher stance on China. But the latest events demonstrate that breaking up technology supply chains are really hard to do because of the crosscutting interests, Arthur Kroeber, Gavekal’s head of research, said via email.
“In general, the national security crowd in the U.S. would like to severely limit or cripple Huawei, because they think it is a bad actor and a threat to U.S. security interests,” he says. “Yet in the case of the latest proposed sanctions it was the Department of Defense that blocked them, because they were convinced that eliminating Huawei would pose another sort of national security threat, by undermining the financial futures of the semiconductor and other firms that are critical for military equipment.”
Though the development is unlikely to alter U.S. intentions toward Huawei, it and gives Huawei a win for now, says William Reinsch, the Scholl Chair in International Business at the Center for Strategic and International Studies and a former Commerce Department official in the Clinton administration. The battle over technology “is also going to be long and drawn-out because there are internal divisions within the U.S. government on Huawei and divisions between countries,” Reinsch adds. “Frankly, if we had a better relationship with our allies, it might be an easier battle.”
What to watch next:
• Germany is the next key battleground. Though the U.K. decision gives German Chancellor Angela Merkel cover to avoid new policies that would effectively ban Huawei from the country’s next-generation networks, Eurasia’s Triolo says a majority of German lawmakers favor tougher security criteria that would effectively bar Chinese suppliers from the country’s 5G rollout. Plus, Germany doesn’t have the same ability to manage “high-risk” vendors as the U.K., he says.
• For investors, the next big milestone will be around what the U.S. does with the temporary grant licenses it gave U.S. companies to continue supplying Huawei that are set to expire in mid-February, TS Lombard’s Olcott says.
• What U.S. agencies do next in terms of restrictions on Huawei. Last year’s restrictions didn’t completely hobble the company, which managed to increase revenue 18% in 2019. It designed around many of the U.S. chips in its smartphones and was allowed to continue buying nonsensitive technologies—including most semiconductors—as long as they were made overseas, according to a note from Gavekal’s Kroeber and Daniel Wang earlier this month.
Several agencies are preparing new rules that could more severely limit Huawei’s access to U.S. technology and its ability to work with suppliers. That could cut U.S. sales to Huawei by hundreds of millions of dollars and create major new disruptions in the electronics supply chain, Gavekal analysts write. The new rules could also hit Taiwan Semiconductor Manufacturing (TSM) because some of its chip designs came from U.S. firms and because its chip-manufacturing equipment is supplied by U.S. companies.
Longer term, the question is what the U.S. does to get at the heart of the problem: It doesn’t have its own serious competitor in 5G systems. ”Ultimately, I think it won’t really be possible to constrain China’s technological development, so if the U.S. wants to avoid buying from Chinese firms it will need to ensure it has its own alternatives in place,” Kroeber says.
Write to Reshma Kapadia at reshma.kapadia@barrons.com
Commentary: Do you belong to the procrastination club?
https://vimeo.com/386395740
We’ve intended to write about procrastination for some time, but we kept putting it off. There, now we admit it! We’re part of the 95% of Americans who belong to the procrastination club because, at times, we all procrastinate about something.
Are you part of this club, too? If so, you probably realize that procrastination can produce some significant stress.
Goethe said, ‘Hell begins the day God grants you the vision to see all that you could have done, should have done and would have done, but did not do.”
We certainly have things we could of, should of, and would of done. And yes, we have regrets. We have things we “intended” to do. Some of these things have minor consequences like “I wish I would have cleaned those closets.” Those closets will still be there and can be cleaned in the future.
Some other situations have more significant consequences, such as “I wish I would have visited my beloved family members and friends more.” Unfortunately, sometimes people pass away and then we can only visit them in our memories. Here’s where regrets show up. What regrets do you have as a result of procrastinating?
However, regrets don’t help us move forward in life. You’ve probably heard the saying that “the road to ‘you know where’ is paved with good intentions.” We want to address the “could of, should of, and would of” in our lives. We want to change our “good intentions” into actions so we have fewer regrets. That’s why we decided to look at overcoming procrastination, especially in areas of life that are most important.
We can learn from the past, but it does no good to beat ourselves up with guilt. Jim Rohn said, “We must all suffer from one of two pains: the pain of discipline or the pain of regret. The difference is discipline weighs ounces while regret weighs tons.” If you want to get past procrastination and gain more discipline, we hope you’ll join us on this journey as we learn more about procrastination.
Robert Hardy, PhD, eliminating self-defeating behavior expert, points out that it’s important to separate the person from the behavior. We are people who sometimes choose the self-defeating behavior of procrastination. Instead, we can replace procrastination with behaviors, such as discipline, that are helpful to us.
So, why do we procrastinate? We all can probably find several reasons. Often we procrastinate because we think it’s easier to avoid doing something than it is to do it. It may seem overwhelming. Small tasks left undone feel like big mountains. Sometimes there are too many important tasks that compete for a limited amount of time. Also, we may feel we lack the knowledge or resources to complete tasks. These rationalizations are not insurmountable.
A colleague of ours, Jeff Herring, says that we tell ourselves “rational lies” and call it rationalizing. Rationalizing sometimes keeps us from taking action to complete challenging tasks. We link more pain to doing something than to putting it off. Actually we need to reframe how we view a task so putting it off is more painful and doing it provides pleasure.
Here are some strategies to help stop procrastinating and start getting things done.
Brian Tracy has a book, "Eat That Frog." The title refers to Mark Twain’s thought that if you eat a live frog first thing in the morning, nothing worse will happen to you the rest of the day. Yuk! No live frogs for us! But doing the worst task first certainly can make the rest of the day seem easier.
“Starting is half-finished” is a saying you may have heard. It’s a favorite of parents and teachers. When you get started, it will encourage you to finish. Also, chunking down a big task can be helpful. For example, if you’re weeding a large garden, complete it in sections, so you can see progress.
If there’s something you must get done, taking at least one step toward completion of it before bedtime helps you realize you are on the road to getting it accomplished. It also helps you to face the task in the morning with more confidence.
What about you? Do you want to stop procrastinating?
We hope the ideas we’ve shared will be helpful to overcome procrastination. Remember, small actions are better than great intentions. Tackling the hardest task first provides motivation and momentum to complete the rest. As you overcome procrastination, your life will be less stressful and more peaceful – you might even lose your membership in the procrastination club!
The Road to the Green New Deal Lies Through This Overlooked Agency
Climate change activists rally in support of the Green New Deal in Los Angeles in May 2019. (Richard Vogel / AP Photo)
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If you ask US climate activists which federal agency will be most essential in any future effort to enact a Green New Deal, you’ll often get the same response: the Environmental Protection Agency, of course. You know, the agency with 14,000 employees, which regulates power plants and was responsible for crafting President Obama’s Clean Power Plan. The one with that sexy superhero name and plenty of mainstream press coverage. It’s a solid commonsense answer—and also a mistake.
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“When people say it’s the EPA, I’m like, ‘What are you talking about?’” says Nada Culver, a former senior attorney at the Wilderness Society and now a vice president at the Audubon Society. “Do you know which agency is doing all the leasing and permitting? Do you know which agency is leasing out all our public lands to oil and gas companies while completely ignoring climate change?”
While no one doubts the EPA will play an enormous role in the fight to confront the fossil fuel cartel and abate the climate crisis, Culver and other longtime climate advocates have their eyes on a much larger bureaucratic behemoth: the US Department of the Interior (DOI).
Despite its bland name and relatively low profile, the Interior Department’s influence on this country’s response to the climate crisis is almost impossible to overstate. The largest environmental regulator in the land, the DOI boasts about 70,000 employees, including some 10,000 scientists, making it more than four times the size of the EPA.
This mammoth institution administers roughly 500 million acres of federal land across the nation, or one-fifth of the United States’ landmass. It manages vast tracts of oil, gas, coal and other mineral resources, including the entire outer continental shelf. It is the chief regulator of coal mining in America, even on private lands. It oversees the Bureau of Indian Affairs and the Bureau of Reclamation, the American West’s principal dam-building agency. It runs the National Park Service and controls more than 500 wildlife refuges nationwide. And it enforces the Endangered Species Act, perhaps our most powerful environmental law.
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What’s more, roughly a quarter of all greenhouse gas emissions in the United States derive from fossil fuels drilled and mined on land that the agency controls. Despite a perennial dearth of coverage in big-name news outlets, the Department of the Interior is the place where an enormous portion of the Green New Deal will likely take shape.
“The Interior Department has to be front and center on this,” says John Ruple, a professor of law at the University of Utah who specializes in public land policy. “They control the land where the future happens—whether we are talking about renewable energy development or a new Civilian Conservation Corps—and they control the land of the past,” which is to say, the millions of public acres scattered with oil and gas rigs, coal mines, pipelines, and more.
In other words, the path toward environmental healing in the United States passes through the Interior Department. That’s where critical Green New Deal policies will be translated into reality. It’s where plans to ban offshore and onshore drilling will largely take shape. It’s where Bernie Sanders’s plan to invest “$171 billion in reauthorizing and expanding” the Civilian Conservation Corps will get hammered out. And it’s where Elizabeth Warren’s proposal to develop offshore wind projects from Maryland to Maine will evolve from theory to practice.
The problem is, none of it will be easy. Even if an eager, committed president takes office in 2020, the job of turning the DOI into a vanguard force in the fight to stanch the climate crisis will be a formidable challenge—thanks, in no small part, to the work of the Trump administration.
For the last three years, the Trump team has been busy turning the Interior Department into the equivalent of an ecological suicide vest. It has used the agency’s vast powers to erode environmental laws, purge knowledgeable civil servants, monkey wrench regulations, and lock in fossil fuel production on federal lands for many years to come. At this very moment, there are roughly 24,000 oil and gas leases on federal land in production. More than 450,000 federal acres, meanwhile, are leased out to coal mining concerns.
And that’s really just the beginning. From the Arctic National Wildlife Refuge in Alaska to the Boundary Waters Wilderness in Minnesota to the Bears Ears region in southern Utah, the administration has attacked protected lands from coast to coast in an attempt to open them up to the extractive industries. In fact, President Trump’s destruction of the Bears Ears National Monument in Utah in December 2017 amounted to the largest single rollback of public land protections in American history—and all for the benefit of right-wing pressure groups, ranching interests, and mining firms.
“They have essentially gutted the agency,” says Representative Deb Haaland of New Mexico, a key leader on public lands issues in Congress.
To erase Trump’s legacy at Interior will require years of strategic effort. Among other things, an incoming progressive administration will have to rebuild the DOI’s civil service, which has been badly damaged by the Trump team’s drive to push out competent personnel, especially at the crucial Bureau of Land Management. It will also have to undo Trump-era rules, regulations, and proclamations that have eviscerated key laws like the Endangered Species Act, the National Environmental Policy Act, the Antiquities Act, and the Migratory Bird Treaty Act. It will have to reverse secretarial orders that direct the department to fast-track fossil fuel development on federal land. And it will have to review and revise a slew of land management plans that have provided free rein to oil and gas drillers, mining interests, and more on the public domain.
All of the above will take an enormous amount of time and talent. And that’s just defense, a rear-guard action to limit the damage inflicted by a previous administration. To regroup and go on the offense will be another challenge entirely. How, for example, will a future administration actually “end all new and existing fossil fuel extraction on public lands”—a key plank of Sanders’s plan for a Green New Deal? Will Sanders simply kick these oil and gas rigs off the land? Is that even possible?
Assuming that a pro–Green New Deal administration doesn’t come into office with an enlightened Congress ready to legislate the climate movement’s priorities, it will have to use executive authority to achieve its goals. As it happens, using such authority to immediately end new federal land leasing at least seems possible within the confines of existing law. Under the Mineral Leasing Act of 1920, the secretary of the Interior has the discretion to halt new federal land fossil fuel leases, says John Leshy, a law professor at the University of California Hastings and the Interior Department’s top lawyer during the Clinton administration.
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“A nearly complete moratorium [on new federal land fossil fuel leasing] is actually pretty feasible legally,” says Leshy. “You can do it. And politically, it is not totally unrealistic either.”
On the other hand, immediately ending existing fossil fuel extraction on federal lands is an entirely different matter. Leshy calls it “pie in the sky.” The oil and gas leases that are in effect today—and again there are tens of thousands of them—are the subject of legally binding contracts between the federal government and private oil and gas firms. Unless Congress is prepared to appropriate hundreds of millions of dollars or more to buy out these contracts, proponents of the Green New Deal will almost certainly have to find other ways to crack down on current oil, gas, and coal operations on federal lands.
“As of last count we have about 26 million acres of federal land under lease,” says Culver of the Audubon Society, who is an expert on federal land energy development. “It’s not necessarily impossible, but it would be a significant undertaking to figure out how to stop development universally on existing leases.”
Moreover, the fossil fuel industry won’t be the only force the DOI will have to contend with. State budgets in places like New Mexico and Wyoming are hugely dependent on fossil fuel revenues from public lands. A just transition in such states will require highly competent federal leadership capable of developing large-scale renewable-energy generation and transmission projects along with other economic programs. The same goes for the creation of jobs programs like a new CCC, which will also need a massive, well-planned mobilization at the DOI.
What this means in practice is that any future administration that seeks to aggressively combat the climate crisis while creating millions of good jobs will have to come into office on day one with an incredibly detailed plan for the Interior Department. It will need an all-star team of lawyers, planners, administrators, and scientists who know exactly what they are doing. And it will need a movement behind it that truly understands the importance of this agency, an agency too often ignored, even by climate activists.
It’s time to start paying attention to the Interior Department.
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