Special report – Hobbling Huawei: Inside the U.S. war on China’s tech giant

By Cassell Bryan-Low, Colin Packham, David Lague, Steve Stecklow and Jack Stubbs

CANBERRA (Reuters) – In early 2018, in a complex of low-rise buildings in the Australian capital, a team of government hackers was engaging in a destructive digital war game.

The operatives; agents of the Australian Signals Directorate, the nation’s top-secret eavesdropping agency. had been given a challenge. With all the offensive cyber tools at their disposal, what harm could they inflict if they had access to equipment installed in the 5G network, the next-generation mobile communications technology, of a target nation?

What the team found, say current and former government officials was sobering for Australian security and political leaders: The offensive potential of 5G was so great that if Australia were on the receiving end of such attacks, the country could be seriously exposed. The understanding of how 5G could be exploited for spying and to sabotage critical infrastructure changed everything for the Australians, according to people familiar with the deliberations.

Mike Burgess, the head of the signals directorate, recently explained why the security of fifth generation, or 5G, technology was so important: It will be integral to the communications at the heart of a country’s critical infrastructure – everything from electric power to water supplies to sewage, he said in a March speech at a Sydney research institute.

Washington is widely seen as having taken the initiative in the global campaign against Huawei Technologies Co Ltd, a tech juggernaut that in the three decades since its founding has become a pillar of Beijing’s bid to expand its global influence. Yet Reuters interviews with more than two dozen current and former Western officials show it was the Australians who led the way in pressing for action on 5G; that the United States was initially slow to act; and that Britain and other European countries are caught between security concerns and the competitive prices offered by Huawei.

The Australians had long harbored misgivings about Huawei in existing networks, but the 5G war game was a turning point. About six months after the simulation began, the Australian government effectively banned Huawei, the world’s largest maker of telecom networking gear, from any involvement in its 5G plans. An Australian government spokeswoman declined to comment on the war game.

After the Australians shared their findings with U.S. leaders, other countries, including the United States, moved to restrict Huawei.

The anti-Huawei campaign intensified last week, when President Donald Trump signed an executive order that effectively banned the use of Huawei equipment in U.S. telecom networks on national security grounds and the Commerce Department put limits on the firm’s purchasing of U.S. technology. Google’s parent, Alphabet, suspended some of its business with Huawei, Reuters reported.

Until the middle of last year, the U.S. government largely “wasn’t paying attention,” said retired U.S. Marine Corps General James Jones, who served as national security adviser to President Barack Obama. What spurred senior U.S. officials into action? A sudden dawning of what 5G will bring, according to Jones.

“This has been a very, very fast-moving realization” in terms of understanding the technology, he said. “I think most people were treating it as a kind of evolutionary step as opposed to a revolutionary step. And now that light has come on.”

The Americans are now campaigning aggressively to contain Huawei as part of a much broader effort to check Beijing’s growing military might under President Xi Jinping. Strengthening cyber operations is a key element in the sweeping military overhaul that Xi launched soon after taking power in 2012, according to official U.S. and Chinese military documents. The United States has accused China of widespread, state-sponsored hacking for strategic and commercial gain.

A THREAT TO CRITICAL INFRASTRUCTURE

If Huawei gains a foothold in global 5G networks, Washington fears this will give Beijing an unprecedented opportunity to attack critical infrastructure and compromise intelligence sharing with key allies. Senior Western security officials say this could involve cyber attacks on public utilities, communication networks and key financial centers.

In any military clash, such attacks would amount to a dramatic change in the nature of war, inflicting economic harm and disrupting civilian life far from the conflict without bullets, bombs or blockades. To be sure, China would also be vulnerable to attacks from the U.S. and its allies. Beijing complained in a 2015 defense document, “China’s Military Strategy,” that it has already been a victim of cyber-espionage, without identifying suspects. Documents from the National Security Agency leaked by American whistleblower Edward Snowden showed that the United States hacked into Huawei’s systems, according to media reports. Reuters couldn’t independently verify that such intrusions took place.

However, blocking Huawei is a huge challenge for Washington and its closest allies, particularly the other members of the so-called Five Eyes intelligence-sharing group; Britain, Canada, Australia and New Zealand. From humble beginnings in the 1980s in the southern Chinese boomtown of Shenzhen, Huawei has grown to become a technology giant that is deeply embedded in global communications networks and poised to dominate 5G infrastructure. There are few global alternatives to Huawei, which has financial muscle – the company reported revenue for 2018 jumped almost 20 percent to more than $100 billion – as well as competitive technology and the political backing of Beijing.

“Restricting Huawei from doing business in the U.S. will not make the U.S. more secure or stronger,” the company said in a statement in response to questions from Reuters. Such moves, it said, would only limit “customers in the U.S. to inferior and more expensive alternatives.”

For countries that exclude Huawei there is a risk of retaliation from Beijing. Since Australia banned the company from its 5G networks last year, it has experienced disruption to its coal exports to China, including customs delays on the Chinese side. In a statement, China’s foreign ministry said it treated “all foreign coal equally” and that to assert “China has banned the import of Australian coal does not accord with the facts.”

Tension over Huawei is also exposing divisions in the Five Eyes group, which has been a foundation of the post-Second World War Western security architecture. During a trip to London on May 8, U.S. Secretary of State Mike Pompeo issued a stark warning to Britain, which has not ruled out using Huawei in its 5G networks. “Insufficient security will impede the United States’ ability to share certain information within trusted networks,” he said. “This is exactly what China wants; they want to divide Western alliances through bits and bytes, not bullets and bombs.”

Huawei’s 74-year old founder, Ren Zhengfei, is a former officer in China’s military, the People’s Liberation Army. “Mr. Ren has always maintained the integrity and independence of Huawei,” the company said. “We have never been asked to cooperate with spying and we would refuse to do so under any circumstance.”

In an interview with Reuters at the company’s headquarters in Shenzhen, Eric Xu, a deputy chairman, said Huawei had not allowed any government to install so-called backdoors in its equipment – illicit access that could enable espionage or sabotage – and would never do so. He said 5G was more secure than earlier systems.

“China has not and will not demand companies or individuals use methods that run counter to local laws or via installing ‘backdoors’ to collect or provide the Chinese government with data, information or intelligence from home or abroad,” the Chinese foreign ministry said in a statement in response to questions from Reuters.

Washington argues that surreptitious backdoors aren’t necessarily needed to wreak havoc in 5G systems. The systems will rely heavily on software updates pushed out by equipment suppliers – and that access to the 5G network, says the United States, potentially could be used to deploy malicious code.

So far, America hasn’t publicly produced hard evidence that Huawei equipment has been used for spying.

Asked whether the United States was slow to react to potential threats posed by 5G, Robert Strayer, the State Department’s lead cyber policy diplomat, told Reuters that America had long been concerned about Chinese telecom companies, but that over the past year, as 5G loomed closer, “we were starting to talk more and more with our allies.” Banning Huawei from 5G networks remains “an end goal,” he said.

THE TECH THREAT

The West has long harbored concerns about Chinese telecom equipment. In 2012, a U.S. House Intelligence Committee report concluded Chinese tech companies posed a national security threat. Huawei denounced the finding.

Despite such concerns, the U.S. government’s response to the threats posed by 5G only took shape more recently.

In February 2018, Malcolm Turnbull, then prime minister of Australia, flew to Washington D.C. Even before Australia’s eavesdropping agency had run its war game, Turnbull was already raising red flags in Washington. A former technology entrepreneur, he believed 5G presented significant risks and wanted to press allies to act against Huawei.

“He was warning about how important 5G networks would be and the security risks we all needed to think about around countries that had capability, form and intent, as well as coercive laws,” a senior Australian source told Reuters.

A spokesman for Turnbull declined to comment.

Turnbull and his advisers met U.S. officials, including Kirstjen Nielsen, then U.S. secretary of homeland security, and Michael Rogers, then head of the U.S. National Security Agency, the U.S. signals-intelligence operation. The Australians said they believed Beijing could compel Huawei to do its bidding and that this posed a threat should tensions with China rise in the future, said two of the Australian officials familiar with the meeting.

The U.S. officials were receptive to the Australian message, but imposing restrictions on the world’s largest maker of mobile network gear didn’t appear to be a high priority, according to the two Australian officials. “They didn’t share our concern with the same urgency,” said one.

Rogers declined to comment. A Department of Homeland Security official did not elaborate on the meeting, but said the agency works closely with Australia on security issues and that “China will continue to use cyber espionage and bolster cyber-attack capabilities to support its national security priorities.”

5G technology is expected to deliver a huge leap in the speed and capacity of communications. Downloading data may be up to 100 times faster than on current networks.

But 5G isn’t only about faster data. The upgrade will see an exponential spike in the number of connections between the billions of devices, from smart fridges to driverless cars, that are expected to run on the 5G network. “It’s not just that there will be more people with multiple devices, but it will be machines talking to machines, devices talking to devices – all enabled by 5G,” said Burgess, the Australian Signals Directorate chief, in his March address.

This configuration of 5G networks means there are many more points of entry for a hostile power or group to conduct cyber warfare against the critical infrastructure of a target nation or community. That threat is magnified if an adversary has supplied equipment in the network, U.S. officials say.

Huawei said in its statement that the company does “not control in any way the networks in which our equipment is deployed by our clients. The US and Australian allegations are fanciful and are not rooted in any evidence at all.”

In July 2018, Britain delivered a blow to Huawei. A government-led panel that includes senior intelligence officials said it was no longer fully confident it could manage national security risks posed by the Chinese telecom equipment giant.

That panel oversees the work of a laboratory that was set up by the British government in 2010 and is funded by Huawei to vet the company’s equipment used in the UK. The facility was established because even then Huawei was perceived as a security risk. The oversight panel said serious problems it had identified with Huawei’s engineering processes “exposed new risks in the UK telecommunication networks and long-term challenges in mitigation and management.”

That report was a “bombshell,” shaping how the Americans viewed the Huawei 5G risk, said one U.S. official.

U.S. officials also point to Chinese laws enacted in recent years that they say could compel individuals and companies to assist the Chinese government in conducting espionage.

China’s foreign ministry called this portrayal by U.S. officials of Chinese legislation “a misreading and a wanton smearing of relevant Chinese laws,” adding: “Trying to smear others to wash oneself clean is futile.”

THE WEST AWAKES

Through the middle of last year, the Australians continued to apprise other countries of their worries about 5G. “We were sharing our concerns about security with many allies, not just the U.S. and not just the traditional partners,” said one of the senior Australian officials. “We shared our thoughts with Japan, Germany, other European countries and South Korea.”

In Washington, the administration began imposing restrictions on Huawei. In August, Trump signed a bill banning federal agencies and their contractors from using equipment from Huawei and ZTE Corp, another Chinese telecom equipment maker. Huawei has since filed a lawsuit in federal court in Texas challenging the ban.

In late August, the Australians went further: They banned companies that didn’t meet their security requirements, which included Huawei, from supplying any equipment for the country’s 5G network, whether run by the government or by private firms.

Australia’s decision, China’s Foreign Ministry said in a statement, “has no basis in fact, and is an abuse of ‘national security’ standards. China urges the Australian side to abandon Cold War thinking and ideological prejudices, and provide a fair, transparent, non-discriminatory environment for Chinese companies.”

In November, New Zealand’s intelligence agency blocked the country’s first request by a telecom service provider to use Huawei kit for a 5G network, citing national security concerns.

Like the Australians and Americans, British security officials had concerns over China’s potential use of Huawei as a channel for conducting espionage. But the options are limited. Huawei is one of only three major global companies that analysts say can supply a broad range of advanced mobile network equipment at scale. The other two are Ericsson and Nokia. And Huawei has a reputation among telecom operators for supplying cost-effective equipment promptly.

Nevertheless, British security officials were becoming increasingly frustrated with what they viewed as Huawei’s failure to fix software flaws in its equipment, particularly discrepancies in the source code; the programs’ underlying set of instructions. This problem means the laboratory near Oxford set up to vet Huawei equipment cannot even be sure that the code it is testing is exactly the same as the code Huawei deploys in its real-world equipment. This makes it difficult to provide safety assurances about the company’s gear.

British officials say the array of flaws could be exploited by China, as well as other malevolent actors. Ian Levy, a British security official who oversees the UK’s review of Huawei equipment, told Reuters the company’s software engineering is like something from 20 years ago. “The chance of a vulnerability with a Huawei piece of kit is much higher than other vendors,” he said.

The company said it has pledged to spend at least $2 billion “over the next five years” to improve its software engineering capabilities.

British ministers have agreed to allow Huawei a restricted role in building parts of its 5G network, but the government has yet to announce its final decision. The European Union has left it to individual governments to decide whether to ban any company on national security grounds. Some European security officials say banning one supplier doesn’t address the broader issue of the risks posed by Chinese technology in general.

HUAWEI FIGHTS BACK

As the tensions between the West and Huawei intensified through last year, they suddenly took a personal turn. U.S. law enforcement officials had for some time been investigating links between Huawei and Iran, including the involvement of Meng Wanzhou, Huawei’s chief financial officer, who is the daughter of the company’s founder. The probe followed Reuters stories in 2012 and 2013 that revealed links between Huawei, Meng and another company that allegedly attempted to violate U.S. sanctions on Iran.

When U.S. officials became aware that Meng would be traveling through Vancouver in December, they pounced, asking Canada to detain her on allegations of bank and wire fraud. Meng remains free on bail in Canada while the U.S. government tries to have her extradited. Huawei said in its statement that Meng “is not guilty of the charges she faces,” and that they are “politically motivated.”

The Huawei conflict isn’t only about U.S.-China superpower rivalry: The activities of Meng and Huawei were under scrutiny by U.S. authorities long before Trump began a trade war with China, according to interviews with people familiar with those probes. But there is no doubt the wider showdown with Huawei has now become intensely geopolitical.

In recent months, the U.S. has ramped up diplomatic efforts to urge allies to sideline Huawei. 5G is a “game-changing technology with implications across all aspects of society from business, government, military and beyond,” Gordon Sondland, U.S. ambassador to the European Union, told Reuters in February. “It seems common sense to me to not hand over the keys to your entire society to an actor that has … demonstrated malign conduct.”

Asked whether there is evidence of Huawei equipment having been used for espionage, Sondland said “there is classified evidence.” He declined to expand on the nature of the material beyond saying there was no doubt that Huawei had “the capability to hack a system” and “the mandate by the government to do so upon request.”

Pompeo has publicly gone further than most U.S. officials by directly linking the company to Beijing. “Huawei is owned by the state of China and has deep connections to their intelligence service,” he said in March. “That should send off flares for everybody who understands what the Chinese military and Chinese intelligence services do.”

Huawei has repeatedly denied it is controlled by the government, military or Chinese intelligence services. “U.S. Secretary of State Pompeo is wrong,” the company said in its statement, adding that it is owned by its employees.

While Huawei was initially muted in its public response, it too has become more combative. In late February, the company confronted the United States at a major annual gathering of mobile industry executives in Barcelona, where Huawei’s red logo was ubiquitous. Top American officials arrived intent on warning government and industry representatives off Huawei. But the company had flown in a team of senior executives to offer customers and representatives of European governments reassurance in the face of the U.S. accusations.

In a keynote speech, Guo Ping, a deputy chairman at Huawei, took aim at America’s own spying operations. “Prism, Prism on the wall. Who’s the most trustworthy of them all?” he said. Guo was referring to a mass U.S. foreign-surveillance operation called Prism that was disclosed by former NSA contractor Snowden. The barb drew laughter from the audience.

Europeans pushed back, too. During one closed-door session, senior representatives from European telecom operators pressed a U.S. official for hard evidence that Huawei presented a security risk. One executive demanded to see a smoking gun, recalled the U.S. official.

The American official fired back: “If the gun is smoking, you’ve already been shot. I don’t know why you’re lining up in front of a loaded weapon.”

(Reporting by Cassell Bryan-Low, Colin Packham, David Lague, Steve Stecklow and Jack Stubbs. Additional reporting by Charlotte Greenfield in Wellington; Yoshifumi Takemoto in Tokyo; Jonathan Weber; Sijia Jiang; Ben Blanchard and Gao Liangping in Beijing. Edited by Peter Hirschberg and Richard Woods.)

Dutch security agency warns against Chinese, Russian technology

FILE PHOTO: EU leaders including Belgian Prime Minister Charles Michel (C), Netherlands Prime Minister Mark Rutte (R), Luxembourg Prime Minister Xavier Bettel (L) and Italian Prime Minister Paolo Gentiloni (rear left) gather around a computer screen at the European Union leaders summit in Malta, February 3, 2017. REUTERS/Darrin Zammit-Lupi/File Photo

AMSTERDAM (Reuters) – The Dutch security service advised the government on Tuesday not to use technology from countries with active cyber-hacking campaigns against the Netherlands, such as China and Russia.

The recommendation came as the Dutch government is weighing options for a new 5G telecommunications network in the coming years and seeks to replace its domestic emergency services network, known as C2000.

The AIVD security agency flagged Chinese and Russian attempts at digital espionage as a major security risk.

“It is undesirable for the Netherlands to exchange sensitive information or for vital processes to depend on the hardware or software of companies from countries running active cyber programs against Dutch interests,” the AIVD said in its annual report.

Prime Minister Mark Rutte has refused to rule out doing business with Chinese technology companies, even as key allies the United States and Australia restricted Huawei Technologies from accessing its next-generation mobile networks on national-security grounds.

Washington has said that Huawei is at the beck and call of the Chinese state, warning that its network equipment may contain “back doors” that could open them up to cyber espionage. Huawei says such concerns are unfounded.

(Reporting by Anthony Deutsch; Editing by Robin Pomeroy)

Trump border wall prototypes torn down to make way for new barrier

FILE PHOTO: The prototypes for U.S. President Donald Trump's border wall are seen behind the border fence between Mexico and the United States, in Tijuana, Mexico January 7, 2019. REUTERS/Jorge Duenes/File Photo

(Reuters) – The prototypes for President Donald Trump’s contest for a border wall near San Diego, California, were torn down on Wednesday, to make way for a new section of actual border fencing.

To the president’s supporters, the eight 30-foot-high (9-meter) models were a symbol of his commitment to build a wall along the length of the U.S. Mexico border to enhance national security. To opponents, they were a waste of taxpayer money and an affront to Mexico and immigrants.

“Since the test and evaluation of these prototype models is complete, they have served their purpose and are now being removed,” U.S. Customs and Border Protection (CBP) spokesman Ralph DeSio said in a statement.

Using jackhammers, ladders and blow torches, military special forces and CBP special units spent weeks trying to go under, over and through the walls to test their strengths and weaknesses.

The tests of the eight prototypes, which Supervisory Border Patrol Agent Michael Scappechio of the San Diego sector said cost between $300,000 and $500,000 each to build, showed the effectiveness of the kind of steel post, or “bollard,” fence that already exists along large sections of the border.

Now, a new 30-foot-high bollard fence is being built as a secondary barrier along a 14-mile (22.5 km) section, behind an existing, 18-feet-high bollard fence, Scappechio said.

The ability of agents to see through a barrier is crucial to their safety, and a fence made out of steel posts or “bollards” is easier to repair when breached and relatively cost-effective, he said, while the 30-foot height is a deterrent to climbers.

The fence will also incorporate fiber optic sensor, Scappechio said.

(Reporting by Andrew Hay in New Mexico; editing by Bill Tarrant and Leslie Adler)

‘Sometimes you have to walk’: Trump scraps North Korea summit deal

U.S. President Donald Trump holds a news conference after his summit with North Korean leader Kim Jong Un at the JW Marriott hotel in Hanoi, Vietnam, February 28, 2019. REUTERS/Leah Millis

By Jeff Mason and Josh Smith

HANOI (Reuters) – U.S. President Donald Trump said he had walked away from a nuclear deal at his summit with Kim Jong Un in Vietnam on Thursday because of unacceptable demands from the North Korean leader to lift punishing U.S.-led sanctions.

Trump said two days of talks in the Vietnamese capital Hanoi had made good progress in building relations and on the key issue of denuclearization, but it was important not to rush into a bad deal.

“It was all about the sanctions,” Trump said at a news conference after the talks were cut short. “Basically, they wanted the sanctions lifted in their entirety, and we couldn’t do that.”

The United Nations and the United States ratcheted up sanctions on North Korea when the reclusive state undertook a series of nuclear and ballistic missile tests in 2017, cutting off its main sources hard cash.

Trump and Kim cut short their talks, skipping a planned working lunch at the French-colonial-era Metropole hotel after a morning of meetings.

“Sometimes you have to walk, and this was just one of those times,” Trump said, adding “it was a friendly walk”.

He later left Vietnam to return to Washington.

Failure to reach an agreement marks a setback for Trump, a self-styled dealmaker under pressure at home over his ties to Russia and testimony from Michael Cohen, his former personal lawyer who accused him of breaking the law while in office.

Trump said Cohen “lied a lot” during Congressional testimony in Washington on Wednesday, though he had told the truth when he said there had been “no collusion” with Russia.

The collapse of the talks raised questions about the Trump administration’s preparations and about what some critics see as his cavalier style of personal diplomacy.

Since their first summit in Singapore in June, Trump has stressed his good chemistry with Kim, but there have been doubts about whether the bonhomie could move them beyond summit pageantry to substantive progress on eliminating a North Korean nuclear arsenal that threatens the United States.

Things had appeared more promising when the leaders met on Wednesday, predicting successful talks before a social dinner with top aides.

The White House had been confident enough to schedule a “joint agreement signing ceremony” at the conclusion of talks. Like the lunch, the ceremony did not take the place.

North Korea's leader Kim Jong Un and U.S. President Donald Trump speak during the second U.S.-North Korea summit in Hanoi, Vietnam, in this photo released on February 28, 2019 by North Korea's Korean Central News Agency (KCNA). KCNA via REUTERS

North Korea’s leader Kim Jong Un and U.S. President Donald Trump speak during the second U.S.-North Korea summit in Hanoi, Vietnam, in this photo released on February 28, 2019 by North Korea’s Korean Central News Agency (KCNA). KCNA via REUTERS

MARKETS HIT

“No deal is a surprise, especially as they were both all smiley last evening,” said Lim Soo-ho, senior research fellow at the Institute for National Security Strategy.

“But no-deal today doesn’t mean there won’t be one in coming months. It means stakes were way too high for the two leaders to give another wishy-washy statement like they did in Singapore.”

The Singapore summit, the first between a sitting U.S. president and a North Korean leader, produced a vague statement in which Kim pledged to work toward denuclearization of the Korean peninsula.

But little progress followed.

News of the summit failure sent South Korea’s currency lower and knocked regional stock markets. South Korea’s Kospi index closed 1.8 percent lower, marking the biggest one-day percentage loss since Oct 2018.

North Korea’s old rival South Korea, which backs efforts to end confrontation on the peninsula, said it regretted that no deal had been reached but the two sides had made progress.

Senior Chinese diplomat Wang Yi said difficulties in the talks were unavoidable but the two sides should press on and China would play a constructive role.

Japanese Prime Minister Shinzo Abe said he backed Trump’s decision and wanted a meeting with Kim.

There was no indication of when Trump and Kim, or their negotiators, might meet again.

Kicking off their second day in Hanoi, Trump said he would be happy as long as North Korea conducted no more nuclear or intercontinental ballistic missile tests.

North Korea has conducted no tests since late 2017, and Trump said Kim had promised him there would be no resumption.

Trump said he and Kim had discussed dismantling North Korea’s main nuclear facility at Yongbyon, which Kim was willing to do, but Kim had wanted sanctions relief first.

There were other facilities that Trump said he wanted included in a deal – and the North Koreans had been surprised the Americans knew about them – but they had baulked.

“We asked him to do more and he was unprepared to do that, but I’m still optimistic,” U.S. Secretary of State Mike Pompeo told the news conference, referring to Kim.

Trump said the United States would be able to inspect some North Korean facilities but he did not go into specifics.

TESTING TRUMP?

Daniel Russel, a former top State Department diplomat for East Asia, said Kim might have thought he could drive a hard bargain, given Trump’s troubles at home.

“Kim Jong Un is not testing ballistic missiles and nuclear bombs at the moment, but he is testing Donald Trump. Kim may have wanted to see if Trump’s domestic legal and political woes made him desperate enough to take any deal he could get,” he said.

Trump had indicated a more flexible stance in the run-up to the Hanoi summit prompting some critics to warn that he risked squandering leverage over North Korea if he gave away too much.

U.S. intelligence officials have said there is no sign North Korea would eve give up its entire arsenal of nuclear weapons, which Kim’s ruling family sees as vital to its survival.

Earlier Kim and Trump, sitting across from each other at a conference table, appeared confident of progress, and Kim had suggested he was ready to give up his nuclear bombs.

“If I’m not willing to do that, I won’t be here right now,” Kim told reporters through an interpreter when asked if he was ready to give up his nuclear weapons.

Reporting by Soyoung Kim and Jeff Mason in HANOI; Additional reporting by Soyoung Kim, Joyce Lee, Jeongmin Kim, Hyonhee Shin, Jack Kim, James Pearson, Mai Nyugen, Ju-min Park, Khanh Vu in HANOI, Ben Blanchard in BEIJING, David Brunnstrom and Matt Spetalnick in WASHINGTON; Editing by Robert Birsel and Lincoln Feast)

Downgrading U.S.-Saudi ties would be ‘grave mistake’: Pompeo

U.S. Secretary of State Mike Pompeo pauses during a news conference at the State Department in Washington, U.S., November 20, 2018. REUTERS/Yuri Gripas

By Doina Chiacu and Patricia Zengerle

WASHINGTON (Reuters) – Secretary of State Mike Pompeo said on Wednesday that downgrading U.S. ties with Saudi Arabia over the killing of journalist Jamal Khashoggi would be a mistake for national security and would not push Saudis in a better direction at home.

After repeated calls from members of Congress for a strong U.S. response, Pompeo and Defense Secretary Jim Mattis were briefing the U.S. Senate behind closed doors about Saudi Arabia and the Oct. 2 murder of Khashoggi at the Saudi consulate in Istanbul, as well as the civil war in Yemen.

In a blog post, Pompeo said: “The October murder of Saudi national Jamal Khashoggi in Turkey has heightened the Capitol Hill caterwauling and media pile-on. But degrading U.S.-Saudi ties would be a grave mistake for the national security of the U.S. and its allies,” Pompeo wrote.

In his remarks for the briefing, which were released as it got underway, Mattis said that pulling back U.S. military support in Yemen and stopping weapons sales to important partners would be misguided.

“Our security interests cannot be dismissed, even as we seek accountability for what President (Donald) Trump described as the “unacceptable and horrible crime” of Jamal Khashoggi’s murder, a crime which “our country does not condone,” Mattis said in his prepared remarks.

Pompeo made the case that the Saudis are too important an ally to lose, citing the country’s help to contain Iran in the region, secure democracy in Iraq and fight the Islamic State and other militant groups.

“The kingdom is a powerful force for stability in the Middle East,” he wrote. “Saudi Arabia, like the U.S. – and unlike these critics – recognizes the immense threat the Islamic Republic of Iran poses to the world.”

Pompeo also said the United States would provide an additional $131 million for food aid in Yemen.

The nearly four-year-long war in Yemen, which has killed more than 10,000 people and triggered the world’s most urgent humanitarian crisis, is seen as a proxy war between Saudia Arabia and Iran.

(Reporting by Doina Chiacu; Editing by Chizu Nomiyama and Bill Berkrot)

Trump likely to give U.S. troops authority to protect immigration agents

A migrant, part of a caravan of thousands traveling from Central America en route to the United States, poses for a photo after climbing up the border fence between Mexico and United States while moving to a new shelter in Mexicali, Mexico November 19, 2018. REUTERS/Kim Kyung-Hoon

By Idrees Ali and Lizbeth Diaz

WASHINGTON/TIJUANA, Mexico (Reuters) – President Donald Trump is likely to give U.S. troops authority to protect immigration agents stationed along the U.S. border with Mexico if they come under threat from migrants seeking to cross into the United States, a U.S. official said on Monday.

Ahead of U.S. congressional elections earlier this month, Trump denounced the approach of a caravan of migrants as an “invasion” that threatened American national security, and he sent thousands of U.S. troops to the border to help secure it.

Currently, the troops do not have authority to protect U.S. Customs and Border Patrol personnel. The new authority could be announced on Tuesday, the official said, speaking on condition of anonymity.

U.S. officials briefly closed the busiest border crossing from Mexico early on Monday to add concrete barricades and razor wire amid concerns some of the thousands of Central American migrants at the border could try to rush the crossing.

Northbound lanes at the San Ysidro crossing from Tijuana to San Diego, California, were temporarily closed “to position additional port hardening materials,” a U.S. CBP spokesperson said.

A Department of Homeland Security official, who requested anonymity, told reporters on a conference call that U.S. officials had heard reports some migrants were intending to run through border crossings into California.

Migrants, part of a caravan of thousands traveling from Central America en route to the United States, move to a new shelter in Mexicali, Mexico November 19, 2018. REUTERS/Kim Kyung-Hoon

Migrants, part of a caravan of thousands traveling from Central America en route to the United States, move to a new shelter in Mexicali, Mexico November 19, 2018. REUTERS/Kim Kyung-Hoon

The closing was rare for the station, which is one of the busiest border crossings in the world with tens of thousands of Mexicans heading every day into the United States to work or study.

“Today was a lost day of work. I already called my boss to tell her that everything was closed and I did not know what time I would be able to get in,” said Maria Gomez, a Mexican woman who crosses the border every day for work. “I cannot believe this is happening.”

Trump had remained mostly silent about the caravan since the Nov. 6 vote, but on Monday he posted a photo on Twitter showing a fence that runs from the beach in Tijuana into the ocean now covered with razor wire.

Critics charged that his talk of a migrant “invasion” was an effort to rouse his political base ahead of the elections.

Officials have stressed that the 5,900 active-duty U.S. troops on the border are not there in a law enforcement capacity and that there are no plans for them to interact with migrants.

Instead, their mission is to lend support to the CBP, and they have been stringing up concertina wire and erecting temporary housing.

The commander of the mission told Reuters last week that the number of troops may have peaked, and he would soon look at whether to begin sending forces home or shifting some to new border positions.

About 6,000 Central Americans have reached the border cities of Tijuana and Mexicali, according to local officials. More bands of migrants are making their way toward Tijuana, with around 10,000 expected.

Hundreds of local residents on Sunday massed at a monument in a wealthy neighborhood of Tijuana to protest the arrival of the migrants, with some carrying signs that said “Mexico first” and “No more migrants.”

Last month, thousands of Central American migrants began a long journey from Honduras through Mexico toward the United States to seek asylum.

Other bands of mostly Salvadorans followed, with a small group setting off on Sunday from San Salvador.

(Additional reporting by Yeganeh Torbati in Washington; Editing by Dan Grebler and Cynthia Osterman)

Massive U.S. defense policy bill passes without strict China measures

U.S. Army soldiers carry a large U.S. flag as they march in the Veterans Day parade on 5th Avenue in New York November 11, 2014. REUTERS/Mike Segar

By Patricia Zengerle

WASHINGTON (Reuters) – The U.S. Senate passed a $716 billion defense policy bill on Wednesday, backing President Donald Trump’s call for a bigger, stronger military and sidestepping a potential battle with the White House over technology from major Chinese firms.

The Senate voted 87-10 for the John S. McCain National Defense Authorization Act or NDAA. The annual act authorizes U.S. military spending but is used as a vehicle for a broad range of policy matters as it has passed annually for more than 50 years.

Since it cleared the House of Representatives last week, the bill now goes to Trump, who is expected to sign it into law.

While the measure puts controls on U.S. government contracts with China’s ZTE Corp and Huawei Technologies Co Ltd because of national security concerns, the restrictions are weaker than in earlier versions of the bill.

This angered some lawmakers, who wanted to reinstate tough sanctions on ZTE to punish the company for illegally shipping products to Iran and North Korea.

In another action largely targeting China, the NDAA strengthens the Committee on Foreign Investment in the United States (CFIUS), which reviews proposed foreign investments to weigh whether they threaten national security.

Lawmakers from both parties have been at odds with the Republican Trump over his decision to lift his earlier ban on U.S. companies selling to ZTE, allowing China’s second-largest telecommunications equipment maker to resume business.

But with his fellow Republicans controlling both the Senate and House, provisions of the NDAA intended to strike back at Beijing and opposed by the White House were softened before Congress’ final votes on the bill.

Separately, the NDAA authorizes spending $7.6 billion for 77 F-35 Joint Strike Fighter jets, made by Lockheed Martin Corp.

And it would prohibit delivery of the advanced aircraft to fellow NATO member Turkey at least until after the production of report, another measure that was stricter in earlier versions of the bill.

U.S. officials have warned Ankara that a Russian missile defense system Turkey plans to buy cannot be integrated into the NATO air and missile defense system. They are also unhappy about Turkey’s detention of an American pastor.

The fiscal 2019 NDAA was named to honor McCain, the Armed Services Committee chairman, war hero, long-time senator and former Republican presidential nominee, who has been undergoing treatment for brain cancer.

(Reporting by Patricia Zengerle, additional reporting by Roberta Rampton; Editing by James Dalgleish and David Gregorio)

Cyberwarfare, populism top ‘black swan’ events at Milken conference

Thomas Barrack, Executive Chairman, Colony Northstar, speaks at the Milken Institute's 21st Global Conference in Beverly Hills, California, U.S. May 1, 2018. REUTERS/Lucy Nicholson

By Anna Irrera

BEVERLY HILLS, Calif. (Reuters) -Cyberwarfare and populism are some of the top risks that could threaten global stability and financial markets in the years ahead, investors and policymakers warned at the annual Milken Institute Global Conference this week, as they characterized them as black swan events.

Thomas Barrack, founder and executive chairman of Colony Northstar, said cybersecurity was his greatest concern because “if the system itself is hacked or breaks or causes trauma, I am not sure what happens.”

Representative Ed Royce, chairman of the U.S. House of Representatives Foreign Affairs Committee, echoed the sentiment, saying that “Russian weaponization of information” has been one of his main concerns.

“The impact that is having in terms of the effect on the democratic process there (in Eastern Europe) is very concerning,” Royce said. “Indeed, worldwide Russian efforts in this regard need to be effectively countered, and it’s been many years since we’ve done anything effective.”

Royce, who also expressed concerns about the proliferation of nuclear weapons, called for more aggressive action.

“We need on social media and with respects to our sanctions push-back and make them (Russia) feel the price for doing this,” Royce said.

American intelligence agencies have said that Russia interfered in the 2016 U.S. presidential race to try to help Donald Trump win the presidency. Trump has repeatedly denied receiving help from Moscow for his election campaign, and Russian has denied meddling in the election.

While government and business leaders worldwide have become more aware of cybersecurity risks, the threat may still be underappreciated, some speakers said.

“The cyberwarfare in this world is completely unknown, uncontemplated and has to be grasped as we think about where we are going,” Mary Callahan Erdoes, chief executive officer of JPMorgan Asset Management, said on Monday.

Others cited rising populism in the West as one of the biggest risks for the global economy and market stability.

“My black swan is politics, politics in the West which is getting bust,” said Peter Mandelson, a former European trade commissioner and British first secretary of state. “And bust politics has two effects. It generates populist nationalist pressures on government and regulators, draws them more into the economy, onto the backs of businesses and makes decision-making by investors and businesses much more difficult.”

Although speakers did share what might keep them up at night in the coming months, the outlook was generally upbeat at the event, with Citigroup Inc <C.N> CEO Michael Corbat describing the current state of affairs as being “OK.”

Ironically, the mood was so positive that some speakers worried about excessive optimism.

“I am really concerned regarding the overwhelming optimism, which we observed over the past two days,” said Hiro Mizuno, chief investment officer for Japan’s Government Pension Investment Fund. “People say nothing matters to the capital markets, so that is scary.”

Chris Stadler, managing partner at CVC Capital, added: “When you sit here and…you talk about all these things hitting on all cylinders and you don’t know what could change it, you’re coming close to an event.”

(Reporting by Anna Irrera; Additional reporting by Liana Baker; Editing by Jennifer Ablan and Leslie Adler)

Norway’s Christian Democrats meet to decide government’s fate

Norway's Justice Minister Sylvi Listhaug and her political adviser Espen Teigen are seen in the Norwegian parlament after several parties supported a motion of no-confidence against her in Oslo, Norway March 15, 2018. NTB Scanpix/Gorm Kallestad via REUTERS

By Joachim Dagenborg and Terje Solsvik

OSLO (Reuters) – Norway’s Christian Democrats, holding the balance of power in parliament, were meeting on Monday to decide whether to back a no-confidence motion against the justice minister, a step that could bring down the government.

Sylvi Listhaug has rocked Norway’s traditionally consensual politics by accusing the opposition Labour Party – in 2011 the target of the country’s worst peacetime massacre – of putting terrorists’ rights before national security.

Five opposition parties last week said they would vote on Tuesday to oust the minister, leaving her fate in the hands of the small Christian Democratic Party.

“The polarizing rhetoric and behavior must end,” party leader Knut Arild Hareide told delegates in an opening address on Monday, before talks began in earnest behind closed doors.

He said he was seeking their advice on how to proceed. “The conclusion has not been drawn,” he added.

On Sunday, daily Verdens Gang and broadcasters NRK and TV2 quoted sources close to Prime Minister Erna Solberg as saying her cabinet would stand by Listhaug and resign if the no-confidence vote succeeded.

Snap elections are not allowed, and Norway’s next general election is not due until 2021. Solberg might be able to form a new government, but if the Christian Democrats switched sides the task could fall to Labour leader Jonas Gahr Stoere.

Political scientist Johannes Bergh said they were unlikely to do so.

“They do not want a new a government,” said Bergh, a researcher at the Institute of Social Research in Oslo. “They do not want to contribute to a Labour-led government coming to power.”

ISLAND MASSACRE

On July 22, 2011, far-right extremist Anders Behring Breivik killed eight people in downtown Oslo with a car bomb and then shot dead 69 people, many of them teenagers, at a Labour party camp on Utoeya Island.

On March 9, Listhaug posted on Facebook a photograph of masked people clad in military fatigues, black scarves and ammunition with the text: “Labour thinks terrorists’ rights are more important than the nation’s security. Like and Share”.

The comments unleashed a political storm, and Listhaug, a member of the right-wing Progress Party, apologized in parliament on March 13. Most opposition parties said her gesture was not sincere enough.

Many attempts have been made in parliament to oust governments via no-confidence motions, but the last to succeed in bringing down a cabinet was in 1963.

Daily Aftenposten on Monday said Solberg and Christian Democrat leader Hareide had discussed the possibility of defusing the situation by having Listhaug apologize again.

The dispute erupted after Labour and the Christian Democrats helped defeat a bill allowing the state the right, without judicial review, to strip individuals of Norwegian citizenship if they were suspected of terrorism or joining foreign militant groups.

Hareide’s party has backed Conservative leader Solberg for prime minister since 2013, but has declined invitations to join the cabinet, primarily due to its opposition to the Progress Party.

(Additional reporting by Camilla Knudsen and Gwladys Fouche; Editing by Clarence Fernandez and Andrew Roche)

Pakistan summons U.S. ambassador after Trump’s angry tweet

David Hale, U.S. Ambassador to Pakistan, speaks at the Pakistan Stock Exchange in Karachi, Pakistan, July 26, 2016.

By Drazen Jorgic

ISLAMABAD (Reuters) – Pakistan has summoned the U.S. ambassador to protest against U.S. President Donald Trump’s angry tweet about Pakistani “lies and deceit”, which Foreign Minister Khawaja Asif dismissed as a political stunt.

David Hale was summoned by the Pakistan foreign office on Monday to explain Trump’s tweet, media said. The ministry could not be reached for comment but the U.S. Embassy in Islamabad confirmed on Tuesday that a meeting had taken place.

Trump said the United States had had been rewarded with “nothing but lies and deceit” for “foolishly” giving Pakistan more than $33 billion in aid in the last 15 years.

“They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!” he tweeted on Monday.

His words drew praise from Pakistan’s old foe, India, and neighboring Afghanistan, but long-time ally China defended Pakistan.

Pakistan Prime Minister Shahid Khaqan Abbasi on Tuesday chaired a National Security Committee meeting of civilian and military chiefs, focusing on Trump’s tweet. The meeting, which lasted nearly three hours, was brought forward by a day and followed an earlier meeting of army generals.

Relations with Washington have been strained for years over Islamabad’s alleged support for Haqqani network militants, who are allied with the Afghan Taliban.

The United States also alleges that senior Afghan Taliban commanders live on Pakistani soil, and has signaled that it will cut aid and take other steps if Islamabad does not stop helping or turning a blind eye to Haqqani militants crossing the border to carry out attacks in Afghanistan.

In 2016, Taliban leader Mullah Mansour was killed by a U.S. drone strike inside Pakistan and in 2011, al Qaeda leader Osama bin Laden was found and killed by U.S. troops in the garrison town of Abbottabad.

Islamabad bristles at the suggestion that it is not doing enough to fight Islamist militants, noting that its casualties at the hands of Islamists since 2001 number in the tens of thousands.

“DEAD-END STREET”

Foreign Minister Asif dismissed Trump’s comments as a political stunt born out of frustration over U.S. failures in Afghanistan, where Afghan Taliban militants have been gaining territory and carrying out major attacks.

“He has tweeted against us and Iran for his domestic consumption,” Asif told Geo TV on Monday.

“He is again and again displacing his frustrations on Pakistan over failures in Afghanistan as they are trapped in dead-end street in Afghanistan.”

Asif added that Pakistan did not need U.S. aid.

A U.S. National Security Council official on Monday said the White House did not plan to send an already-delayed $255 million in aid to Pakistan “at this time” and that “the administration continues to review Pakistan’s level of cooperation”.

Afghan defense spokesman General Dawlat Waziri said Trump had “declared the reality”, adding that “Pakistan has never helped or participated in tackling terrorism”.

Jitendra Singh, a junior minister at the Indian prime minister’s office, said Trump’s comment had “vindicated India’s stand as far as terror is concerned and as far as Pakistan’s role in perpetrating terrorism is concerned”.

But Chinese Foreign Ministry spokesman Geng Shuang, asked during a briefing about Trump’s tweet, did not mention the United States.

“We have said many times that Pakistan has put forth great effort and made great sacrifices in combating terrorism,” he said. “It has made a prominent contribution to global anti-terror efforts.”

Pakistani officials say tough U.S. measures threaten to push Pakistan further into the arms of China, which has pledged to invest $57 billion in Pakistani infrastructure as part of its vast Belt and Road initiative.

(Reporting by Drazen Jorgic in ISLAMABAD, Syed Raza Hassan in KARACHI, Malini Menon in NEW DELHI, Mirwais Harooni in KABUL; Writing by Drazen Jorgic; Editing by Kevin Liffey)