Chinese firm ‘owns’ telephone system in Iraq

Huawei denies links to PLA

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A Chinese telecommunications company suspected of links to China’s military has won hundreds of contracts in Iraq since the 2003 U.S.-led invasion, some paid in part with U.S. tax dollars, and now effectively owns the country’s phone system.

Huawei Technologies has won more than 600 telecommunications infrastructure contracts since Iraqi reconstruction began in 2004, said Robert C. Fonow, the State Department’s senior adviser to Iraq’s Telecommunications Ministry from 2006 to 2008.

“No other company comes close to” that number, said Mr. Fonow, now a consultant and managing director of the business-turnaround firm RGI Ltd.

He said that Huawei “controls the market for the national fiber-optic grid, and much of the mobile-phone and wireless fixed-line equipment markets in Iraq, which is just about everything.”

“In a real sense, Huawei owns Iraq telecommunications,” he said.

Huawei has long generated concern among U.S. officials, who have blocked its efforts to buy American high-tech firms or supply U.S. companies with phone systems, because they suspect the company of links to China’s People’s Liberation Army via its founder, a retired PLA officer.

Late last week, Huawei agreed to cut its ties to a small high-tech firm in California after a U.S. government panel deemed the business relationship a national security risk.

Huawei officials say there are no links between the company and China’s armed forces.

The reconstruction of Iraq’s telecommunications sector was “for the most part, funded by private companies, institutions and wealthy Middle Eastern investors,” said Mr. Fonow, a former research fellow at the U.S. National Defense University.

Some U.S. funds were put in immediately after 2003, he said, estimating the U.S. contribution to be about 5 percent of the total.

“Today, the telecom sector is one of the few verifiable reconstruction success stories in the sense that it’s self-sustaining,” Mr. Fonow said.

He added that Iraq’s telecommunications network, built in part by Huawei, had helped U.S. forces, especially during the surge, and had “saved American lives.”

In part, observers attribute Huawei’s success in Iraq to its long history there, including reputed U.N. sanctions-busting during the regime of since-deposed Iraqi leader Saddam Hussein.

According to a 2004 report by the U.S. Iraq Survey Group, “Huawei, along with two other Chinese companies, participated in extensive work in and around Baghdad that included the provision and installation of telecommunication switches, more than 100,000 lines, and the installation of fiber-optic cable,” after the U.N. had sanctioned Saddam’s regime in 2000.

As a result, Huawei employees “are considered friends” by Iraqis today and can go places in Iraq where “American engineers attempting to operate … would be killed,” Mr. Fonow said.

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