While some countries have already made up their minds about allowing Huawei to participate in the construction of their national 5G networks, Germany is among those who remain undecided on the issue. Although the SPD party, a junior government coalition member, has stood for banning the Chinese tech giant from the country's 5G, the CDU/CSU alliance, which has a parliamentary plurality, remains divided on the matter.
Natascha Gewaltig, the director of European economics at Action Economics, believes that the CDU and Chancellor Angela Merkel's hesitation to give a final answer on the matter is closely tied to Germany finding itself caught between a rock and a hard place – or the US and China, to be specific.
"The EU is facing difficult trade talks with the US this year and automakers in particular are weary of the threat of tariffs. With the US urging its partners to follow their lead on Huawei an open endorsement could undermine already difficult relations with the US ahead of trade talks", Gewaltig said.
The economist noted that on the other hand, Merkel can't disregard Beijing's interests, since the Asian country recently became a lucrative market for the same German carmakers, and hence Berlin could run the risk of hurting its ties with the country by outright banning Huawei. Otherwise, German exports to China, which remain weak, may face major trouble, Gewaltig added.
She believes that in a situation like that, Merkel might try to find a middle-ground between the two.
"Against that background Chancellor Merkel is trying to do what she is best at – trying to navigate in the best of Germany’s interests without aggravating either side too much", the economist said.
Gewaltig further stressed that Merkel usually takes a tough stance on "technical certification and scrutiny of telecoms equipment suppliers", but avoids excluding vendors or entire countries during such scrutiny.
The economist concluded that Merkel will also have to "quieten the discussions within the cabinet" and unite the government on the Huawei issue, especially in the light of opinions circulating that it's her last term. If she fails to do so, it will "be a further sign that her power is waning", Gewaltig added.
According to a recent Reuters report, Merkel is planning to gather her CDU and CSU alliance together to discuss Huawei's access to the construction of the country’s 5G networks, as well as the US pressure and threats to cut intelligence sharing programmes with American allies who use the Chinese telecommunication giant's equipment. At the same time, in a recent interview with The Financial Times, Merkel opposed the US approach towards China as an adversary, noting that the country can't be considered as such just "because it is economically successful".