Espionage fears
Huawei was started by Ren Zhengfei, a former member of the People's Liberation Army, in 1987.
As the firm has grown to become one of the largest global players in the sector, fears about its ties with the Chinese military have frequently surfaced.
There have been concerns and allegations that it was helping China gather information on foreign states and companies, charges that the firm has denied.
Last year, its purchase of American computer company 3Leaf systems, was rejected by a US security panel.
Earlier this year, it along with ZTE, faced allegations that some of their equipment had been installed with codes to relay sensitive information back to China.
Senior executives from the two companies denied those allegations when they appeared before US lawmakers in September.
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In sintesi:
Ci sono delle voci che affermano che il colosso Cinese Huawei che sta inaugurando in questi giorni in Italia affari di dimensione enorme sia in realta un'organismo militare e attenti alla sicurezza dell'occidente.
"Si sieda prego, questo colloquio di lavoro avverrà per teleconferenza con due persone in altri paesi. Il video è spento sento delle voci. La ragazza parla in cinese. Poi sento ( a malapena) qualcuno dire qualcosa in Inglese.
Nessuna presentazione dei miei interlocutori, nessuna presentazione della azienda che mi vuole assumere. Mi dicono di presentarmi, cosa che faccio, dopo un po mi fermo per sapere cosa ne pensano.
Mi dicono che vogliono che parlo dei progetti a cui ho lavorato. Lo faccio. Mi dicono di fornire dettagli, di parlare del progetto Telecom Italia cosa che faccio. Mi dicono che non sono interessati a questo vogliono sapere i dettagli. Quali? mi dicono i dettagli sui sistemi di sicurezza informatica. Dico che non posso rispondere a questa domanda, cerco di riprendere il filo di questo colloquio di lavoro che mi ero augurato positivo. Mi interrompono Vogliono i dettagli di "Telefonica"Non rispondo. Mi dicono che non sono la persona giusta mi chiameranno per altri lavori.
Esco, stordito.
Poi ci penso bene e comincio a capire qualcosa. Poi guardo su internet e vedo. E sono qui a scrivere.
Certo puo essere la mia solita mania di vedere sempre cose strane chissa.
Potete seguire la discussione qui : NoMoreLies
Security Fear Kills Huawei Bid in U.S. - WSJ.com
The Defense Department wouldn't discuss Huawei or ZTE, but in a statement said, "DoD is very concerned about China's emerging cyber capabilities and any potential vulnerability within or threat to DoD networks."CHINA’S EXPANSION INTO AND U.S.WITHDRAWAL FROM ARGENTINA’S TELECOMMUNICATIONS AND SPACE INDUSTRIES AND THE I MPLICATIONS FOR U.S. NATIONAL SECURITY by Janie Hulse – Una REAL Historia de espionaje con ramificacion politica argenti na | TechnologyNews
CHINA’S EXPANSION INTO AND U.S.WITHDRAWAL FROM ARGENTINA’S TELECOMMUNICATIONS AND SPACE INDUSTRIES AND THE I MPLICATIONS FOR U.S. NATIONAL SECURITY by Janie Hulse – Una REAL Historia de espionaje con ramificacion politica argenti na December 10, 2011 | Filed underLatest | Posted by admin inShare [themselves for success in strategic industries of developing economies. Over the next 10 years, the International Monetary Fund (IMF) predicts the pace of growth from emerging economies to be double that of developed nations. Chinese companies doing business outside of China are mostly state-owned enterprises (SOEs) that are provided government incentives to penetrate strategic industries in the developing world. Unlike purely profit seeking U.S. companies, Chinese SOEs, cushioned by generous lines of credit, are not averse to entering into uneconomical deals. They tend to be driven less by market and profit considerations and more by their government’s strategy to establish strategic footholds and lock up resources.2 The growing importance of developing economies is especially evident in today’s telecommunications industry. Mobile phone markets are saturated in developed countries but growing strongly in developing nations. The British arm of Gartner Group, an international telecommunications research firm, recommended that mobile-handset manufacturers worldwide should be looking to emerging markets for the bulk of their sales in the near future. While there is concern that this will not translate directly into high profits, Gartner reported that mobile phone sales worldwide will reach 1 billion units by 2009.3 Chinese companies are strategically focusing their foreign investments in these growing markets. Relative to other developing markets in Latin America, Argentina has a robust telecommunications sector. It is second only to Chile in the region for cellular phone penetration and ranks in third place for fixed line penetration after Puerto Rico and Uruguay.4 Argentina has a population of about 38 million, with more than 32 million cellular phones and nearly 9 million fixed telephone lines in service.5 Internet is the fastest growing telecommunications technology in the country.6 Data from 2006 reveal more than 13 million internet users in Argentina, which represents 34 percent of the population.7 Argentina has the third largest population of internet users in Latin America and is one of the four main broadband leaders in the region along with Brazil, Chile, and Mexico. Projections from December 2005 estimate a 100 percent annual growth of broadband access.8 With increasing internet access, Argentina is quickly becoming more reliant upon Internet Protocol (IP) communications. Considered an early adaptor of new technologies, the Argentine communications market will continue to experience significant IP expansion as more businesses harness the potential of IP networks. Even though it is still a nascent technology in the country, a recent survey by Prince and Cooke of the top 130 companies showed that the adoption of IP telephony had already reached 20 percent by mid-2005, from a mere 5 percent penetration in 2004. Argentina is the leader in the adoption of IP telephony in the region followed by Chile.9 Moreover, Argentina is following the world trend of converging telecommunications services over one multiservice network. This will leave behind the outdated switching systems of the early 1990s.10 Argentina’s telecommunications sector went through dramatic change in the 1990s as it was gradually privatized from an inefficient state-run sector. A period of growth and modernization in the sector started with the privatization of the state-owned telephone company ENTEL in 1990. Basic telecommunications services were privatized by splitting Entel in half and creating two monopolies—one in the north of the country owned by Telecom (French Telecom and a Telecom Italia Consortium) and one in the south owned by Spain’s Telefónica. After 10 years of gradual change, the market was fully liberalized in November 2000. Deregulation has opened up the market and created fierce competition for new customers and new service niches. New market entrants struggle against the advantages of strong, already established players.11 The Argentine telecommunications sector has shown significant investments and growth since 2004 after a period of contraction that began with the country’s recession and financial crisis of 2000-02. The sector grew 20 percent in 2005 and 19.5 percent in 2006. Total sector revenues, including equipment and services, reached U.S. Dollars (USD) $5.1 billion in 2005 and USD $6.1 billion in 2006, surpassing pre-crisis levels. The market is expected to continue growing by 20 percent in 2007 and 19 percent in 2008.12 The Chinese Enter Argentine Telecommunications. There is substantial international interest in Argentina’s telecommunications industry owing largely to deregulation, increasingly modern infrastructure, and several years of solid growth. The Chinese have managed to compete in this burgeoning market despite economic setbacks and competition by larger, more established companies. When Argentina’s financial crisis hit in 2002, China quickly seized the chance to increase its stake in the country as U.S. investment declined by nearly half. During this economically tumultuous period, the Chinese made inroads into Argentina’s telecommunications sector. Two Chinese telecommunications companies, in particular Huawei and ZTE, quickly established a niche supplying hightech telephony suitable for rural and lesser developed regions. These areas proved more penetrable as the two dominant telecommunications companies in Argentina—Telefónica and Telecom—operate mostly in populated urban areas. Five years after the crisis, Huawei and ZTE are established as important equipment suppliers in the Argentine market. It is likely that their presence in the market will grow, and that they will upgrade their service offerings to include networks as they have done in other South American countries. In August 2006, for example, Brazil’s Vivo, the biggest mobile telecommunications operator in the southern hemisphere, chose Huawei as the key supplier of the largest new GSM network in Latin America.13 Huawei arrived to Argentine in 2001 in the midst of the economic crisis and by 2004 was bringing in revenues of USD $14 million. It has since replaced traditional equipment providers like Alcatel and Siemens in the Argentine market, thanks to its aggressive commercial approach and low prices. Recently, Huawei invested in a new plant in Buenos Aires Province aiming to produce 100,000-400,000 wireless handsets per year for sale throughout Latin America. Their Code Division Multiple Access (CDMA) 450 Mhz equipment is apt for long signal ranges in rural areas. As of September 2005, Huawei’s telephone assembly takes place in a former barracks at a military base in City Bell near La Plata, the capital of Buenos Aires Province. Huawei supplies the funds and the technology, and local telecom cooperatives manufacture the equipment. The property was ceded to the local cooperatives by the Argentine Secretary of Communication. Part of the property is still used by the Army’s Communication Battalion 601. Huawei invested USD $1 million to refurbish the military facilities for its use. Huawei’s agreement with the local cooperatives allows it to keep 35 percent of the manufacturing facilities after 36 months.14 Chinese company ZTE, Huawei’s direct competitor, has also successfully penetrated the Argentine telecommunications market. ZTE has been heavily involved with setting up a “wireless corridor” between El Calafate and Perito Moreno in Argentina’s Patagonia region.15 Working alongside a local cooperative, ZTE has provided the technology for the necessary installations free of charge.16 According to press reports, ZTE has offered similar pro-bono work to several other local governments throughout Argentina including López Camelo, Villa Gesell, and Río Turbio. Huawei had also offered to donate equipment to the Calafate project, but there was no need for the local cooperative to accept its offer as it already possessed equipment donated directly by the Chinese government.17 During Argentine President Néstor Kirchner’s 2004 visit to China, the Chinese government donated a network of fixed cellular rural telephony for Calafate, providing wireless connections within a 50 kilometer radius of a fixed station and reducing the cost of telephone service in rural areas.18 Huawei and ZTE are China’s two largest telecommunications equipment and service suppliers. They are capable of providing end-to-end solutions to telecommunications carriers, and they have built broad product portfolios. Both companies are based in China’s Shenzhen region, one of the country’s “Special Economic Zones” that provide tax incentives for companies. Huawei and ZTE have both successfully competed against dominant multinational players in China’s domestic market and are now expanding internationally by targeting underdeveloped, pricesensitive markets often skipped by major western brands. Norson Telecom Consulting analyst Dave Carini said that since ZTE and Huawei were little known in western countries, developing markets offered the best opportunity for overseas expansion. ZTE and Huawei equipment typically costs 30 to 40 percent less than similar gear sold by western suppliers, who are reluctant to see their margins eroded by price cuts. ZTE and Huawei are quickly gaining a reputation as world-class suppliers and are up-and-coming players in the international marketplace. Huawei, a private company, was established in Shezhen in 1987 with registered capital of only USD $27,000. Now the company has total revenues of over USD $6 billion. Since its founding, Huawei has grown quickly and now employs 30,000 people worldwide. It is expanding internationally at an accelerated rate with 65 percent of sales now emanating from overseas markets. Huawei’s overseas sales increased from USD $50 million in 1999 to USD $5 billion in 2005, a hundred-fold growth within 6 years. Huawei has established over 85 overseas branches, research centers and factories, and has deployed wireless terminal technologies in over 100 countries, providing services for roughly 1 billion customers.19 In 2004, Huawei had revenues of 2 billion in Latin America alone, where it now has offices in 13 countries. As mentioned, VIVO, the largest mobile operator in the region, adopted Huawei’s EnerG Group Special Mobile (GSM) solutions in 2006 to build South America’s biggest mobile network along Brazil’s developed coastal states, including Rio de Janeiro, Espírito Santo, Paraná, Rio Grande do Sul, and Santa Caterina.20 In mid-2006, Huawei was also awarded a Next Generation Network (NGN) transformation contract worth more than USD $50 million with CANTV, the leading provider of telecommunications services in Venezuela.21 Less than half a year later, in an effort to nationalize the strategic industry, the Venezuelan government bought New York-based Verizon’s 28.5 percent stake in CANTV for USD $572 million.22 Venezuela is opening up its telecommunications market to China as it shuts U.S. companies out. Much of Huawei’s overseas success is attributed to the company penetrating rural, developing world markets. Huawei is the number one producer of CDMA 450 Mgz rural telephony and holds 67 percent of the world market share of the technology. According to Li Cheng, Visiting Fellow at the John L. Thornton China Center of the Brookings Institution in Washington, DC, Huawei’s leadership has been inspired by Mao’s ideas of “occupying the country-side first in order to encircle the cities.”23 Indeed, Huawei got its start in China by targeting markets in small cities and towns in remote provinces, areas to which multinational companies did not even bother to seek access.24 The company has moved up the value-chain in its product and service provision in China and is now following the same successful formula overseas. Huawei’s success is also attributed to support it receives from the Chinese government, particularly the People’s Liberation Army (PLA). Huawei’s chief executive and one of the seven founders, Ren Zhengfie, spent 10 years in the PLA, and Huawei is reported to have installed switches and other telecommunications equipment linking military bases across China in 2000. The company plays down the role of the government and the military in its contracts, yet Huawei receives state support in the form of tax privileges and statesponsored credit because it has been designated a “national champion” of new technology. For example, the company was awarded a massive financing agreement from the state-controlled China Development Bank in December 2004. The agreement establishes a USD $10 billion credit facility for Huawei and its customers, acting as a government-backed guarantee on international expansion.25 An unclassified Canadian intelligence report26 labels Huawei a civilian defense enterprise that grew over the years through PLA tutelage. In the 1980s, in order to increase funds for the military, the Chinese army was allowed to enter into profit-making businesses under favorable tax and investment rules. By the mid-1990s, the so-called PLA Inc. included over 20,000 companies in areas such as agribusiness, electronics, tourism, and telecommunications. In 1998, government leadership ordered the PLA to divest itself of its profit-oriented businesses because of concerns about corruption. The PLA has not, however, completely withdrawn from the economy nor have the divested firms completely severed ties with the PLA. According to the report, Huawei is one of many private companies involved in defense production. The same Canadian intelligence report claims that Huawei has offices in rogue states like Cuba and Iran and accuses the Chinese company of having aided the Taliban and Saddam Hussein’s regime. In 2001, its Indian subsidiary was blamed for tailoring a commercial order for the Taliban in Afghanistan. Also in 2001, Huawei allegedly supplied Iraq with fiber optics to link its radar and anti-aircraft systems.27 Huawei denied these accusations and explained that its equipment was found in Iraq because it had won a tender under the United Nations (UN) Oil-for Food Program to build a GSM network, but gave up on the project.28 The Indian government has been evaluating the risks of exposing strategic telecommunications networks to Huawei for fear that China could attack India’s communications networks should relations between the countries deteriorate. The license in dispute would allow Huawei’s India subsidiary, Huawei Technologies India, to bid for installation and maintenance work, among other types of telecommunications projects.29 According to a Times of India article in August 2005, the dilemma facing the government involved a choice “between cheap Chinese equipment and national security.” The Indian defense ministry stated, “In view of China’s focus on cyber warfare, there is a risk of exposing our strategic telecom network to the Chinese.” India’s security agency expressed “reservations regarding the company’s links with the Chinese military and intelligence establishment, their clandestine operations in Iraq and Taliban-ruled Afghanistan, and their close ties with the Pakistan army.”30 Another more provocative press article in September 2006 warned India against “sleeping with the enemy.” It highlights the PLA’s recent modernization efforts, which have included “the wholesale shift to digital, secure communications via fiber optic cable, satellite, microwave, and encrypted high frequency radio.” This military shift was made possible by what Rand calls the “digital triangle,” an alliance among China’s booming IT companies, state research and development corporations, and the military. Under the triangle, Chinese companies are called “national champions.” They are allowed generous lines of credit from state banks and funding and staff from the military and state research institutions. The PLA is the most favored customer for the high technology made by the “national champions” like Huawei.31 ZTE, a publicly listed company, was founded in 1985 in Shenzhen by a handful of state-owned companies affiliated with the Chinese Ministry of Aerospace Industry. ZTE became a publicly listed company in 1997 and has gained credit from analysts and customers alike for being more transparent than the privately held Huawei. Nonetheless, despite its listing, the Chinese government still owns a big portion of ZTE’s shares.32 ZTE is already China’s second-biggest telecommunications equipment vendor, after rival Huawei, and China’s largest listed telecommunications solutions provider. The company has grown along with China’s big phone companies, which are ZTE’s top customers. ZTE’s revenue reached USD $2.68 billion in 2005. More than 25 percent of ZTE’s business comes from international markets, and the company is actively focused on expanding overseas sales. ZTE expects that more than 50 percent of its revenue will come from the international market by 2008. ZTE has been successful in the Asian and African markets and is now making inroads into Latin America where its revenues reached USD $400 million in 2005.33 In May 2004, ZTE signed a USD $100 million contract to supply CDMA handsets to Vivo in Brazil. The Chinese company, like its rival Huawei, has focused energies on rural areas in the Latin American market where big multinationals dominate the populous urban areas. ZTE’s Chief Executive officer (CEO), Yin Yimin, says the company is able to prevail over bigger competitors in developing markets because its home base in China gives it a better understanding of how to operate in developing countries. According to Business Week Online, Yimin is one of a new breed of bosses within China’s state-owned enterprises. “He is keenly aware of how competitive the industry is, doesn’t take state support for granted, and thinks about business as a constant battle.”34 Both Huawei and ZTE are making their mark in the world’s telecommunications industry, with the former raising alarm bells for its connection with the PLA. Both companies benefit from China’s increasing supply of highly skilled, cheap labor and the world’s—especially the developing world’s—hunger for reasonably priced high-quality technology. The companies are also able to leverage their experience in China’s expansive developing world market in other emerging markets. Andrew Chetham, an analyst with Gartner Inc. in Hong Kong, believes Huawei and ZTE could potentially change the structure of the telecommunications industry. He said, “In 5 years’ time, western companies [won’t be able to] keep up with their research and development spending because of their low-cost advantage.”35 In fact, some analysts believe that the recent merger and acquisition deals between Ericsson and Marconi, Alcatel and Lucent, and Nokia and Siemens were at least partly designed to fight off competition from Huawei and ZTE.36 Part of Huawei and ZTE’s successful international expansion is owed to their aggressive approach to business. In Argentina, their style has been described as ruthless. They are known to bribe and “trap” clients. They frequently offer Argentine clients and prospective clients full-paid trips to China. Upon arrival, it is alleged that they are presented with an envelope containing a significant amount of cash. Industry analyst Carlos Blanco disclosed one known case where, after a day of sightseeing, the Chinese left photos of their guests taken while touring in their hotel rooms. According to Blanco, such behavior is frowned upon by Argentine businessmen and is seen as a form of extortion.37 Blanco views Huawei as the more ruthless of the two companies. He explains that Huawei is known for its cunning tactics of roping in clients. It often lends its equipment for trial periods, but if the prospective client does not wish to make a purchase after the trial, the Chinese company backtracks, claiming that it must charge for the use of the equipment. Uruguay’s state telephone operator ANTEL purportedly fell into this trap. Huawei had offered ANTEL a 1-year trial of third generation telephone radios. After the trial period, ANTEL dragged its feet about purchasing the expensive, high-tech equipment, but Huawei insisted. ANTEL bought the equipment even though the marketplace did not warrant it.38 While they are the dominant players, Huawei and ZTE are not the only Chinese companies in Argentina’s telecommunications sector. Hutchison Whampoa Limited, a Hong-Kong based holding company rumored to have ties to Chinese leadership and the PLA, also has a stake in the market. Hutchinson’s diverse array of holdings include, but are not limited to, the world’s biggest port operators, retailers, property development and infrastructure companies, and telecommunications operators. Hutchinson operates telecommunications businesses in Europe, Hong Kong, and various emerging markets. The conglomerate has been particularly successful in India where it owns 67 percent of the mobile phone business.39 In Argentina, Hutchinson operates a telecommunications network called “Port-hable” in the western part of Buenos Aires Province. It is a fixed line service but acts as a mobile service as customers can receive the signal outside of their homes. Hutchinson has about 70,000 users in Argentina. It wants a license to expand into the mobile market, but the Argentine Communications Secretariat denied its petition in January 2006. The government favored a local Argentine cooperative for the space.40 Hutchinson, which has raised concern among U.S. politicians for its operation of strategic ports at each end of the Panama Canal, also runs a state-of-the-art container terminal in the Port of Buenos Aires.41 The two big telecommunications monopolies in Argentina—Telefónica and Telecom—are contributing to the rise of Chinese telecommunications companies. Both companies buy equipment from Huawei and ZTE, and both have other deepening ties with China. In July 2005, Telefónica International broke into China’s state-run telecommunications sector by agreeing to pay USD $290 million for 2.99 percent stake in China Netcom, China’s second-largest fixed-line operator. In September 2005, the company bought another 2.01 percent for USD $242 million, lifting its stake to the maximum 5 percent and qualifying for a seat on the board.42 While the transaction was carried out by Telefónica Spain, according to a journalist at Xinhau news agency in Buenos Aires, the investment funds were provided by Telefónica Argentina. Netcom and Telefónica are expected to cooperate on equipment purchasing, research and development, marketing, and business strategies.43 According to industry analyst Carlos Blanco, it was the Chinese company who sought out the partnership with Telefónica. China Netcom is interested in extending its geographical operations of fixed and mobile services.44 Also, it is rumored that Telefónica is strategically aligning itself with the Chinese so as to beat out potential competition. Telecom Argentina also has developed close ties with the Chinese. The Werthein family, which together with Telecom Italia owns over 50 percent of Telecom Argentina, was one of the first in Argentina to do business with the Chinese beginning in the 1970s. Since then, they have maintained good relations with the Chinese. In fact, the patriarch of the family, Julio Werthein, is the current President of the Argentine- China Chamber of Commerce.45 Now deregulated, Argentina’s telecommunications sector is undergoing continuous change associated with increased competition, mergers, acquisitions, and shifting strategic alliances. New entrants like Chinese companies Huawei and ZTE have faired well and are even beating out more experienced competitors for market share. They have also garnered the support of the market’s dominant players—Telefónica and Telecom— which now buy their equipment. Beyond Huawei and ZTE, Telefónica and Telecom continue to strengthen ties with the Chinese. Positive market conditions and good relationships are helping the Chinese succeed as equipment suppliers and increasingly as network providers in Argentina and elsewhere in Latin America. While viewed as competent and successful, these largely state-owned companies’ past dealings, motivations, and business practices are increasingly called into question. China Enters Argentine Space Operations. China has been pushing for increased international space cooperation and is looking to expand its share of the international market for satellite launches and other space services. Jin Zhuanglong, Deputy Director of the Commission of Science, Technology, and Industry for National Defense, speaking at an international conference on the space industry in Beijing in August 2006, mentioned that China will strengthen cooperation in the international space community with the aim of achieving “the peaceful development of outer space.” China has already signed 16 agreements with 13 governments and organizations, and established space industry cooperation with more than 40 countries and international bodies. Specifically, China is looking to further cooperation with European and South American countries.46 Argentina and most other Latin American countries have historically relied on cooperation with the United States to support their space programs. Argentina opened the door to increased space cooperation in 1991 when it created the Argentine National Commission on Space Activities (CONAE). Its first cooperative efforts were with the U.S. National Aeronautics and Space Administration (NASA). The same year CONAE was created, it signed an agreement with NASA for the promotion of civilian space research and cooperation. (An agreement extending the 1991 agreement was signed in 1996.) Since then, cooperative activities have included scientific exchanges, the launching by NASA of Argentine scientific satellites, and a 1997 U.S.-Argentine space conference hosted by CONAE and NASA. In addition, the U.S. and Argentina have worked closely on the Gemini and Auger projects, two multinational space programs.47 In 2000, the United States assisted Argentina in launching its first Earth orbiting SAC-C satellite. The project was a collaborative effort between Argentina, the United States, Brazil, Denmark, France, and Italy. The satellite was launched from Vandenberg Air Force Base in California.48 Moreover, CONAE and NASA are currently collaborating on the SAC-D/Aquarius satellite, under construction by the Argentine hightech firm INVAP, which is scheduled for launch in 2008.49 U.S. private companies have also played a role in the development of Argentina’s satellite program. For example, General Electric Capital Corporation (GE), later to be acquired by SES Global and become SES Americom, was one of the early investors, with 28 percent of shares in Nahuelsat, a private company created to operate satellite communications systems in orbital positions assigned to Argentina. In the last few years, China has pushed to become a player in Argentina’s space and satellite industry as well. During President Hu Jintao’s visit to Argentina in November 2004, the countries signed a Framework Agreement on “Technology Cooperation in the Peaceful Use of Outer Space.” According to the agreement, the Chinese government is willing to provide the Argentine government with commercial launch services, satellite components, and communication satellite platforms. The Argentine government is taking advantage of this offer so as to launch a satellite in the commercially valuable 81 degrees longitude slot, which allows for observation of all the Americas. The 81 degrees slot was allotted to the Argentine government by the International Telecommunications Union (ITU) in 1998. It occupies a strategic orbital position 36,000 kilometers above the equator, with a reach to North America, including all of the United States and the southern part of Canada. To date, the government has been unable to launch a satellite into the slot. The Argentine government had originally commissioned the work to Nahuelsat, but financial issues impeded its success in filling the 81 degrees slot. There is pressure mounting for the Argentine government to fill the slot, and it has already asked for extensions to the original deadline of October 2003 and the extended deadline of October 2005 imposed by the ITU. At present, the government is enjoying a de-facto 2- year grace period until the World Telecommunications Conference in October 2007, after which the ITU will decide on its case. In 2004, the Argentine government promoted the creation of ARSAT, a national satellite company, to be responsible for placing a satellite into Argentina’s 81 degrees slot and repairing its older satellite, Nahuel 1, now occupying position 72 West. The ARSAT program was approved by the Argentine Senate in September 2004 and was signed into existence by the Congress in March 2006. The company was assigned an initial 50 million pesos (roughly USD $16.6 million) from the government, with the rest of the needed capital to be generated by stock sales. Large and small telecommunications companies in Argentina had promised the government that they would buy capacity once the satellite was up and running. In December 2005, Nahuelsat was reorganized due to the withdrawal of SES Americom, and it was decided that the company will be absorbed into ARSAT, leaving only one satellite operator in Argentina. INVAP, a space satellite manufacturing company run by the Argentine Province Rio Negro, will be responsible for creating and launching the satellite for ARSAT. In 2004, during his visit to Latin America, Chinese President Hu Jintao visited the INVAP facility in Rio Negro.50 In May 2005, the Chinese government signed an agreement with the Argentine government to provide technical support and equipment to INVAP for the development of the satellite. According to industry experts, INVAP does not have the capability to build a communications satellite on its own. Chinese experience and expertise will complement INVAP’s capabilities. The Chinese also have offered Argentina a full launching system for the satellite at a 30 percent discount from international market prices. Payment for services and equipment provided by the Chinese will be paid through ARSAT stock, which would give the Chinese ownership stake and corresponding voting rights in the Argentine state satellite company.51 According to one press report, there are conversations going on between the Argentine and Venezuelan governments about the possibility of Venezuela joining the ARSAT project.52 Chinese space assistance to Argentina goes beyond the high-profile slot 81. Indeed, according to industry analyst Carlos Blanco, China is largely interested in low orbiting, fixed observance satellites in Argentina. Argentina already has two in place, and China is interested in helping Argentina develop and field more. Moreover, in early 2006, China provided Argentina with a third generation precision satellite laser ranger (SLR). According to press reports, the astronomical instrument was installed in San Juan University of Argentina, and will be launched jointly by China National Astronomical Observatories (NAOC) and Argentine San Juan University. The primary function of the SLR is the measurement of precise distances between laser telescopes and reflectors on passing satellites. SLR is mainly used in monitoring earth rotation and polar motion, modeling the temporal and spatial variation of the earth’s gravity field, and the determination of ocean and earth tides.53 China’s space cooperation in South America extends beyond Argentina. For example, China has signed a contract to manufacture and launch satellites for Venezuela, and has cooperated with Brazil on the development and launch of four satellites under the China-Brazil Earth Research Satellite (CBERS) program. The CBERS program involves, among other things, Brazilian digital imaging technology that may help the Chinese to augment their over-the-horizon military targeting capability.54 Brazilian space cooperation with China is more advanced than Argentina-China cooperation. According to Stephen Johnson, Deputy Assistant Secretary of Defense for Western Hemisphere Affairs who works for the Undersecretary of Defense for Policy, the Chinese began collaborating with Brazil on spy satellite technology in 1999, providing rocket launch expertise in exchange for digital optical technology that would permit high resolution, realtime imaging.55 The United States has a good track record of space cooperation with Argentina dating back to the early 1990s. However, the 2005 withdrawal of SES-Americom from Nahuelsat means that the United States will not participate in the operation of Argentina’s two orbital slots allotted to it by the ITU. Argentina’s state-run company ARSAT will now be the sole operator of the slots. Moreover, China will be providing ARSAT’s satellite manufacturer INVAP, another state company, the technical assistance needed to create the satellite that will eventually fill the 81 degrees position. Argentina’s historic reliance on U.S. space cooperation is waning as China offers alternative assistance. This is part of a larger pattern best described by Latin America scholar Peter Hakim as U.S. disinterest post-September 11, 2001 (9/11), and resulting in sporadic and narrowly targeted policies toward the region since then. As a result, Latin American leaders’ support for Washington’s policies has diminished. According to Hakim, few Latin Americans today, in or out of government, consider the United States to be a dependable partner.56 It is not surprising, then, that they are reaching out to other willing partners like China in areas such as space operations. Implications for U.S. Security. The implications for U.S. national security of increasing Chinese presence in Argentine and other regional space and telecommunications sectors will depend on the U.S. response to this trend. Potential threats exist as U.S. companies cede market dominance to Chinese and other foreign companies in strategically sensitive sectors. Telecommunications networks are no longer domestic, terrestrial, and circuit-switch operated. They are interdependent, diverse, and rest on terrestrial, satellite, and wireless technologies. These latter technologies are harder to control and more susceptible to tampering and attacks. Chinese capabilities in information technology and IW are increasing as its economic and political influence grows in Latin American countries. If Chinese influence is left unchecked, the United States will leave itself vulnerable to international information networks, which are of increasing operational importance to a modern military. source: CHINA’S EXPANSION INTO AND U.S.WITHDRAWAL FROM ARGENTINA’S TELECOMMUNICATIONS AND SPACE INDUSTRIES AND THE IMPLICATIONS FOR U.S. NATIONAL SECURITY by Janie Hulse September 2007 This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. As such, it is in the public domain, and under the provisions of Title 17, United States Code, Section 105, it may not be copyrighted. Visit our website for other free publication downloads http://www.StrategicStudiesInstitute.army.mil/
