By Kenneth Maxwell
Welcome to what the Russian Government owned international news network “Sputnik” is calling the “New Technological Cold War. “
In November last year Huawei launched an Artificial Intelligence (AI ) backed cloud service in Brazil.
Quin Dan the CEO of Huawei Cloud Brazil said at the launch ceremony in São Paulo: “We have the technology, experience, security and support so our clients can transform and expand their businesses.” Erick Schanz, the company’s business manager, said that Huawei Cloud is set up to compete in Brazil, Latin America’s largest economy, with U.S. companies that provide similar services such as Microsoft, Amazon and Google.
Huawei noted in a statement that “another important benefit of cloud is that it is linked to the development in Brazil of 5G technology.”
The company also presented its Huawei Cloud Partner Network (HCPN) which has 291 partners in Latin America and 80 in Brazil. An auction is expected this year for frequency space in Brazil.
The Brazilian 5G auction will be among the largest spectrum sales ever and telecom companies from all over the world are expected to compete for the contract.
The recent UK decision by the Boris Johnson government over Huawei and 5G, which would restrict Huawei to 35% participation in the periphery of the network which connects devices and equipment to mobile phone masts, and exclude it from sensitive core areas such as nuclear installations and military bases, has already had an impact in Brazil which sees the British model as one to follow.
In Britain the potential competitors to Huawei, Ericsson of Sweden and Nokia of Finland, and Samsung, would delay 5G technology rollout and increase costs.
Which is why in the British case the use of Huawei for 5G is supported by Vodafone and BT, both of which have already embedded Chinese telecom technology in their telecom systems.
Most components come from Southeast Asia, principally from China.
Yao Wei, the outgoing President of Huawei in January 2020 met with the Brazilian President Jair Bolsonaro at the palácio do planalto in Brasilia. He was following up on the two meetings between Bolsonaro and Chinese President Xi Jinping in Beijing during a state visit to China in October and at the BRICS summit in Brasília in November.
Bolsonaro had said that “China should be buying in Brazil, not buying Brazil.”
But pressure from the Brazilian agro-business sector had persuaded him to modify his tone.
He sent his Vice President, general Hamilton Mourão, to China in May where he met with Huawei technology company’s founder, Ren Zhengfei, and discussed Huawei plans to build a 5G network in Brazil.
The Chinese have been lobbying General Hamilton Mourão and the minister of science, technology, innovation and communication (MCTIC), Marcos Pontes since then, and Huawei has been dangling the possibility of a major US$800 million investment in a factory in São Paulo to manufacture smart phones according to João Doria, the governor of São Paulo.
There are major issues at stake here beyond 5G and Artificial intelligence services. In recent years China has been rapidly expanding its influence in Brazil and in Latin American more broadly.
Most significantly China is Brazil’s most important trading partner.
The coronavirus crisis in China has had an immediate impact on Brazilian trade. Brazilian exports to China falling by 3.5% over the first weeks after the crisis hit according to the Brazilian Association of External Commerce. Brazil’s dependence on commodity exports makes it especially vulnerable to any decrease in Chinese demand. China is a major importer of Brazilian beef and soy. Powerful Agro-business interests in Brazil, major political supported of Jair Bolsonaro’s Government, have a huge stake in the preservation of good commercial relations with China.
Brazil is a major part of China food security strategy.
Soy is China’s main food commodity which it imports to feed its pigs. Chinese state companies invest directly in Brazil’s supply chain and China buys 70 to 80% of Brazilian soy and has in Brazil some 7,500 employees. The Chinese pledged an investment of US$100 billion in Brazil at the last BRICS summit in Brasília, and have committed US$ 3.1 billion to two BRI (belt and road) Projects in Brazil.
A high voltage transmission system for the belo monte dam in Mato Grosso, and toward the expansion of the port of São Luís in Maranhão, and possibly on support the construction of a new railroad link from Mato Grosso to bring soya to the ports on the Amazonian Tapajos river.
The replacement of tropical rain forest by cattle and soy in the inevitable consequence of Chinese commodities demand.
China has become a major in investor in Brazil’s pre-salt petroleum and takes two thirds of the Brazil’s total petroleum output. The Chinese offshore oil engineering company (CODEC) has constructed floating production, storage and offloading platforms for Brazil, due to bottlenecks in Brazilian yards. One of these platforms, Petrobras P-70, broke from it’s moorings in a storm in Rio de Janeiro’s Guanabara Bay off Niterói at the end of January this year having just arrived from China.
The platform was due to move to the Petrobras operated Atapu pre-salt field and is designed to produce 150,000 barrels of oil a day and day 6 million cubic meters of natural gas and employ 160 people and be operational for 25 years.
President Donald Trump in an “apoplectic” phone call to Boris Johnson criticised his Huawei decision, and his Secretary of State, Mike Pompeo has also expressed his alarm and opposition to Boris Johnson’s Huawei and 5G decision, and both have also pressured Jair Bolsonaro over his potential decision over Huawei and 5G in Brazil.
Boris Johnson and Jair Bolsonaro are soul mates of Donald Trump to be sure, but material interest are pulling them in an opposite direction.
Featured Image: Friso Gentsch/picture alliance via Getty Images.
Also, see the following excellent overview on 5G in a strategic context: