Huawei sanctions could hit other telecom operators

Stephen Peepels was quoted in the Financial Times.

The article examined the potential sanctions on Huawei under discussion in Washington and how they could put western multinationals that have partnered with the Chinese company under strain. One possibility would be to bar all US exports to Huawei, commonly referred to as the “nuclear option”. An alternative would be a ban on purchases from Huawei, but some experts say this ignores Huawei’s huge role in the global telecoms market.

“A ban on US sales to Huawei would be as nuclear as an option could be,” said Stephen.

Another alternative would be to deem Huawei a “specially designated national” which means an individual or company which is subject to sanctions. Such a move would be based on charges contained in the indictment that Huawei tricked US banks into financing dealings with Iran from which they were barred under US sanctions. Under US law, any company breaking sanctions can become a target of them as well.

“Within the parameters of existing law, if a party is seen as having flagrantly violated or facilitated the violation of US sanctions, the US has the power to designate that party as an SDN,” Stephen commented. Such a move against Huawei would put many of its business partners at risk as well, even those operating outside the US. Stephen explained that the US applies the sanctions to any business with Iran conducted in US currency or involving US persons or technology.

Huawei works with global carriers in several markets across Africa, Asia and Latin America. If Washington were to designate the Chinese firm an SDN, these carriers could be forced to choose between suspending ties with Huawei globally — or face legal risks in the US themselves.

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