Spies Like Us: USA, PRC and, er...'IBM'

♠ Posted by Emmanuel in ,, at 5/29/2014 01:00:00 AM
The silly season is upon us once more in the spying biz as the US and China make tit-for-tat accusations about each others' covert activities. The US started the ball rolling with this nonsense by "indicting" five Chinese military men it believes are spying on American companies. At this point we learn of many things important already. First, it is obvious that the US government cares more about its corporations than us Internet users when it distinguishes purported corporate espionage (not OK) from NSA spying (perfectly OK). In America, I guess corporations have more rights than people do as the anti-globalization types say. Second, the Yanqui hypocrites have also been spying on Chinese companies, namely telecoms equipment makes Huawei:
One of the goals of the operation, code-named “Shotgiant,” was to find any links between Huawei and the People’s Liberation Army, one 2010 document made clear. But the plans went further: to exploit Huawei’s technology so that when the company sold equipment to other countries — including both allies and nations that avoid buying American products — the N.S.A. could roam through their computer and telephone networks to conduct surveillance and, if ordered by the president, offensive cyberoperations.
Third, it is well-known that so-called American allies France and Israel have run industrial espionage programs aimed at the US for longer than China--the only question is if they are more intrusive cumulatively speaking, and there is reason to believe that they are. Even if they are not, why is it that the United States doesn't put them in an even trickier situation by demanding that their spooks be handed over for prosecution? The US made the charges against China obviously not expecting that the PRC would actually hand them over. Having security alliances with France and Israel, on the other hand, would set different expectations.  

Ultimately, the losers from this horseplay may be none other than American corporations as China seeks to move away from US technology products. Bye-bye a market consisting of a fifth of humanity. First China moved to ban the use of the latest version of Microsoft Windows, 8 (which I use), in government installations over, you guessed it, "security" concerns after XP updates were discontinued. Having jettisoned US software, the next step involves harassing makers of hardware. After enduring endless hassles over Huawei being considered a proxy for the Chinese military--I doubt it--the PRC is now scrutinizing IBM servers for "security" lapses while asking financial institutions to use PRC servers instead:
The Chinese government is reviewing whether domestic banks’ reliance on high-end servers from International Business Machines Corp. (IBM) compromises the nation’s financial security, people familiar with the matter said, in an escalation of the dispute with the U.S. over spying claims. Government agencies, including the People’s Bank of China and the Ministry of Finance, are asking banks to remove the IBM servers and replace them with a local brand as part of a trial program, said the four people, who asked not to be identified because the review hasn’t been made public. 
By the same, ah, tortured logic Americans paint Huawei as an extension of PRC security apparatus--its founder used to work in the PLA--IBM is suspect presumably because it's a large US defense contractor. I can already guess what comes next. As it so happens, China's Lenovo is trying to buy IBM's low-end server business since Big Blue wants to get out of that low-margin business:
IBM announced in January it would sell its low-end server computer business to Beijing-based Lenovo Group Ltd. (992) for $2.3 billion. That transaction faces regulatory scrutiny including a U.S. national security review. Angela Lee, a Hong Kong-based spokeswoman for Lenovo, said she couldn’t immediately comment.

Under the proposed deal with Lenovo, IBM will keep its higher-end hardware, including System z mainframes and Power servers. Lenovo would get IBM servers that use x86 processors, an industry-standard technology. The transaction includes BladeCenter and Flex System blade-style servers -- slim devices that slide into racks -- along with switches that run corporate computer networks.
Nevermind that the low-end IBM servers use generic parts anyone else can buy. In this heated environment, I expect American politicians to raise "security" hackles over the proposed purchase. It will be even more silliness on top of so much that has already transpired. At any rate, I offer some takeaways:
  1. Nobody is innocent here of spying over either "security" or "commercial espionage."
  2. The US is doubly hypocritical in not charging its spying allies whose practices are indistinguishable from China's (or its own for that matter). 
  3. The Americans are using "security" claims to paint China in a bad light.
  4. The Chinese are using "security" claims an an excuse to eventually wean government procurement off US software and hardware. Since it's not a signatory to the WTO government procurement agreement, it has some legal cover--although don't be surprised if the US makes a WTO case if things get worse.
  5. The real victims in this joint US-Chinese idiocy are firms more interested in trade and investment than participating in geopolitics. I honestly see no reason why the likes of Huawei and IBM would deliberately include spying equipment in their equipment sales to foreign governments, and there have been no documented cases of such equipment being bugged. 
Stupid is as stupid does.