from Digital and Cyberspace Policy Program and Net Politics

Huawei and the Third Offset

The logo of Huawei is seen in Davos, Switzerland. REUTERS/Arnd Wiegmann

In order to effectively mitigate the security risks posed by Huawei, the U.S. Department of Defense needs to fund and integrate cutting-edge technologies from the private sector.

April 6, 2020

The logo of Huawei is seen in Davos, Switzerland. REUTERS/Arnd Wiegmann
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Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

Perri Adams is a computer security researcher and cyber policy analyst based in Washington, DC. You can follow her @perribus.

Dave Aitel works in the area of offensive cyber technologies and is based in Miami. You can follow him @daveaitel.

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Sophia d’Antoine is a veteran security enthusiast and the founder of Margin Research in New York City. You can follow her @calaquendi44.

Although concern over Huawei’s implications for national security remains high, current U.S. strategies against Huawei have largely been framed as a counter to Chinese spying and focused on retrospective actions, such as lobbying allies against adopting Huawei’s 5G kit (when those allies’ mobile networks are already dependent on Huawei infrastructure), and using the Department of Justice (DOJ) to hold Huawei accountable for intellectual property theft and sanction violations. Unnoted by many, however, is that Huawei’s actions are part of the military competition between Beijing and Washington, a cycle of technology offsets and counter offsets to offsets.

Huawei’s global dominance in 5G infrastructure is no mistake, rather it is an attempt by China to project power over significant swathes of the global information sphere. China is pursuing an information age “manifest destiny," bridling the global conversation under its influence. Efforts to convince allies to avoid Huawei equipment have been met with resistance, and the latest in a series of setbacks came with the UK’s recent decision to use the company’s equipment with added security mitigations. This may seem like a reasonable compromise but, in reality, mitigation is impossible against risks posed by an adversary supplying critical network equipment, and there is little doubt that Huawei is beholden to the Chinese government in this regard. So, while countries have argued over the details of these ultimately useless mitigations, China has achieved a strategic coup.

The world-wide deployment of Huawei infrastructure gives China significant cyber capabilities and advances what former Deputy Secretary of Defense Robert Work recently articulated as China’s offset strategy. As Work and his former special assistant Greg Grant wrote in their recent report for the Center for a New American Security, China "appears increasingly close to achieving technological parity with U.S. operational systems and has a plan to achieve technological superiority."

Offset strategies are intended to counterbalance an adversary's military advantages by developing asymmetric technological strengths. While in his role at the U.S. Department of Defense (DOD), in 2015 Work developed the “Third Offset” strategy to foster innovation to counter China’s offset. China, for example, developed ballistic missiles, space, and cyber capabilities to deal with U.S. carrier groups, and now the United States is responding with its own cyber capabilities, UAVs, and application of AI and ML to weapons platforms.

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Moreover, the Third Offset strategy acknowledges that technological innovation has moved to the global and commercial domain. The strategy seeks to embrace this shift by incorporating cutting edge technology, such as A.I., into U.S. military operations in real-time by selectively funding areas of innovation and, more importantly, integration. The Third Offset envisions shifting focus from in-house innovation to the integration of technology into military operations. This requires improving supply chains, testing mechanisms, and field adaptation processes. This is especially crucial for cyber operations because if you don’t have a pipeline to buy and use new software and zero-days from industry, you don’t have a cyber capability. Moreover, it is important that those overseeing this strategy possess an intimate knowledge of available commercial technology to successfully leverage it for military purposes.

While mounting a successful Third Offset strategy faces many challenges and requires a concerted effort (and dedicated funding), it is more necessary than ever to rejuvenate this initiative, especially with regard to cyber capabilities. Unfortunately, in recent years the United States has deprioritized the Third Offset.

A re-energized Third Offset, especially with regard to the cyber domain, would put even greater focus on smaller companies, faster turnaround times, and increasing comfort with risk and failure. Small companies are frequently the epicenters of innovation in computer security yet are disincentivized to work with the DOD because of the numerous hoops through which they must jump.

Cyber Fast Track (CFT), the innovative DARPA project undertaken by Peiter “Mudge” Zatko is an example for how the DOD might strip away the red tape and diversify their supply chain. As DARPA described their motivation, “The government needs agile cyber projects that are smaller in effort, have a potential for large payoff, and result in a rapid turnaround, creating a greater cost to the adversary to counter.” Cyber Fast Track funded smaller non-traditional performers in shorter increments by eliminating many of the hurdles these companies and individuals would typically face working with the DOD. The CIA-funded venture capital firm In-Q-Tel, which has backed companies like the threat intelligence firm Recorded Future, and Fire Eye provides another model that the DOD might follow. Not only has In-Q-Tel invested in many successful technology startups, but they’ve helped the CIA develop fruitful relationships within the tech industry that advance their mission. Current DOD efforts at fostering investment, like the Trusted Capital Marketplace (TCM), are positive signs, however the TCM, as it stands, may be too narrowly focused and weighed down by existing defense industry bureaucracy, as argued here. Another promising example, the DOD’s Defense Innovation Unit (DIU), formed under then-Secretary of Defense Ash Carter and based in Silicon Valley, is designed to identify and invest in promising commercial technology that can be integrated into defense operations. In order for the DIU to succeed, it needs to increase its comfort with taking on potentially risky ventures.

Creating an asymmetrical advantage inherently requires novel approaches, a difficult task for large bureaucracies like the DOD, which is why it is imperative to prioritize this now. The Third Offset is no panacea, nor will it directly stop Huawei, but it could ameliorate some of the advantage gained by China from its 5G successes. This should complement other forward-looking strategies addressing the threat posed by Huawei, such as promoting the research and development of 5G and future generations of mobile infrastructure. Focusing solely on short-term efforts to prevent China’s long-term plans is a Sisyphean exercise that will only advantage the adversary.

We thank Alexei Bulazel, a co-author on our previous piece in Lawfare, for his insights on these issues.

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