[Congressional Record (Bound Edition), Volume 157 (2011), Part 12]
[Extensions of Remarks]
[Pages 17296-17298]
[From the U.S. Government Publishing Office, www.gpo.gov]




ARTICLE OF CHINESE TELECOM FIRM HUAWEI'S ROLE IN ENABLING IRAN'S STATE 
                            SECURITY NETWORK

                                 ______
                                 

                           HON. FRANK R. WOLF

                              of virginia

                    in the house of representatives

                       Monday, November 14, 2011

  Mr. WOLF. Mr. Speaker, I submit an October 27 Wall Street Journal 
article that summarizes Chinese telecom firm Huawei's role in enabling 
Iran's state security network. At the same time that the U.S. and its 
allies are increasing efforts to support pro-democracy and human rights 
activists, Huawei is empowering the Iranian regime to suppress these 
groups.

             [From the Wall Street Journal, Oct. 27, 2011]

                      Chinese Tech Giant Aids Iran

          (By Steve Stecklow, Farnaz Fassihi and Loretta Chao)

       When Western companies pulled back from Iran after the 
     government's bloody crackdown on its citizens two years ago, 
     a Chinese telecom giant filled the vacuum.
       Huawei Technologies Co. now dominates Iran's government-
     controlled mobile-phone industry. In doing so, it plays a 
     role in enabling Iran's state security network.
       Huawei recently signed a contract to install equipment for 
     a system at Iran's largest mobile-phone operator that allows 
     police to track people based on the locations of their 
     cellphones, according to interviews with telecom employees 
     both in Iran and abroad, and corporate bidding documents 
     reviewed by The Wall Street Journal. It also has provided 
     support for similar services at Iran's second-largest mobile-
     phone provider. Huawei notes that nearly all countries 
     require police access to cell networks, including the U.S.
       Huawei's role in Iran demonstrates the ease with which 
     countries can obtain foreign technology that can be used to 
     stifle dissent through censorship or surveillance. Many of 
     the technologies Huawei supports in Iran--such as location 
     services--are available on Western networks as well. The 
     difference is that, in the hands of repressive regimes, it 
     can be a critical tool in helping to quash dissent.
       Last year, Egyptian state security intercepted 
     conversations among pro-democracy activists over Skype using 
     a system provided by a British company. In Libya, agents 
     working for Moammar Gadhafi spied on emails and chat messages 
     using technology from a French firm. Unlike in Egypt and 
     Libya, where the governments this year were overthrown, 
     Iran's sophisticated spying network remains intact.
       In Iran, three student activists described in interviews 
     being arrested shortly after turning on their phones. Iran's 
     government didn't respond to requests for comment.
       Iran beefed up surveillance of its citizens after a 
     controversial 2009 election spawned the nation's broadest 
     antigovernment uprising in decades. Authorities launched a 
     major crackdown on personal freedom and dissent. More than 
     6,000 people have been arrested and hundreds remain in jail, 
     according to Iranian human-rights organizations.
       This year Huawei made a pitch to Iranian government 
     officials to sell equipment for a mobile news service on 
     Iran's second-largest mobile-phone operator, MTN Irancell. 
     According to a person who attended the meeting, Huawei 
     representatives emphasized

[[Page 17297]]

     that, being from China, they had expertise censoring the 
     news.
       The company won the contract and the operator rolled out 
     the service, according to this person. MTN Irancell made no 
     reference to censorship in its announcement about its 
     ``mobile newspaper'' service. But Iran routinely censors the 
     Internet using sophisticated filtering technology. The 
     Journal reported in June that Iran was planning to create its 
     own domestic Internet to combat Western ideas, culture and 
     influence.
       In winning Iranian contracts, Huawei has sometimes 
     partnered with Zaeim Electronic Industries Co., an Iranian 
     electronics firm whose website says its clients include the 
     intelligence and defense ministries, as well as the country's 
     elite special-forces unit, the Islamic Revolutionary Guards 
     Corps. This month the U.S. accused a branch of the 
     Revolutionary Guards of plotting to kill Saudi Arabia's 
     ambassador to the U.S. Iran denies the claim. Huawei's chief 
     spokesman, Ross Gan, said, ``It is our corporate commitment 
     to comply strictly with all U.N. economic sanctions, Chinese 
     regulations and applicable national regulations on export 
     control. We believe our business operations in Iran fully 
     meet all of these relevant regulations.''
       William Plummer, Huawei's vice president of external 
     affairs in Washington, said the company's location-based-
     service offerings comply with ``global specifications'' that 
     require lawful-interception capabilities. ``What we're doing 
     in Iran is the same as what we're doing in any market,'' he 
     said. ``Our goal is to enrich people's lives through 
     communications.''
       Huawei has about 1,000 employees in Iran, according to 
     people familiar with its Iran operations. In an interview in 
     China, a Huawei executive played down the company's 
     activities in Iran's mobile-phone industry, saying its 
     technicians only service Huawei equipment, primarily routers.
       But a person familiar with Huawei's Mideast operations says 
     the company's role is considerably greater, and includes a 
     contract for ``managed services''--overseeing parts of the 
     network--at MTN Irancell, which is majority owned by the 
     government. During 2009's demonstrations, this person said, 
     Huawei carried out government orders on behalf of its client, 
     MTN Irancell, that MTN and other carriers had received to 
     suspend text messaging and block the Internet phone service, 
     Skype, which is popular among dissidents. Huawei's Mr. 
     Plummer disputed that the company blocked such services.
       Huawei, one of the world's top makers of telecom equipment, 
     has been trying to expand in the U.S. It has met resistance 
     because of concerns it could be tied to the Chinese 
     government and military, which the company denies.
       Last month the U.S. Commerce Department barred Huawei from 
     participating in the development of a national wireless 
     emergency network for police, fire and medical personnel 
     because of ``national security concerns.'' A Commerce 
     Department official declined to elaborate.
       In February, Huawei withdrew its attempt to win U.S. 
     approval for acquiring assets and server technology from 
     3Leaf Systems Inc. of California, citing opposition by the 
     Committee on Foreign Investment in the United States. The 
     panel reviews U.S. acquisitions by foreign companies that may 
     have national-security implications. Last year, Sprint Nextel 
     Corp. excluded Huawei from a multibillion-dollar contract 
     because of national-security concerns in Washington, 
     according to people familiar with the matter.
       Huawei has operated in Iran's telecommunications industry 
     since 1999, according to China's embassy in Tehran. Prior to 
     Iran's political unrest in 2009, Huawei was already a major 
     supplier to Iran's mobile-phone networks, along with Telefon 
     AB L.M. Ericsson and Nokia Siemens Networks, a joint venture 
     between Nokia Corp. and Siemens AG, according to MTN Irancell 
     documents.
       Iran's telecom market, which generated an estimated $9.1 
     billion in revenue last year, has been growing significantly, 
     especially its mobile-phone business. As of last year, Iran 
     had about 66 million mobile-phone subscribers covering about 
     70% of the population, according to Pyramid Research in 
     Cambridge, Mass. In contrast, about 36% of Iranians had 
     fixed-line phones.
       As a result, mobile phones provide Iran's police network 
     with far more opportunity for monitoring and tracking people. 
     Iranian human-rights organizations outside Iran say there are 
     dozens of documented cases in which dissidents were traced 
     and arrested through the government's ability to track the 
     location of their cellphones.
       Many dissidents in Iran believe they are being tracked by 
     their cellphones. Abbas Hakimzadeh, a 27-year-old student 
     activist on a committee that published an article questioning 
     the actions of Iran's president, said he expected to be 
     arrested in late 2009 after several of his friends were 
     jailed. Worried he could be tracked by his mobile phone, he 
     says he turned it off, removed the battery and left Tehran to 
     hide at his father's house in the northeastern city of 
     Mashhad.
       A month later, he turned his cellphone back on. Within 24 
     hours, he says, authorities arrested him at his father's 
     house. ``The interrogators were holding my phone records, SMS 
     and emails,'' he said.
       He eventually was released and later fled to Turkey where 
     he is seeking asylum. In interviews with the Journal, two 
     other student activists who were arrested said they also 
     believe authorities found them in hiding via the location of 
     their cellphones.
       In early 2009, Siemens disclosed that its joint venture 
     with Nokia, NSN, had provided Iran's largest telecom, 
     government-owned Telecommunications Company of Iran, with a 
     monitoring center capable of intercepting and recording voice 
     calls on its mobile networks. It wasn't capable of location 
     tracking. NSN also had provided network equipment to TCI's 
     mobile-phone operator, as well as MTN Irancell, that 
     permitted interception. Like most countries, Iran requires 
     phone networks to allow police to monitor conversations for 
     crime prevention.
       NSN sold its global monitoring-center business in March 
     2009. The company says it hasn't sought new business in Iran 
     and has established a human-rights policy to reduce the 
     potential for abuse of its products.
       A spokesman for Ericsson said it delivered ``standard'' 
     equipment to Iranian telecom companies until 2008, which 
     included built-in lawful-interception capabilities. 
     ``Products can be used in a way that was not the intention of 
     the manufacturer,'' the spokesman said. He said Ericsson 
     began decreasing its business in Iran as a result of the 2009 
     political upheaval and now doesn't seek any new contracts.
       As NSN and Ericsson pulled back, Huawei's business grew. In 
     August 2009, two months after mass protests began, the 
     website of China's embassy in Tehran reprinted a local 
     article under the headline, ``Huawei Plans Takeover of Iran's 
     Telecom Market.'' The article said the company ``has gained 
     the trust and alliance of Major governmental and private 
     entities within a short period,'' and that its clients 
     included ``military industries.''
       The same month the Chinese embassy posted the article, 
     Creativity Software, a British company that specializes in 
     ``location-based services,'' announced it had won a contract 
     to supply a system to MTN Irancell. ``Creativity Software has 
     worked in partnership with Huawei, where they will provide 
     first and second level support to the operator,'' the company 
     said.
       The announcement said the system would enable ``Home Zone 
     Billing''--which encourages people to use their cellphones at 
     home (and give up their land lines) by offering low rates--as 
     well as other consumer and business applications that track 
     user locations. In a description of the service, Creativity 
     Software says its technology also enables mobile-phone 
     operators to ``comply with lawful-intercept government 
     legislation,'' which gives police access to communications 
     and location information.
       A former telecommunications engineer at MTN Irancell said 
     the company grew more interested in location-based services 
     during the antigovernment protests. He said a team from the 
     government's telecom-monitoring center routinely visited the 
     operator to verify the government had access to people's 
     location data. The engineer said location tracking has 
     expanded greatly since the system first was installed.
       An official with Creativity Software confirmed that MTN 
     Irancell is a customer and said the company couldn't comment 
     because of ``contractual confidentiality.''
       A spokesman for MTN Group Ltd., a South African company 
     that owns 49% of the Iranian operator, declined to answer 
     questions, writing in an email, ``The majority of MTN 
     Irancell is owned by the government of Iran.'' He referred 
     questions to the telecommunications regulator, which didn't 
     respond.
       In 2008, the Iranian government began soliciting bids for 
     location-based services for the largest mobile operator, 
     TCI's Mobile Communication Co. of Iran, or MCCI. A copy of 
     the bidding requirements, reviewed by the Journal, says the 
     contractor ``shall support and deliver offline and real-time 
     lawful interception.'' It also states that for ``public 
     security,'' the service must allow ``tracking a specified 
     phone/subscriber on map.''
       Ericsson participated in the early stages of the bidding 
     process, a spokesman said. Internal company documents 
     reviewed by the Journal show Ericsson was partnering with an 
     Estonian company, Reach-U, to provide a ``security solution'' 
     that included ``Monitor Security--application for security 
     agencies for locating and tracking suspects.''
       The Ericsson spokesman says its offering didn't meet the 
     operator's requirements so it dropped out. An executive with 
     Reach-U said, ``Yes, we made an offer but this ended 
     nowhere.''
       One of the ultimate winners: Huawei. According to a Huawei 
     manager in Tehran, the company signed a contract this year to 
     provide equipment for location-based services to MCCI in the 
     south of Iran and is now ramping up hiring for the project.
       One local Iranian company Huawei has done considerable 
     business with is Zaeim Electronic Industries. ``Zaeim is the 
     security and intelligence wing of every telecom bid,'' said 
     an engineer who worked on several projects with Zaeim inside 
     the telecom ministry. Internal Ericsson records show that 
     Zaeim was handling the ``security part'' of

[[Page 17298]]

     the lawful-interception capabilities of the location-based 
     services contract for MCCI.
       On its Persian-language website, Zaeim says it launched its 
     telecommunications division in 2000 in partnership with 
     Huawei, and that they have completed 46 telecommunications 
     projects together. It says they now are working on the 
     country's largest fiber-optic transfer network for Iran's 
     telecom ministry, which will enable simultaneous data, voice 
     and video services.
       Zaeim's website lists clients including major government 
     branches such as the ministries of intelligence and defense. 
     Also listed are the Revolutionary Guard and the president's 
     office.
       Mr. Gan, the Huawei spokesman, said: ``We provide Zaeim 
     with commercial public use products and services.'' Zaeim 
     didn't respond to requests for comment.

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