So much of the fight over the 5G rollout is politicized.
The USA pressures Canada to arrest a Huawei executive. It pressures allies, large and small, worldwide to avoid Chinese 5G tech with carrots and sticks. All of that gets rolled into an anti-China agenda. Talking heads talk about overreach and hidden threats.
The simple fact of the matter is that it should be a grave concern. The USA knows why.
After all, what China has the capacity to do comes straight from the CIA playbook.
Let’s look back to a bit of Cold War-era history that has only recently fully come to light.
This is the real story about why we should worry, starting half a century ago with a tiny Swiss company no one suspected.
Once upon a time, there was a Swiss company called Crypto AG.
World War II was revolutionary for encryption, and Crypto AG was on the forefront. It made a small fortune making crude, mobile machines to generate codes for U.S. troops during World War II, which it then used to ride the wave of both analog and digital encryption that followed.
It made money hand over fist selling equipment to more than 120 countries all the way into the 21st century.
It didn’t matter if its clients were bastions of freedom, or military juntas, or questionable rivals like India and Pakistan, or antagonists like Iran. Even the Vatican was a client.
Anyone that needed to communicate in secret was a potential client.
What virtually no one knew was that it was a front company for the CIA and the West German intelligence agencies.
This history has only just come to light, and it forebodes what is happening now.
The operation, first known as “Thesaurus” and later “Rubicon” was, as a CIA report called it:
“…the intelligence coup of the century. Foreign governments were paying good money to the US. and West Germany for the privilege of having their most secret communications read by at least two (and possibly as many as five or six) foreign countries.”
From 1970 on, the CIA and its rapidly growing sister agency, the National Security Agency, controlled virtually all aspects of Crypto AG’s operations.
Hiring decisions, tech designs, algorithmic back doors, and even sales targets. It all filtered down while almost everyone was none-the-wiser.
They monitored Iran during the hostage crisis. They fed info to the UK during the Falklands War. They listened to chatter during the CIA assassination and coup attempts — successful and unsuccessful — in Latin and South America.
They even caught Libyan officials’ self-congratulatory messages following the 1986 bombing of a Berlin discothèque.
Russia and China knew better and — more importantly — had the resources to build their own systems, which the CIA and NSA surely targeted as well.
But again, 120 countries were either duped into buying Crypto AG products or just never had a fighting chance to outmaneuver the Americans and West Germans.
There were security scares for the clandestine operation, but it wasn’t until the 1990s that the West Germans finally considered the joint venture to be compromised and backed out.
The 1992 arrest of a Crypto AG salesman in Iran, who had no idea he was a patsy for western intelligence agencies, started to bring it all to an end, along with the move towards online communications instead of open-air signals-based systems.
But at its height in the 1980s, Crypto AG encryption systems accounted for roughly 40% of all diplomatic cables and other transmissions by foreign governments.
And all of them were mined for any scrap of government or business secrets of any value.
Plus, Crypto AG kept delivering profits that were plowed into other operations, surely easier to shift around than direct government funding.
Crypto AG products are still in use in a handful of places, but the company was dismantled in 2018.
This is the underlying reason why the USA doesn’t want a Chinese company with government backing and domestic regulation — both publicly known and undoubtedly secret — to have anything to do with modern communications infrastructure.
It didn’t take much for an entire company to have no clue what was happening. Just a couple key executives and a handful of engineers. The rest of the staff never had a clue.
And today there is no information and communications infrastructure that matters more than the global 5G rollout that is happening right now.
This isn’t a chance to get the “keys to the kingdom”, so to speak. It is the chance to forge them.
I don’t care for what the FBI and law enforcement have been doing locally to try and force backdoor access to devices.
I don’t care for what we know for sure the CIA and NSA are doing to maintain their dominance in signals intelligence and decryption work.
I know one thing for sure though — I’d much rather deprive China of having the same baked-in advantage that the CIA and NSA had for half a century.
That’s why Chinese-built 5G hardware and software won’t be deployed in the USA and most of Europe.
That’s why a lot of the world is wising up and following suit.
And that creates a unique opportunity for investors.
The huge capital spending and profits that will come from 5G networks over the next several decades will be spread across western companies and exclude the telecom, software, and hardware giants that have emerged in China.
Geopolitical necessity is forcing a level playing field, and a handful of companies are going to bring in a windfall.
It is early in the game, but early contenders are already proving what they have to offer.
This is far from over, but this isn’t about anti-China rhetoric, though some politicians will bluster and bloviate to score some points with voters.
This is about the next several decades of profound advantages for anyone who can seize them, just like the CIA, NSA, and West German intelligence agencies did 50 years ago.
