Digital Governance with Jeffrey RoyE-governmentSecurity
healthcare, business, cyberattacks, malwarebytes
November 27, 2019

Libra, Huawei, and Canadian Cyber-Security

The mixed and varied reactions to Facebook’s announcement of a new global crypto-currency – named Libra, are emblematic of a world struggling to make sense of rising digital interdependence. On the one hand, many politicians have poured cold water over Facebook’s ambitions. France’s Finance Minister, for instance, flatly dismissed the Libra as ‘out of the question’.

Central bankers – mainly aligned with and working within national institutions, seem a bit more pragmatic. The UK’s Mark Carney, a Canadian, acknowledged that Facebook discussed their plans with the British central bank in advance, while the Bank of Canada had already released in 2017 a whitepaper examining options for creating its own form of digital currency. The Bank of Canada has stated that it is thus reviewing Facebook’s own blueprint ‘very carefully’.

On the other end of the spectrum are those who see the Libra as an innovation gateway for widening the credibility of blockchain infrastructures. Some see Libra as a source of empowerment in the developing world where hundreds of millions remain disenfranchised from traditional banking services or shackled by wildly volatile currencies. In contrast to bitcoin, Facebook’s envisioned currency is not truly crypto in nature but rather one whose value will be determined by a basket of existing global currencies. As such, it aspires to be both global and virtual but not necessarily crypto.

Yet as Facebook seeks to forge stronger ties with American and European regulators in a manner that will enable it to forge a new financial infrastructure (its public affairs efforts overseen by a former British Deputy Prime Minister), the company remains largely excluded from China. In China, payments, privacy and politics are closely inter-related with the country’s widening digital ambitions not only domestically but across borders.

Such ambitions have raised alarm bells in the west, notably with the case of China’s leading telecommunications provider, Huawei that is a key player in the roll-out of 5G mobile infrastructure in countries around the world. The Trump Administration has sought to ban Huawei from the US, encouraging its allies (including Canada) to do the same.

Responses have been mixed. Australia and New Zealand have followed the Americans while the British and German Governments have called for greater oversight and testing of Huawei infrastructure within their own borders. The Canadian Government has yet to make its own decision at a time when the arrest of Huawei’s CFO (and daughter of the company’s founder) in Vancouver, at the behest of an American extradition request, lies at the heart of the deepening malaise with China.  

Enjoining the evolving storylines of Libra and Huawei are two fundamentally different notions of the Internet that are shaping globalization as digital interdependence grows. The western-based vision of the Internet emphasizes personal freedoms and openness (albeit with various proprietary and political restrictions), while China and a growing list of other countries aspire to a model predicated upon control and surveillance. As Samm Sacks writes in the The Atlantic in June of last year, ‘China’s control-driven model defies international openness, interoperability, and collaboration, the foundations of global internet governance and, ultimately, of the internet itself.’ 

Importantly, Canada’s Parliamentarians are beginning to take note of the ramifications of these inter-related developments, as Canada’s Standing Committee on Public Safety and National Security released a report in June entitled Cyber-Security in the Financial Sector as a National Security Issue. While the report does not directly address Facebook’s currency ambitions, it draws important links between financial stability and cyber-security – raising alarm bells in particular about so called ‘fintech’ companies potentially prioritizing innovation over stability.

Members cast suspicion over Huawei but stop short of calling for an outright ban. The Committee further recommends that ‘in the next Parliament, the House of Commons Standing Committee on Public Safety and National Security establish a sub-committee dedicated to studying the public safety and national security aspects of cybersecurity, with potential areas of inquiry including international approaches to critical infrastructure protection, impact of emerging technologies, and cyber supply chain security.’

Encouraging all Canadians to adapt sound ‘cyber-hygiene practices’, the report should be recommended reading for all – and most especially for the 338 members elected to Canada’s Parliament in October.

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Jeffrey Roy

Jeffrey Roy is professor in the School of Public Administration at Dalhousie University (roy@dal.ca).

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