US Urges UAE To Replace Adversary Huawei, Triggering Doubts On Lockheed Martin's F-35 Jet, Drone Sales: Bloomberg

The Biden government influenced the United Arab Emirates (UAE) to replace Huawei Technologies Co from its telecommunications network, further jeopardizing UAE's purchase of $23 billion in Lockheed Martin Corp's LMT F-35 jets and drones, Bloomberg reports.

What Happened: The U.S. requested the UAE to remove Huawei equipment from its networks within the next four years before the F-35's proposed delivery in 2026 or 2027. However, the UAE officials said they need more time and sought an affordable alternative.

Possible alternatives include Samsung Electronics Co Ltd SSNLF, Telefonaktiebolaget L M Ericsson ERIC or Nokia Oyj NOK.

Previously the Trump government also influenced the UAE to replace Huawei and severe military and economic ties with China.

Though the F-35 sale commenced, for the time being, concerns still loom depending on the U.S. UAE agreement over Huawei and Chinese technology.

The U.S. is working with allies and partners to support a diverse supply chain of reliable telecommunications equipment and services as it considers the 5G security a high priority.

Previously the U.S. cut off Turkey as a buyer and parts supplier for the F-35 after President Recep Tayyip Erdogan bought a missile defense system from U.S. adversary Russia.

Why It Matters: UAE has nurtured alliances with the U.S. and China to hedge against fading American involvement in the region.

UAE is also scared by the Biden government's possible renewal of the Iran nuclear accord that Trump abandoned in 2018. 

China, along with other world powers, is engaged in talks to bring back the deal.

Huawei's presence in UAE's commercial networks could enable China to spy on pilots, contractors, and others at the bases at the F-35 locations.

China could also steal the U.S. drone technology as the U.S. fears.

China was the UAE's top trade partner in 2020 with $53.67 billion in total trade, double the U.S. trade figure.

Huawei is the UAE's partner company for its 5G network launch in a deal announced in 2019.

At the time, UAE telecom operator Etisalat disclosed Huawei's plans of building 300 5G towers in six months, ahead of Dubai hosting Expo 2020. In addition, Huawei posted a chief security officer to the UAE in 2020 to work with the Gulf state on cybersecurity and set up smart cities.

Price action: LMT shares traded lower by 0.01% at $387.68 on the last check Friday.

Image Courtesy: Wikimedia