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Visitors pass in front of the Huawei’s stand on the first day of the Mobile World Congress in Barcelonaon on February 27, 2017 in Barcelona.

Lluis Gene | AFP | Getty Images

Huawei claimed Thursday that attempts to restrict the Chinese tech giant from doing business stateside will cause the U.S. to fall behind in the development of next-generation mobile networks — and could raise “other serious legal issues.”

On Wednesday, President Donald Trump signed an executive order that gives the government authority to block transactions that involve information or communications technology that “poses an unacceptable risk to the national security of the United States.”

According to the executive order, the technology that could be blocked will be that which is “designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary.”

While Huawei isn’t named in the policy, the U.S. has long-accused the Chinese telecoms equipment maker of being closely-linked to China’s ruling Communist Party. Washington has also alleged that Huawei’s telecom equipment poses a national security risk because it could be used by Beijing for espionage. Huawei has denied all of these claims.

In a statement to CNBC on Thursday, Huawei said that further moves to block it from the U.S. market could have a damaging impact on the country’s development of 5G technology.

“Huawei is the unparalleled leader in 5G. We are ready and willing to engage with the US government and come up with effective measures to ensure product security,” a spokesperson for the company told CNBC.

“Restricting Huawei from doing business in the US will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers,” the statement said. “In addition, unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues.”

5G refers to the next-generation of mobile networks that promise super-fast download speeds and the ability to underpin new technologies like driverless cars, which require huge amounts of data to be transmitted.

Huawei was also put on the Bureau of Industry and Security’s (BIS) so-called Entity List. That means U.S. firms will need to get a license from the BIS to sell or transfer technology to Huawei. The Chinese company relies on some components from companies like Intel.

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OECD cuts growth outlook to post-crisis low

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The trade war between the United States and China has plunged global growth to its lowest levels in a decade, the OECD said on Thursday as it slashed its forecasts.

The Organisation for Economic Cooperation and Development said that the global economy risked entering a new, lasting low-growth phase if governments continued to dither over how to respond.

The global economy will see its weakest growth since the 2008-2009 financial crisis this year, slowing from 3.6% last year to 2.9% this year before a predicted 3.0% in 2020, the OECD said.

The Paris-based policy forum said the outlook had taken a turn for the worse since it last updated its forecasts in May, when it estimated the global economy would grow 3.2% this year and 3.4% in 2020.

“What looked like temporary trade tensions are turning into a long-lasting new state of trade relationships,” OECD chief economist Laurence Boone told Reuters.

“The global order that regulated trade is gone and we are in a new era of less certain, more bilateral and sometimes assertive trade relations,” she added.

Trade growth, which had been the motor of the global recovery after the financial crisis had fallen from 5% in 2017 into negative territory now, Boone said.

Meanwhile, trade tensions have weighed on business confidence, knocking investment growth down from 4% two years ago to only 1%.

Boone said that there was evidence that the trade standoff was taking its toll on the U.S. economy, hitting some manufactured products and triggering farm bankruptcies.

The world’s biggest economy would grow 2.4% this year and 2.0% next year instead of the 2.8% and 2.3% respectively that the OECD had forecast in May.

Global Economy Screen with world map and man

Stephen Morton | Bloomberg | Getty Images

Brexit Britain

China would also feel the pain with the second-biggest economy growing 6.1% in 2019 and 5.7% in 2020, outlooks the OECD cut from 6.2% and 6.0% previously.

The OECD estimated that a sustained decline in Chinese domestic demand of about 2 percentage points annually could trigger a significant knock-on effect on the global economy.

If accompanied with a deterioration in financial conditions and more uncertainty, such a scenario would mean global growth would be cut by 0.7 percentage points per year in the first two years of the shock.

Meanwhile, uncertainty over government policies was also hitting the outlook for Britain as it lurches towards leaving the European Union.

The OECD forecast British growth of 1% in 2019 and 0.9% in 2020, but only if it left the EU smoothly with a transition period, a far from certain conclusion at this stage. The OECD had forecast in May growth of 1.2% and 1.0%.

If Britain leaves without a deal, its economy will be 2% lower than otherwise in 2020-2021 even if its exit is relatively smooth with fully operational infrastructure in place, the OECD said.

The euro area would not be spared from negative spillovers under such a scenario and would see its gross domestic product cut by half a percentage point over 2020-2021.

The OECD trimmed its forecast for the shared currency block, largely due to the slowdown in its biggest economy, Germany, which was estimated to be in a technical recession.

Euro zone growth was seen at 1.0% – down from 1.2% in May – this year and 1.0% in 2020 – down from 1.4% in May.

Boone said Germany’s economy had probably shrunk in the second and third quarters with a slump in car manufacturing, which accounts for 4.7% of German GDP, knocking three-fourths of a percentage point off German growth.

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Netanyahu urges rival Gantz to form unity government

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Israeli Prime Minister Benjamin Netanyahu delivers a speech to supporters of his Likud party after polls closed in the Israeli parliamentary elections.

Ilia Yefimovich | picture alliance | Getty Images

Prime Minister Benjamin Netanyahu called on Thursday on his main rival, former general Benny Gantz, to join him in a broad, governing coalition after Israel’s election ended with no clear winner.

A spokeswoman for Gantz, leader of the centrist Blue and White party, had no immediate response to the surprise offer from Netanyahu, head of the right-wing Likud party.

The change of strategy reflected Netanyahu’s weakened position after he failed again in Tuesday’s election, which followed an inconclusive ballot in April, to secure a parliamentary majority.

“During the election campaign, I called for the establishment of a right-wing government but to my regret, the election results show that this is impossible,” Netanyahu said.

“Benny, we must set up a broad unity government, as soon as today. The nation expects us, both of us, to demonstrate responsibility and that we pursue cooperation.”

On Wednesday, Gantz said he hoped for a “good, desirable unity government”. But he has also ruled out forming one with a Netanyahu-led Likud, citing looming corruption charges against the prime minister. Netanyahu denies any wrongdoing.

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How Saudi Arabia failed to protect itself from drones, missile attacks

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Smoke is seen following a fire at Aramco facility in the eastern city of Abqaiq, Saudi Arabia, September 14, 2019.

Stringer | Stringer

DUBAI — Questions have abounded all week as to how Saudi Arabia, the planet’s third-highest defense spender and steward of the world’s largest oil facility, allowed itself to fall victim to a drone and missile attack that wiped out half of its crude production in a day.

“The Saudi leadership has a great deal of explaining to do that a country that ranks third in terms of total defense spending … was not able to defend its most critical oil facility from these kinds of attacks,” former U.S. diplomat Gary Grappo told CNBC on Tuesday.

The stakes for the future of Saudi Arabia’s ability to defend itself are global. Brent crude saw its largest price jump ever as markets opened this week, and the commodity’s next moves depend heavily on Saudi oil giant Aramco’s ability to recover its production capacity and defend itself from similar attacks.

Investors are likely asking themselves how the kingdom could have left itself so vulnerable and what that means for the future of oil, global markets and the long-awaited Aramco public stock offering.

So how did the Saudis, who in 2018 spent an estimated $67.6 billion on arms — second only to the U.S. and China — fail to defend their economic jugular vein?

A target like ‘a Christmas tree’

The Saudis have a lot of sophisticated air defense equipment. Given their general conduct of operations in Yemen, it is highly unlikely that their soldiers know how to use it.

Jack Watling

Land warfare expert, Royal United Services Institute

It also doesn’t help that massive oil plants are just easy targets.

“Saudi oil assets are vulnerable for the simple reason that when flying over them at night, they stick out against the desert background like a Christmas tree,” Michael Rubin, a former Pentagon official and Middle East expert at the American Enterprise Institute, told CNBC in an email.

“This means that enemies don’t need high-tech GPS-guided drones, even though they might have them, but can also use relatively lower technology drones.”

Drone wreckage including one described as an Iranian Delta Wave UAV, foreground, from the attack on the Aramco Abqaiq oil refinery, sits on display during a Ministry of Defense news conference in Riyadh, Saudi Arabia, on Wednesday, Sept. 18, 2019. Saudi Arabia on Wednesday said the weekend attacks on the kingdoms critical oil infrastructure were “unquestionably sponsored by Iran.” Photographer: Vivian Nereim/Bloomberg via Getty Images

Vivian Nereim | Bloomberg | Getty Images

Twenty-five drones and missiles were used in the Saturday strikes on state oil giant Saudi Aramco facilities Abqaiq and Kurais, Saudi’s defense ministry said. While claimed by Yemen’s Houthi rebels, Saudi and U.S. officials say Iran was responsible, a charge Tehran has denied.

Dave DesRoches, an associate professor and senior military fellow at the National Defense University in Washington, D.C., told CNBC: “If an attack is of a different threat than the system was designed for — that is a low-altitude cruise missile instead of a high-altitude ballistic missile — then the system will not intercept it.”

Saudi Arabia’s current air defenses are ‘irrelevant’

Saudi Arabia boasts an arsenal of sophisticated and expensive air defense equipment. They have the American-made Patriot missile defense system, German-made Skyguard air defense cannons and France’s Shahine mobile anti-aircraft system, and they’ll soon have Lockheed Martin’s highly advanced THAAD (terminal high altitude area defense) interceptors.

But these are basically inconsequential, says Jack Watling, a land warfare expert at the Royal United Services Institute who advises Gulf militaries.

“The Patriots are kind of irrelevant,” Watling told CNBC in a phone interview. “The track record of Patriot engaging missiles of any kind is pretty awful, they very rarely hit the target.” The other issue, he says, is that it’s designed for shooting down high-altitude ballistic missiles, not the cruise missiles and drones used in Saturday’s attack.

“These were low-flying cruise missiles. They were coming in far below the engagement zone for Patriot. So you wouldn’t have tried to hit them with Patriot.” In its primary role of shooting down aircraft, Watling noted, the system does perform “very well.”

Aerial photographs found on open-source platforms show three Skyguard batteries placed around the targeted Abqaiq oil facility, which are slow-firing large caliber anti-aircraft guns, as well as French-made Shahine batteries from the 1980s.

Despite being permanently placed to protect these facilities, they Skyguards were not of much use either, Watling says: “The batteries around the site are firstly not the appropriate systems to engage cruise missiles, and there is no evidence that the Saudis have trained using their equipment.”

‘The Saudis… are largely inattentive’

To add to the Saudis’ weapon woes, their military personnel may not be up to the task either, according to Watling and several other experts who spoke to CNBC anonymously.

“The Saudis have a lot of sophisticated air defense equipment. Given their general conduct of operations in Yemen, it is highly unlikely that their soldiers know how to use it,” Watling said. He added that the kingdom’s forces have “low readiness, low competence, and are largely inattentive.”

“So if you’re a battery commander protecting against an oilfield which you never believed was going to come under attack, how carefully are you watching your radar? I’d be surprised if they’d even turned their radar on.”

Even those that do have the technical knowledge, Watling added, “are unlikely to be attentive enough to pick up small unmanned aerial vehicles or low flying missiles on their radar… quickly enough to coordinate countermeasures.”

The Saudi Defense Ministry did not respond to a CNBC request for comment.

In the Saudi military’s defense, oil infrastructure in the kingdom falls under the Ministry of Interior (MOI), military, noted Becca Wasser, a security analyst and war gaming expert at RAND Corp in Washington, D.C.

“Most of U.S. arms sales to KSA, particularly in air defense, have been to the military,” she wrote on Twitter on Monday. “The MOI, to my knowledge, isn’t well kitted out for this role as they tend to focus on domestic threats.”

So what does the kingdom need to do?

Barely a month has gone by since 2016 without Yemen’s Houthis firing rockets or missiles into the kingdom, which has been mired in a bloody war with the rebels since 2015. The Saudi-led offensive in Yemen has led to tens of thousands of deaths, according to the United Nations.

But to achieve the kind of point defense that could counter future attacks like Saturday’s, the Saudis need better short-range air defense systems and lower level search-and-track radar, experts say. “More importantly,” RUSI’s Watling added, “they would need soldiers who were competent at using them, and attentive.”

“If the Trump Administration is serious about confronting Iran in the region, it’s doing an abysmal job preparing for the small and big fights where the IRGC and its proxies can bring asymmetric weapons to bear,” Miguel Miranda, founder of website the 21st Century Arms Race, wrote last year in an op-ed for RealClearDefense.com.

“Genuine layered anti-ballistic missile defenses are needed to protect U.S. bases against hundreds of potential missile and rocket attacks by Iran in a future war.”

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