Globe & Mail: China, Nortel and the Net

Friday, October 19, 2001 -- Print Edition, Page A18

Through the miracle of mutual funds, the little old lady or gentleman down the street may own shares in a Brazilian TV station or a South African brewery. Now, if their fund holds shares in Nortel Networks, they may have a stake in China's suppression of its citizens. In the global economy, 1984 is a buying opportunity. According to the respected Canadian human-rights group Rights and Democracy, Nortel is selling China the technology to use the Internet to spy on its citizens, in part by enabling police to monitor the use of Web sites considered inappropriate by the state.

This would be a boon for China. In modernizing its state-run economy along free-market lines, it needs to join the world of electronic information systems. But those systems are hard for the state to control. Set loose, information tends to spin off in all directions, and to take individuals along for the ride. That's a scary thought for China's one-party rulers.

As a result, Rights and Democracy says, they are drawing on the expertise of international firms such as Nortel to build "a massive, ubiquitous architecture of surveillance." This creation runs counter to the claims by Bill Gates and other gurus of the information age, who have called the Internet and the spread of personal computers potentially the greatest democratizing force the world has ever seen.

If those gurus are wrong -- if totalitarian rulers have found a way to use the Internet while maintaining or even enhancing control over their people -- it would represent a major shift in the technological revolution.

Nortel released a three-paragraph statement yesterday denying the allegations, saying the equipment is designed to enhance communications, not restrict it. Human rights and democracy, it said, "should not be pursued at the unfair expense of Nortel Networks." But the Brampton, Ont.-based firm gave no details about how China plans to use the equipment.

That's not good enough. Shareholders need more information if they are to understand what they're getting into. And this country needs to be able to talk about the implications of doing business in a world where there are, let's face it, bad guys. [...]

True, Canada itself is moving toward greater scrutiny and surveillance of its citizens to combat the threat of terrorism. But China's motives for surveillance are different. Nortel might have taken these motives into account when asking itself whether this was an appropriate way to reverse its sliding economic fortunes.