BERLIN (Reuters) - Interior Minister Horst Seehofer has thrown his weight behind a proposal to reform Germany’s telecommunications law to toughen security requirements on foreign network vendors, the RND group of newspapers reported on Tuesday.

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Seehofer’s intervention increases the likelihood that Germany will tighten oversight over Huawei Technologies , sidestepping pressure from the United States to exclude the Chinese company from its market.

Government and industry leaders want clarity on the ground rules before Germany embarks on the buildout of next-generation 5G mobile networks by auctioning spectrum in late March.

Citing participants at a meeting of conservatives and Social Democrats, who rule together in a grand coalition, RND said Seehofer’s aim was to better control Huawei - and not to ban it.

The best way to achieve this would be by amending an article in Germany’s Telecommunications Act that addresses security. This would apply to all vendors and should not be viewed as a direct response to Huawei, coalition sources told RND.

Seehofer’s view is key, because his ministry oversees the BSI cybersecurity agency that is drafting a catalog of proposed security steps together with the Federal Network Regulator that will oversee the spectrum auction.

Officials are also concerned that, should a decision ultimately be taken to block Huawei, there would need to be a sound legal basis to do so.

Consultations are continuing, a senior government source told Reuters earlier on Tuesday, and a final decision on whether to let Chinese firms participate in 5G is unlikely within the next two weeks.

Work still needs to be done to address costs, feasibility and security measures, said the source, pushing back against reports in the German business press that officials had hammered out a common approach.

NO-SPY DEAL

Chancellor Angela Merkel has said Germany needs guarantees that Huawei would not hand data to the Chinese state before it can take part in building fifth-generation networks that would link everything from vehicles to factories at far greater speeds.

Such a no-spy pledge would come in addition to a catalog of security measures toughening certification procedures to minimize the risk that network equipment comes fitted with ‘back doors’ that would expose it to cyber espionage.

Huawei, the global networks market leader with annual sales exceeding $100 billion, faces international scrutiny over its ties with the Chinese government and suspicion Beijing could use its technology for spying, which the company denies.

U.S. Secretary of State Mike Pompeo drove home that message in Budapest on Monday, cautioning allies in central Europe that deploying equipment from Huawei would make it more difficult for Washington “to partner alongside them”.

Germany’s three telecoms operators - Deutsche Telekom, Vodafone and Telefonica Deutschland - use Huawei equipment in their networks and have warned that curbing their choice of vendors could be costly.

Deutsche Telekom has, for its part, proposed a series of measures to safeguard security, including setting up an independent laboratory to scrutinize equipment used in critical infrastructure before it is deployed in the field.