The fuss over Chinese telecom firms and national security has put Prime Minister Stephen Harper in a quandary.

On the one hand, his free-market instincts tell him that business knows no nationality, that cheapest is best and that, if Chinese companies can deliver high-quality telecommunications equipment at low prices, then Canadian firms would be fools not to buy it.

On the other hand, he is an ardent admirer of the U.S. way of doing things — and in particular of America’s tough-minded approach to national security.

Harper, the Calgary economist, is desperate to stay on the right side of cash-rich China so that it will invest some of its billions in Canada’s resource sector.

But Harper, America’s best friend, is equally desperate to stay on the right side of big brother in Washington.

So when a U.S. House Intelligence Committee this week warned private firms, and by implication Canadian private firms, not to deal with two big Chinese telecom manufacturers, the prime minister was left in a bit of pickle.

What’s a guy to do?

The House committee report says the two Chinese firms, Huawei Technologies Inc. and ZTE Corp., are potential security risks. Huawei is the world’s second-largest telecom manufacturer and has contracts in Canada to make equipment for phone and Internet giants Bell Canada, SaskTel and Telus.

Exactly why the two are deemed security risks is never clearly spelled out in the 52-page report. The committee provides no evidence that either has used its equipment for spying.

Instead, its concerns — at least in the unclassified portion of the report — zero in on the corporate structure of the two firms and their relationship to China’s government.

To Canadians — and perhaps even some Americans — these corporate structures might seem familiar. Huawei, the report says, is controlled not by its shareholders but by an “elite subset of its management” —which makes it similar to many firms, including Bell Canada.

Like, say General Motors, Huawei gets substantial support from the state. Like every U.S. defence contractor, it has links to its country’s military. And like American firms operating in Canada, it must adhere first and foremost to the laws of its homeland.

Will Huawei plant malicious software that lets it listen in on the conversations of Saskatchewan wheat farmers? Perhaps. But as the House committee report suggests, anyone could do the same by simply bribing unscrupulous technicians.

In a rational world, Harper would probably dismiss the House report as pre-election political bluster. But in the world we inhabit, that is not always possible.

Canadians are blasé about foreign companies ruling the roost. Except for a brief period in the 1970s, that’s been our history.

But Americans are not. Americans were alarmed when Dubai — which is one of that country’s great friends — tried to buy six major U.S. seaport operations. Dubai was seen as just a bit too Arab.

Similarly, China is a tad too Chinese for American tastes. That China poses no immediate military threat is of no matter. It is big; it is foreign; it is therefore a problem.

Irrational? Maybe so. But that’s the way the world is viewed down there. And if Canada’s prime minister wants to keep his status as America’s biggest booster, he’ll have to take that into account.

So look for limited action, such as new federal rules that bar Huawei from bidding on a proposed new secure Canadian government telecom system. But don’t expect Ottawa to tell Bell Canada it can’t use the cheapest supplier.

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And for the rest of us? Don’t get too spooked. Most of our Internet and phone conversations are already susceptible to monitoring, either by Canada’s Communications Security Establishment or the U.S. National Security Agency.

Don’t put anything online that you don’t want the CIA — or the Chinese Communist Party — to know.

Thomas Walkom’s column appears Wednesday, Thursday and Saturday.

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