MICHAEL LUCCI: Spain’s ‘Digital Sovereignty’ Ends In Beijing

In Spain, “digital sovereignty” now means putting up barriers to restrict American tech companies while outsourcing the country’s networks to the Chinese Communist Party.

Across the EU, governments claim to be building independent systems to counter foreign dominance. But in practice, that often entails punishing the success of U.S. firms via regulations and taxes while deepening reliance on CCP-linked suppliers to backfill demand unmet by European companies.

Now Spain has taken this playbook to its extreme.

Chinese telecom giant Huawei has partnered with every major wireless carrier in Spain, including Telefónica, Vodafone, and MásMóvil. Vodafone and Telefónica, Spain’s partially state-owned carrier, have relied on Huawei equipment for years. Even now, Huawei remains a core provider of 4G and 5G infrastructure across Spanish networks. (RELATED: China Dominating Key Resources America Needs To Defend Itself, Report Finds)

Despite public claims of a pivot to Western vendors, the Chinese firm is still building smart transformer stations, fiber systems, and enterprise storage systems throughout the country. In 2023, Huawei launched its first cloud acceleration project in Spain, and in 2019, it collaborated with the municipal government of Rivas-Vaciamadrid to help achieve its goal of becoming a “smart city.”

Chinese President Xi Jinping has referred to Spain as a close partner, with China opening new “innovation centers” in Madrid and strengthening its workforce in the country.

The most troubling case, however, may be Huawei’s recent contract with Spain’s Ministry of the Interior. In July, the ministry awarded Huawei a €12.3 million deal to maintain the country’s wiretap and surveillance system. This system processes highly sensitive intercepted calls, messages, and digital communications obtained by court order. In other words, Huawei will now help operate the technical infrastructure for the most critical law enforcement and intelligence data in Spain.

It is unthinkable that a NATO ally would entrust its domestic surveillance to a company controlled by the CCP, even as the U.S. and its allies have spent years warning of Huawei’s ties to espionage, covert data collection, and cyber exploitation. Spanish authorities might as well hand over all sensitive personal and government information directly to Beijing.

In fact, Spain’s own police and security services have reportedly raised concerns over this arrangement. Spain’s National Police and Civil Guard have expressed apprehension about “strategic incongruity” in security matters, noting that even as foreign programs are treated with extreme caution, critical national data is being entrusted to a firm with links to the Chinese Communist Party. But Madrid is ignoring its own security services.

Nonetheless, Madrid has proceeded with the agreement anyway, partnering with a CCP-linked firm accused of spying on U.S. military bases through telecom equipment, violating U.S. sanctions against Iran and North Korea, and supplying surveillance and targeted repression tools to authoritarian regimes.

Meanwhile, Spain continues to extract revenue from American tech companies through discriminatory taxes and regulations.

In 2021, the country enacted a 3% digital services tax targeting revenues from online advertising, user data, and intermediary services. Nearly all the companies caught in the crosshairs – Google, Meta, Amazon, Apple – are American.

A U.S. Trade Representative investigation found that only two Spanish firms met the criteria for the tax, calling it a “proxy for nationality.” In 2023, U.S. companies paid nearly $300 million under this scheme.

The Trump administration has been clear that these unfair measures will not go unanswered. In February, President Trump ordered a new investigation into digital services taxes imposed by Spain and other EU states, calling them violations of U.S. sovereignty that undermine competitiveness and expose American companies to hostile regulatory regimes. Treasury Secretary Scott Bessent similarly labeled Europe’s model a “shakedown” designed to weaken U.S. tech leadership while making room for geopolitical adversaries.

Spain cannot continue to penalize U.S. firms under the guise of “sovereignty,” tax U.S. companies to subsidize its digital sector, and then recklessly wire its systems to Beijing. Spain is essentially taxing its largest ally to pay for Chinese services that are a direct threat to NATO security.

If Spain wants to build a truly sovereign digital future, where its citizens enjoy quality, freedom, and security in the digital marketplace, it should disentangle itself from Huawei and the CCP and embrace American companies and fair competition. Meanwhile, if the EU continues to penalize American innovation while opening its arms to Beijing, it should expect the U.S. to respond accordingly.

Sovereignty cuts both ways. The United States has made clear that the days of subsidizing those who work against our shared prosperity and security are over.

Michael Lucci is Founder and CEO of State Armor.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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