BERLIN, Feb 11 (Reuters) - Lawmakers from Chancellor Angela Merkel's conservative party are set on Tuesday to back a strategy paper that stops short of banning China's Huawei from taking part in the rollout of Germany's 5G network.
The move would rebuff U.S. President Donald Trump's calls on Washington's allies to bar the Chinese telecoms giant from next-generation networks after Britain stopped short of an outright ban and the European Union backed a rules-based approach.
Leading Christian Democrat lawmakers signed off on the four-page paper on Monday evening after weeks of wrangling with hardliners who sympathise with U.S. warnings that Huawei's gear is not safe and it is beholden to Beijing. Huawei denies this.
The paper seeks instead to establish fundamental principles undperpinning a risk-management approach.
"State actors with sufficient resources can infiltrate the network of any equipment maker," it said. "Even with comprehensive technical checks, security risks cannot be eliminated completely - they can at best be minimised.
"At the same time, we are are not defenceless against attempts to eavesdrop on 5G networks. The use of strong cryptography and end-to-end encryption can secure confidentiality in communication and the exchange of data."
Ironing out differences with a bloc of pro-American lawmakers led by Norbert Roettgen, chairman of parliament's foreign affairs committee, will be an important step towards building a broader consensus in Merkel's coalition and across party lines.
It will also be important for Germany to present a coherent position at a security conference in Munich this weekend that will be attended by U.S. Secretary of State Mike Pompeo and Chinese foreign minister Wang Yi.
It would be costly and potentially risky for Germany, Europe's largest economy, to exclude Huawei. Its three network operators are all customers of the Chinese vendor and Berlin is concerned that such a move might provoke trade retaliation by Beijing.
With that in mind, the paper makes a clear distinction between access, transport and core network that are especially sensitive, thus allowing different handling of Huawei components in the various parts of the 5G network.
The paper suggests using products from several companies to avoid a "monoculture", and calls for the concept of trustworthiness to be anchored proposed tweaks to Germany's telecoms and IT security laws.
"Equipment makers can only be trusted if they verifiably fulfil a clearly defined security catalogue that rules out any influence from a foreign state on our 5G infrastructure," the document says.
The draft would also give operators until 2025 to swap out equipment from existing 4G networks that was supplied by vendors who fail certification checks, a position that would mitigate the cost to operators of ripping and replacing it.
The position paper also calls for Germany to push for a wider European industrial policy to ensure that its own companies can build all elements of international competitive an secure 5G networks.
It pushed back against hostile foreign takeovers, in an apparent reference to U.S. Attorney General William Barr's recent call to invest in Swedish network equipment maker Ericsson or Finland's Nokia to gain 5G foothold.
Ericsson CEO Borje Ekholm is due to meet Merkel on Thursday. (Writing by Madeline Chambers and Douglas Busvine; Editing by Angus MacSwan)