By Jack Stubbs and Michael Holden
LONDON, July 19 (Reuters) - A powerful committee of British lawmakers on Friday urged the next prime minister to decide quickly on the role China's Huawei will have in next-generation 5G telecommunications networks to avert more damage to Britain's international relations.
The UK is a battleground in a geopolitical tug-of-war over Huawei Technologies HWT.UL , the world's biggest maker of telecoms networking equipment.
The United States has threatened to cut off intelligence sharing with allies who use Huawei equipment, which it says China could exploit for spying. China has warned Britain that excluding Huawei could hurt investment and trade.
Britain's National Security Council, chaired by outgoing prime minister Theresa May, discussed the issue in April and decided in principle to block Huawei from critical parts of the 5G network but give it limited access to less sensitive parts.
A final decision was supposed to have been made public in a review of the telecoms supply chain led by the Department for Digital, Culture, Media and Sport, but May's resignation has stalled the process.
Parliament's Intelligence and Security Committee (ISC) said the extent of the delay "is now causing serious damage to our international relationships: a decision must be made as a matter of urgency".
Three sources told Reuters the government now planned to publish the results of that review as soon as Monday, but that the section on 5G equipment vendors would be "kept back" for the next prime minister to decide. replacement, either foreign minister Jeremy Hunt or former London mayor Boris Johnson, the frontrunner, will be installed next week.
A government spokesman said the results of the review would be announced "in due course" and all network operators would have to comply.
'GEOSTRATEGIC DECISION'
The ISC said Britain's cyber security chiefs had made clear that the issue was not one country or company, but that national networks had to be able to withstand any attack, malicious action or simple human error.
The committee said this was best achieved by diversifying suppliers, and the problem for 5G was that only three firms were in the running - Huawei, Nokia (HE:NOKIA) and Ericsson (BS:ERICAs).
"Therefore including a third company - even if you may have some security concerns about them and will have to set a higher bar for security measures within the system - will, counter-intuitively, result in higher overall security," the ISC said.
Huawei Vice President Victor Zhang said: "We agree that diversity improves resilience in networks."
The ISC also acknowledged, however, that the government had to take political concerns into account, and so should not do anything to jeopardise the "Five Eyes" intelligence alliance of the United States, Britain, Australia, Canada and New Zealand.
It argued that China would understand if Huawei were excluded as Beijing would not allow a British company to play a role in its critical national infrastructure.
"This is a geostrategic decision, the ramifications of which may be felt for decades to come," the committee said.