Washington has warned Pacific island nations that a Chinese company bidding to build an undersea internet cable is a security threat.
Huawei Marine, which was recently divested from Huawei Technologies and is now majority-owned by another Chinese company, submitted bids along with France’s Alcatel Submarine Networks, Finland’s Nokia and Japan’s NEC, for the $72.6 million project backed by the World Bank and Asian Development Bank.
The project is designed to improve communications to the island nations of Nauru, Federated States of Micronesia (FSM) and Kiribati.
Washington sent a diplomatic note to FSM in July expressing strategic concerns about the project as Huawei Marine and other Chinese firms are required to co-operate with Beijing’s intelligence and security services, the sources said.
The FSM president is concluding a week-long visit to China and Beijing has recently stepped up engagement with the country, which is self-governing but relies on Washington for its defence.
It has signed up to China’s Belt and Road Initiative, and this week the Chinese ambassador handed over a cheque for $50,000 to help it keep out the coronavirus.
Its government told Reuters that it is talking to project partners, “some of whom have addressed a need to ensure that the cable does not compromise regional security by opening, or failing to close, cyber-security related gaps.”
Diplomatic links
Undersea cables, which have far greater data capacity than satellites, have emerged as a sensitive area of diplomacy in the Pacific.
The nation of Kiribati views Huawei Marine’s bid most favourably, Reuters said. Beijing has also courted the island chain, formerly known as the Gilbert Islands, convincing it last year to abandon Taiwan as a diplomatic ally and recognise the mainland.
Nauru, another Pacific nation, is allied with the US and Australia and has urged FSM to shun Huawei’s bid.
In 2018, Australia paid for an undersea link for Papua New Guinea and Solomon Islands, shutting out Huawei Marine.
The Huawei Marine bid is seen as attractive as it is more than 20% cheaper than rivals.
Huawei Marine is now majority owned by Shanghai-listed Hengtong Optic-Electric, part of Hengtong Group, although Huawei Technology Investment Co retains a stake.
The US Commerce Department includes Huawei Marine on its so-called Entity List, which restricts the sale of goods and technology to the company.
• George Russell with reporting by Reuters.
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