After rejecting a Chinese company-led proposal that was judged a security danger by US officials, the Federated States of Micronesia will use a US finance facility to build a Pacific undersea communications cable, two sources told Reuters.
Several schemes to install optical fiber cables across the Pacific have piqued the US’s interest in recent years, projects that would substantially improve communications for island states.
Because submarine cables have significantly larger data capacity than satellites, Washington is concerned that Chinese enterprises’ engagement could jeopardize regional security. Beijing has denied using cable infrastructure for eavesdropping on a number of occasions.
Two sources familiar with the proposals claimed FSM will utilize US cash to build a line connecting two of its four states, Kosrae and Pohnpei, resembling a route suggested under a previous $72.6 million World Bank and Asian Development Bank-backed project.
According to Reuters, the project, which also included Nauru and Kiribati, was canceled in June when Washington expressed fears that the contract would be handed to Huawei Marine, which is now known as HMN Technologies and is majority owned by Shanghai-listed Hengtong Optic-Electric Co Ltd.
According to Reuters, FSM will get roughly $14 million from the American Rescue Plan, a U.S. program established by President Joe Biden to distribute funding both domestically and internationally to tackle the COVID-19 pandemic’s health and economic effects.
FSM said it was committed to providing fiber connectivity to the State of Kosrae, and onward connectivity to Kiribati and Nauru. It did not respond directly to questions about U.S. funding.
The U.S. State Department declined to comment.
The United States and FSM have a long geopolitical relationship, enshrined in the Compact of Free Association, a decades-old agreement between the United States and its former Pacific trust territories. Under that agreement, Washington is responsible for the island nation’s defense.
The second source said the U.S. funded cable would likely connect to the HANTRU-1 undersea cable, a line primarily used by the U.S. government that connects to the U.S. Pacific territory of Guam.
Both sources spoke on condition of anonymity as they were not authorized to speak publicly.
The World Bank said in a statement it was working with FSM and Kiribati to map out their next steps after the original tender for the larger project concluded with no contract awarded.
PACIFIC POLITICS
Undersea cables represent one of the newest and most sensitive fronts in the rivalry between China and the U.S. in the strategic waters of the Pacific.
While FSM has close ties to the United States, it also has long-standing diplomatic and trade relations with China.
Prominent U.S. lawmakers have warned that Chinese companies could undermine competitive tenders by offering state-subsidized bids Reuters previously reported.
The U.S. Commerce Department publicly lists Huawei Marine on its so-called “Entity List” – known as a blacklist – which restricts the sale of U.S. goods and technology to the company. The Department told Reuters that Huawei’s new owner, HMN Tech, would also be captured under these restrictions.
China has strongly refuted the allegations. China’s Foreign Ministry said in a statement to Reuters that Chinese companies had a good record in cybersecurity.
“The so-called security threat [alleged] by the U.S. is totally groundless, and has ulterior motives,” the statement said. “Who the ‘hacker empire’ really is – engaging in spying and stealing secrets – is plain to the world.”
Australia, a strong regional ally to the United States, has ramped up its presence in the Pacific through the creation of a A$2 billion ($1.48 billion) infrastructure financing facility that island nations can potentially access for cable projects.
Nauru has been negotiating plans to tap into the Australian-backed Coral Sea Cable system, via Solomon Islands, sources told Reuters in June.
