The US Raises Security Concerns Over East Micronesia Cable Project

A new submarine fiber optic cable project to connect Nauru, Federated States of Micronesia (FSM), and Kiribati has become a matter of political controversy over security concerns, reports Reuters. The United States has raised security concerns over the East Micronesia Cable Project. The project is designed to improve communications to the Pacific island nations.

The United States has warned the Pacific nations that the involvement of Chinese firms in the project would pose security threats. China-based Huawei Marine has quoted the lowest bid for the project, in which Hengtong’s submarine cables are planned to install.

Huawei Marine has quoted the lowest price for the tender, which around 20% lower than the rivals. Major shares of Huawei Marine is owned by Shanghai-listed Hengtong Optic-Electric Co Ltd, part of Hengtong Group.  Washington continues to warn Pacific nations against using it to provide critical infrastructure.

Kiribati views Huawei Marine’s bid most favorably after last year severing diplomatic ties with Taiwan in favor of China. Kiribati’s political strategy makes things complicated for the East Micronesia Cable Project.

Map of East Micronesia Cable System fiber optic submarine cable

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 did not immediately clarify whether the change in Huawei Marine’s ownership would mitigate this status.

The East Micronesia Cable project is further complicated by its planned connection to the HANTRU-1 undersea cable, which is primarily used by the U.S. government and lands at Guam, a U.S. territory with substantial military assets.

In 2018, Australia largely paid for an undersea internet cable system for its Pacific neighbors, Papua New Guinea and the Solomon Islands, shutting out rival plans from Huawei Marine, then majority-owned by Huawei Technologies.

A World Bank spokesman said the tender was continuing and could not “provide specific comments on the process at this time.” The ADB referred questions to the World Bank.

Submarine fiber optic cables that are backbones of international connectivity and communication easily fall prey to diplomatic controversies in the Pacific. Though the deployment of Submarine cables needs special technology and know-how, once established, they offer far greater data capacity than satellites.

This has created an impasse, the sources said, given on a pure cost basis Huawei Marine is in a strong position to win the bid due to the terms overseen by the development agencies.

Typically, the countries involved in the project establish the bid assessment committees. The development agencies review the committee’s recommendations to ensure the selected bidder complies with the agencies’ policies and procedures.

Alcatel Submarine Networks (ASN), part of Finland’s Nokia, and Japan’s NEC are other bidders, for the $72.6 million project backed by the World Bank and Asian Development Bank (ADB).

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.

That note followed an earlier warning to Micronesia and development agencies from the Nauru government, a Pacific ally to Taiwan, which is viewed by China as a renegade province, about Huawei Marine’s participation in the project, the sources said.

The FSM government told Reuters in a statement it is talking to bilateral partners in the project, “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.”

Under the Compact of Free Association, a decades-old agreement between the United States and its former Pacific trust territories, Washington is responsible for FSM’s defense.

A spokeswoman for the Nauru government said bids were being examined and that stakeholders were addressing “technical and administrative issues” to ensure the project progresses, reports Reuters.

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