Two sources told Reuters that a project led by the World Bank refused to award a contract to lay sensitive submarine communication cables after the Pacific island governments noticed the U.S. warning that the involvement of a Chinese company constituted a security threat.

The former Huawei Marine Networks, now renamed HMN Technologies, is majority-owned by Hengtong Optoelectronics, which is listed in Shanghai, and submitted a bid for a project valued at US$72.6 million (approximately 5.4 billion rupees), which is more expensive than rival Alcatel. The submarine network (ASN) is more than 20% lower. ), part of Finland’s Nokia, and Japan’s NEC, sources said.

The Eastern Micronesia Cable System aims to improve communications in island countries such as Nauru, Kiribati, and the Federated States of Micronesia (FSM) by providing underwater infrastructure with much larger data capacity than satellites.

Two sources with direct knowledge of the bidding situation told Reuters that the project was at a deadlock due to safety concerns raised by the island nation regarding HMN Tech’s bid. The project plans to connect a sensitive cable to Guam, a US territory with a large number of military assets, exacerbating these security issues.

One of the sources said: “Given that there is no practical way to exclude Huawei as one of the bidders, all three bids are considered non-compliant.”

According to sources, HMN Tech has the ability to win the bid due to the terms of the development agency’s supervision, prompting those who are cautious about China’s participation to find expedient solutions to end the bid.

The World Bank said in a statement to Reuters that it is working with governments to develop next steps.

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The Washington-based multilateral lending institution said: “The process has ended because it did not respond to the requirements of the bidding documents, but no rewards were received.”

A spokesperson for the Chinese Ministry of Foreign Affairs said in a statement to Reuters that all parties should provide a non-discriminatory business environment in which companies from all countries, including China, can participate.

The spokesperson said: “In principle, I want to emphasize that Chinese companies have always maintained a good record in cyber security.”

“The Chinese government has always encouraged Chinese companies to carry out foreign investment cooperation in accordance with market principles, international rules and local laws.”

The three island countries participating in the project sent representatives to participate in the bid evaluation committee. Development agencies usually review committee recommendations to ensure that selected bidders comply with agency policies and procedures.

The Asian Development Bank, the second development bank involved in the project, referred Reuters’ questions to the World Bank as the lead agency.

HMN Tech and parent company Hengtong Group did not respond to questions sent via email. A representative of HMN Tech who answered the phone declined to comment.

A spokesperson for Nokia’s ASN told Reuters that the company has no right to comment on confidential information. NEC did not answer the question.

U.S. concerns

During last year’s bidding process, Washington detailed its concerns in a diplomatic note to the Federated States of Micronesia, which has entered into military defense arrangements with the United States in accordance with a decades-long agreement. .

The note stated that Chinese companies pose a security threat because they are required to cooperate with Beijing’s intelligence and security services, but China rejected this statement.

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In another communication, prominent American lawmakers warned that the Chinese government subsidized companies and undermined tenders like those managed by development agencies.

The US State Department did not immediately respond to questions on Thursday.

Although the warning was issued during Trump’s administration, the US position on this issue under the leadership of the new administration has not changed significantly.

The project aims to connect the HANTRU-1 submarine cable, which is the main line used by the US government to connect to Guam.

Washington has put pressure on governments around the world to demand that Huawei Technologies, a Chinese telecommunications equipment manufacturer, stop providing critical infrastructure, claiming that the company handed over data to the Chinese government for espionage, but the company has consistently denied this accusation.

The US Department of Commerce has publicly included Huawei Marine on its so-called “entity list”-the blacklist-to restrict the sale of American products and technology to the company. The US Department of Commerce did not immediately respond to questions about whether the change in ownership of Huawei Marine has changed this situation.

Nauru has close ties with Australia and is Taiwan’s Pacific ally, and initially expressed concern about the Chinese company’s bid.

Kiribati, the third island country participating in the project, has established a strong bilateral relationship with Beijing in recent years, including plans to upgrade remote airstrips.

A spokesperson for FSM said the government could not comment on the project. The representatives of Nauru and Kiribati did not answer questions.

© Thomson Reuters 2021