US warns, Chinese Participation a threat in 'Pacific undersea cable project' a World Bank-led project

US warns, Chinese Participation a threat in 'Pacific undersea cable project' a World Bank-led project, China expelled from bidding.

SYDNEY / BEIJING, - A World Bank-led project has refused to award a contract for submission of submarine cables after Pacific island governments heeded U.S. warnings. The Chinese company's participation was a security threat, two sources told Reuters.

The former Huawei Marine Networks, now called HMN Technologies and the Shanghai-owned majority listed Hengtong Optic-Electric Co Ltd, have submitted a $ 72.6 million project worth more than 20% worth less to rivals Alcatel Submarine Networks (ASN), part of the Finnish Nokia and NEC Japan, said the sources.

The East Micronesia Cable system is designed to improve communication in the Nauru Islands, Kiribati and the Federated States of Micronesia (FSM), by providing underwater infrastructure with a much larger data capacity than satellites.

Two sources with specific information about the tender told Reuters that the project had come to a standstill due to security issues raised in the island countries for HMN Tech purposes. The project connection is a critical cable leading to Guam, a U.S. territory. With large military equipment, it has exacerbated those security concerns.

"Because there was no concrete way to remove Huawei as one of the bidders, all three bids were considered incompatible," said one source.

The source said HMN Tech was in a strong position to win the bid due to the criteria being set by the development companies, which enabled those who were aware of Chinese involvement to find a suitable solution to terminate the tender.

In a statement sent to Reuters, the World Bank said it was working with the governments involved to map out the next steps.

"The program has been completed without award due to non-compliance with bidding documents," said a lender who has partnered with Washington-based organizations.

A spokesman for China's Foreign Ministry said in a statement to Reuters that all parties should provide a business environment that does not discriminate against companies from all countries, including China, in which they can participate.

"Legally, I want to emphasize that Chinese companies always maintain an excellent cyber security record," the spokesman said.

"The Chinese government has been encouraging Chinese companies to participate in foreign investment and cooperation in accordance with market policies, international laws and local laws."

The three island nations that participate in the project are represented on the bid review committee. Development agencies often review committee recommendations to ensure that the nominated bidder complies with agency policies and procedures.

The second development bank involved in the project, the Asian Development Bank, has sent inquiries from Reuters to the World Bank as the leading agency.

HMN Tech and Hengtong Group, a parent company, did not respond to queries sent by email. A lawyer who answered the phone at HMN Tech declined to comment.

A spokesman for Nokia-owned ASN told Reuters the company was not authorized to comment on confidential information. The NEC did not answer questions.

U.S. CONCERNS

During the bidding process last year, Washington expressed its concern over a political letter sent to FSM, which has military-defense plans with the United States under a decades-old agreement.

The note said Chinese firms pose a security threat because they are required to co-operate with Beijing's intelligence and security services, a guarantee denied by China.

In separate publications, prominent U.S. lawmakers They warned that the Chinese government was sponsoring companies, undermining tenders similar to those held by development agencies.

The U.S. Department of State You did not immediately answer questions Thursday.

While warnings were issued during the Trump administration, there was no significant change in the U.S. situation. On this issue under the new government. 

The project is designed to connect to the HANTRU-1 undersea cable, a line widely used by the U.S. government. Connecting to Guam.

Washington has pressured governments around the world to crack down on Chinese communications maker Huawei Technologies without providing sensitive infrastructure, saying the company would pass information to the Chinese government on probation, a claim that has been denied by the company.

The U.S. Department of Commerce It lists Huawei Marine in its list of so-called "Entity List" - also known as the blacklist - blocking the sale of U.S. goods and technology In the company. The Department did not immediately respond to queries that the change in ownership of Huawei Marine had changed the situation.

Nauru, who has strong ties to Australia and has partners with the Pacific and Taiwan, initially raised concerns about a Chinese company's application.

The third island nation to participate in the project, Kiribati, has built strong ties between the two countries and Beijing in recent years, which includes developing strategies for developing a remote airport.

An FSM spokesman said the government could not comment on the plan. Nauru and Kiribati's representatives did not respond.