SYDNEY, Australia: Concerns over Chinese participation have prevented the awarding of a contract to lay underseas communication cables for Pacific island countries.
The project, entitled the East Micronesia Cable system, was to improve communications in the island nations of Nauru, Kiribati and Federated States of Micronesia by providing far greater data capacity than from satellites.
China's Huawei submitted a bid for laying the cable for the $72.6 million project that was more than 20 percent below rivals Alcatel Submarine Networks (ASN), part of Finland's Nokia, and Japan's NEC.
However, sources told Reuters that contracts were not issued due to the island governments' concerns about security if the Chinese were involved. Further, the planned connection to a sensitive cable leading to Guam, a U.S. territory with large military installations, increased the security concerns.
"Given there was no tangible way to remove Huawei as one of the bidders, all three bids were deemed non-compliant," a source told Reuters.
The World Bank, which was helping to fund the project, said in a statement to Reuters that it was working with the island governments to determine how to proceed.
"The process has concluded without an award due to non-responsiveness to the requirements of the bidding documents," the World Bank said.
Meanwhile, the Chinese foreign ministry issued a statement to Reuters claiming that all parties should guarantee a non-discriminatory business environment that all countries, including China, can participate in.
"The Chinese government has always encouraged Chinese companies to engage in foreign investment and cooperation according to market principles, international regulations and local laws," the spokesperson said.
During the bidding process last year, Washington detailed its concerns, noting that Chinese companies are required to co-operate with Beijing's intelligence and security services.
Also, U.S. lawmakers warned that the Chinese government subsidizes companies, undermining tenders like those run by development agencies.
Among other tasks, the underseas cable was designed to connect to the HANTRU-1 underseas cable, a line primarily used by the U.S. government that connects to Guam.
Washington has urged governments worldwide to end the purchase of telecommunications equipment from China's Huawei Technologies. The Americans have warned that Huawei delivers data to the Chinese government for spying, a charge consistently denied by the company.