Exclusive-Pacific island turns to Australia for undersea cable after
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[June 24, 2021]
By Jonathan Barrett
SYDNEY (Reuters) -The Pacific island of
Nauru is negotiating for the construction of an undersea communications
cable that would connect to an Australian network, two sources with
knowledge of the talks told Reuters, after the earlier rejection of a
The United States and its Pacific allies have concerns that cables laid
by China could compromise regional security. Beijing has denied any
intent to use commercial optic fibre cables, which have far greater data
capacity than satellites, for spying.
Nauru, which has strong ties to U.S. ally Australia, helped scupper a
World Bank-led cable tender earlier this year over concerns the contract
would be awarded to the former Huawei Marine, now called HMN Tech, after
the Chinese firm lodged a bid priced at more than 20% below rivals.
The tiny Pacific nation of just over 12,000 people has now approached
the Asian Development Bank (ADB) to help fund an alternative, the
development agency told Reuters.
"ADB is involved in very early discussions with the government of Nauru
to explore possible options to help fund an undersea cable to deliver
low-cost, high quality internet service," the ADB said in a statement to
"The details of the connection arrangement and funding sources will be
determined in due course."
The two sources said the new plan would involve laying a cable from
Nauru to the Solomon Islands capital of Honiara, located about 1,250
kilometres (776.7 miles) apart.
The new line would then tap into the Coral Sea Cable system, a 4,700km
network that connects Australia to the Solomons and Papua New Guinea.
That line, majority funded by Australia and built by
Sydney-headquartered Vocus Group, was completed in 2019 to shut out a
competing offer from Huawei Marine, then owned by Huawei Technologies.
The former Huawei Marine is now majority owned by Shanghai-listed
Hengtong Optic-Electric Co Ltd after Huawei Technologies sold the
submarine cable business last year.
Nauru's plan needs Australia and the Solomons to be on board, the
sources said. It is unclear if Nauru has requested financial assistance
from Australia or whether it only needs Canberra's permission to join
the Coral Sea Cable system.
One source, who has direct knowledge of the planned cable route,
described the talks as "early stage negotiations".
The second source provided information about discussions between Nauru
officials and the ADB, Australia and the Solomons. The source said Nauru
was in the process of "doing a deal".
The governments of Nauru, Australia and the Solomons did not respond to
requests for comment. The World Bank said it was not involved in
discussions around cables connecting with Nauru.
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Nauru was the first to raise concerns over a bid
lodged by China's HMN Tech during the World Bank tender process last
year to build subsea cables for Nauru, Federated States of
Micronesia and Kiribati, sources told Reuters in December. The
United States followed up by warning the Pacific island nations that
the HMN Tech bid posed a regional security threat.
The project then unravelled after the island
governments heeded the U.S. warnings and declined to award a
"The Chinese government has always encouraged Chinese enterprises to
carry out investment cooperation in various fields in accordance
with market principles and international rules and on the basis of
abiding by local laws," said Zhao Lijian, a spokesman at the Chinese
"Chinese enterprises have always maintained a good record in network
security, and the so-called Chinese espionage activities are
groundless," Zhao told a regular press conference on Thursday, when
asked about the undersea cable plan.
Australia has ramped up its presence in the Pacific through the
creation of a A$2 billion ($1.5 billion)infrastructure financing
facility and via its membership of the new "Quad" group, together
with the United States, India and Japan, to counter China's
expanding interests in the Indo-Pacific.
Australia is also part of a trilateral partnership with the United
States and Japan that was formed to finance an undersea optic fibre
cable for Palau, another Pacific nation.
Washington has pressed governments around the world to squeeze
Huawei and other Chinese companies out of supplying sensitive
communications equipment, alleging the company could hand over data
to the Chinese government for spying, a charge denied by Beijing and
A Chinese foreign ministry spokesperson said in a statement to
Reuters last week that Chinese companies had an excellent record in
cyber security and that they needed to be able to participate in a
non-discriminatory business environment.
Nauru, located in the central Pacific, has retained diplomatic ties
to Taiwan, creating tension with China, which regards Taiwan as its
own territory. Hosting a major Pacific forum in 2018, Nauru's then
president, Baron Waqa, described a Chinese envoy as "very insolent"
and a "bully" after an angry exchange between officials.
($1 = 1.3259 Australian dollars)
(Additional reporting by Gabriel Crossley in Beijing; Editing by
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