Australia Parries China Influence in Pacific With Subsea Cable

(Bloomberg) -- Australia announced Wednesday it will help fund a new telecommunications cable stretching from Sydney to the Solomon Islands, squeezing out a bid by Huawei Technologies Co., as it tussles with China to retain its diplomatic influence in the South Pacific.

A high-speed undersea cable will stretch from Australia’s east coast via Port Moresby in Papua New Guinea and on to Honiara, and then link remote provinces in the Solomons, Prime Minister Malcolm Turnbull said.

The Solomon Islands government had initially considered allowing Huawei to build the cable, though reconsidered the Chinese company’s involvement due to Australian concerns, the nation’s Prime Minister Rick Houenipwela told reporters this month. Australia in 2012 banned Huawei from bidding for contracts to help build its own national broadband network, citing security concerns.

As part of its global bid for influence, China has stepped up diplomatic and economic engagement in the Pacific -- signing at least $1.8 billion in aid and loans since 2006, according to Sydney-based think tank the Lowy Institute. That’s triggered concern in Australia, which remains the largest donor to the region, with Foreign Minister Julie Bishop saying earlier this month “we regard the Pacific as our part of the world” and “we want to continue to be the partner of choice for nations in the Pacific.”

“Our concern is ensuring that Australian aid provides the support for economic and social development in the Pacific and that’s why we’re building this cable,” Turnbull told reporters in Canberra on Wednesday after a meeting with Houenipwela. Funding will come from Australia’s aid budget, Turnbull said, declining to give a total cost.

Huawei in August 2017 denied a media report that it had provided political donations to the Solomon Islands government as part of its bid for the cable project.

Huawei hasn’t given up on winning new projects in Australia. It is bidding to help construct Telstra Corp.’s 5G cell phone network, and also on a A$120 million ($91 million) contract to build a communications system for Perth’s metropolitan rail system.

©2018 Bloomberg L.P.