China’s funding of Huawei’s Solomon Islands deal shows signs of further tightening ties

China’s Huawei has signed an agreement to build 161 telecommunications towers on the Solomon Islands in a sign of strengthening ties between the Pacific nation and Beijing just months after it agreed to a controversial security deal. argumentative.

China signed an economic and security treaty in April with the Solomon Islands increased geopolitical tensions in the Pacific and provoked a stern response from the US and Australia in an effort to counter Beijing’s growing influence in the region.

Contract between Solomon Islands and Huawei will be financed by the Export-Import Bank of China, which leads the country’s state investments abroad. The bank will lend the country nearly 450 million Rmb ($66 million) for 20 years at 1% interest to finance the project.

This proposal will be a historic financial partnership with the People’s Republic of China since the two countries established diplomatic relations in 2019 as the two countries work closely to ensure the implementation and successful implementation of the project”, Solomon Islands the government said in a statement.

Telecommunications networks have become the focus of friction in the Pacific. Australia agreed to fund an underground cable to the Solomon Islands in 2018 to prevent Huawei from winning the contract. Then it is banked Telstra acquires DigicelThe dominant telecommunications company in the Pacific islands, this year will halt any potential sales to a Chinese operator.

Canberra is also funding the construction of six towers in the Solomon Islands.

Fergus Hanson, director at the Australian Institute for Strategic Policy Studies, said the Huawei deal was a “slap in the face” to Australian prime minister Anthony Albanese, who was secured by his Solomon Islands counterpart Manasseh Sogavare. last month that Canberra remains the country’s top partner.

“This is another blow to the credibility of Australian foreign policy in the region,” said Mr Hanson, adding that the agreement raised concerns about national security and debt diplomacy.

Work will begin next year and 48 of the towers will be erected before the start of the Pacific Games in Honiara in November 2023. China is also funding the construction of a stadium for this event.

The Solomon Islands says that building the tower is a financially viable project. But a senior telecoms executive is skeptical that the government will generate enough money from the network to pay back the loan, given the size of the loan package, low population density outside of Honiara and revenue. low average per user level across the Pacific.

Huawei’s 5G equipment has been at the heart of tensions between Washington and Beijing in recent years, as countries including Australia and the UK decided to ban Chinese supplier and domestic rival ZTE from building build network.

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