Solomon Islands signs $100 million Huawei deal

Singapore: Solomon Islands has signed a $100 million deal with Chinese telecommunications giant Huawei to build more than 100 mobile phone towers, deepening its partnership with Beijing.

The deal will see Honiara take out a loan from a Chinese state-owned bank for the first time and tie a significant part of its communications infrastructure to Huawei, the Shenzhen-based company banned from building 5G networks in Australia, Canada and the United States due to national security concerns.

Chinese telecommunications firm Huawei is making inroads in the Pacific.Credit: Bloomberg

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

The deal follows a security deal between Beijing and Honiara in April to protect Chinese investment in the Solomons and tighter training links between local and Chinese police forces less than 2000 kilometres from the Queensland coast.

The country’s Prime Minister Manasseh Sogavare has asked to delay its election due in May until after the Pacific Games in November 2023. The move has sparked claims by the opposition that Sogavare is attempting to engineer civil unrest, triggering an intervention by China’s security forces and maintaining his hold on power.

Lowy Institute Pacific research fellow Mihai Sora said the Huawei deal showed Honiara’s relationship with Beijing should stay at the top of Australia’s regional priorities despite a warm meeting between Prime Minister Anthony Albanese and Sogavare in Suva in July.

Prime Minister Anthony Albanese meets with Solomon Islands Prime Minister Manasseh Sogavare in July.Credit: Joe Armao

“It’s not as simple as hugging it out. It’s important, but it’s not sufficient,” he said. “It doesn’t resolve the strategic tension in the Pacific as a result of China using Solomon Islands to make strategic inroads that will continue to be a point of friction.”

Australia is also building six mobile towers across three provinces in the Solomons, but the 161 Huawei towers will dwarf the Australian-built infrastructure across the country. Last month Telstra bought Digicel Pacific for $1.3 billion to stop a competing bid from China telecom.

“Expect more surprises in the future,” said Sora. “[The security deal] is certainly not the end of China’s efforts.”

The Australian Department of Foreign Affairs said international investments were a matter for the Solomon Islands government.

“Australia supports infrastructure investment that is transparent and open, meets genuine needs, delivers long-term benefits and avoids unsustainable debt burdens,” a spokesperson said.

The Sogavare government said the 448.9 million RMB ($97 million) Huawei deal would be funded through a loan by the Exim Bank of China and “the project would generate sufficient revenues for government to fully repay both the principal loan amount and interest costs within the loan period”.

But a KPMG report obtained by the ABC reportedly found the project was expected to generate a financial loss of almost $144 million. The Kiel Institute found since 2008, there have been 71 debt restructurings with Chinese creditors of 39 developing countries, giving Beijing financial and diplomatic leverage over local governments.

Sora said mobile telecommunications infrastructure was vital in the Pacific which suffers from poor connectivity over large distances.

“Sogavare can package this up to demonstrate that the switch in diplomatic ties is delivering for Solomon Islands,” he said.

“It also dovetails neatly with China’s increasing presence in the broadcasting and media production space in the Pacific.”

China is in the midst of digitising East Timor’s television network and is expanding its media training work across the region. Australia cut its Pacific programming under the former Coalition government as part of a $35 million reduction in funding for international broadcasting.

“[The Huawei deal] appears to be about infrastructure development, but then perhaps, there could be a content element down the track exploiting the fact that Australia has retreated from that media space,” said Sora.

“That’s important to China because it does suffer in terms of community sentiment. You have to build the infrastructure, and then you start pumping out the messages that you want people to hear.”

Also, in the sensitive South Pacific region, Vanuatu’s president dissolved the island nation’s parliament on Thursday, state broadcaster VBTC reported, after an attempt by some politicians to oust the prime minister.

Prime Minister Bob Loughman had been expected to face a no-confidence motion when parliament next sat after a group of lawmakers in his party said they had sided with the opposition in a bid to remove him.

Vanuatu’s president, Nikenike Vurobaravu, signed a notice dissolving parliament on Thursday to take effect the same day, a copy of the notice showed.

A failed attempt by Loughman to change the constitution to extend election cycles from four to five years, among other changes, had caused discontent in recent months.

with Reuters

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