Submarine-Cable laying ship

US-China row might push Chile to opt for Japan’s trans-Pacific cable

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The ongoing trade war between US and China might push Chile to opt for Japan’s proposal of taking trans-Pacific route to establish telecommunication network between South America and Asia-Pacific region. As per Japan’s bid Australia and New Zealand would be terminal points. Another contender in the bid is China with Beijing as the terminal point.

The key agenda behind Chile’s global telecommunications project was to build the first fiber-optic cable network which directly connected South America and Asia. So far Latin America is dependent on US for its communication cable network. China’s Huawei and Japan’s NEC showed interest in the bid. As per the reports, Huawei and NEC submitted pre-feasibility studies for the cable project in 2017, reviewing potential routes across the Pacific Ocean and their cost.

Some analyst believed that Chile’s selection out of the two would be influenced by US’s pressure rather than a genuine competitive evaluation of the proposals put across by the two nations. While other suggested that Chile’s decision to pick Japan over China would have more to do with shorter distance, reduced cost and huge foreign investment which is part of Japan’s offering. Tokyo has showed interest in investing huge sum of money in South America, not only in the telecommunications project but also in financing the special purpose vehicle through the Japan Bank for International Cooperation and the Japan ICT Fund.

Besides, the biggest edge which Japan had over China’s bid was its well established undersea cable network between Tokyo and Australia which it completed last month. It meant that Japan would take lesser time to finish the South America-Asia submarine optical fibre network project. While both the speculations stand correct as Japanese bid put a better offering on table while US pressure over Chile to skip Beijing might make the choice obvious.

Last year, China was Chile’s leading candidate for the undersea cable project given its expertise in 5G network as well. In this respect Chilean President Sebastian Pinera was all set to visit Beijing in April to take the discussions forward as Huawei agreed to invest in data centers in Chile. But right before Pinera’s visit to China, US Secretary of State Mike Pompeo reached Chile and urged the country head to push Huawei away, accusing the Chinese technology giant of spying for and sharing informations with the Chinese government, which would put Chileans at risk.

In June 2020,  US Justice Department released an order recommending the US tech giants Google and Facebook to withdraw its dealing with Hong Kong with respect to the Pacific undersea cable project due to security concerns. The US officials said that involving Hong Kong in the project “would expose US communications traffic to collection by the PRC [People’s Republic of China].” The department added, “Such concerns have been heightened by the PRC government’s recent actions to remove Hong Kong’s autonomy and allow for the possibility that PRC intelligence and security services will operate openly in Hong Kong.”

Undersea cable network carry 95% of world’s communications, including internet data. With the emergence of smart devices and 5G communications, increasing the capacity of the optical cables has become a pressing issue.

Gloria Hutt, Chile’s transportation and telecommunications minister, said that Chilean government would release the final technological report towards the end of this year, revealing which nation has won the bid. With an aim to transform Chile into South America’s digital hub, the government declared that the initial investment in the project would be around $500 million.

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