US Offers Financial Support to Developing Countries If They Avoid Using Huawei

U.S. Government Mentions Nokia, Ericsson, and Samsung Electronics Instead of Huawei

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The United States plans to use the carrot of financial support to prevent developing countries from choosing Chinese telecommunications equipment such as Huawei and ZTE. Previously, the U.S. had blocked the use of Chinese telecom equipment companies mainly among Western countries like the UK, and now it aims to expand this to developing countries.

According to the Wall Street Journal (WSJ) on the 18th (local time), the U.S. government agency USAID plans to promise financial support and persuade developing countries in Africa, the Middle East, and other regions to avoid selecting Chinese telecom equipment.

Boni Glick, USAID Deputy Administrator, stated, "The United States is prepared to provide billions of dollars in loans necessary for countries in Africa, the Middle East, and others to purchase hardware from democratic countries rather than China."

USAID is a foreign aid agency well known for providing food aid to developing countries, and its involvement in technology-related support for developing countries is considered unusual.

Deputy Administrator Glick said, "We will send staff to meet politicians and regulators in developing countries," and plans to persuade them that using telecommunications equipment from Chinese companies Huawei and ZTE is not a good idea.

This is due to concerns that Chinese telecommunications equipment could be used by the Chinese government for cyber espionage, and that financial support from Chinese state-owned banks makes these countries more financially dependent on China.

Glick warned, "There are many unfavorable clauses written in small print that go unnoticed," adding, "Countries that have taken Chinese loans are left with enormous debt, and China will take control of that country's state-owned assets."

He further added that he would cite the example of a South Asian country that had to sell its port to a Chinese state-owned company after failing to repay its debt as evidence.

WSJ evaluated this plan by the U.S. as a new weapon chosen amid the intensifying U.S.-China tech cold war.

The U.S. plans to facilitate deals with companies outside China such as Finland (Nokia), Sweden (Ericsson), and South Korea (Samsung Electronics) instead of Huawei and ZTE, as the U.S. lacks major wireless equipment manufacturers to provide the equipment.

To this end, Deputy Administrator Glick is scheduled to depart for Finland today to meet Finnish officials and visit telecommunications equipment companies including Nokia. Glick aims for a telecommunications agreement for developing countries, and the Finnish government is reportedly also reviewing cooperation plans with the U.S.

Meanwhile, according to market research firm Dell'Oro Group, Huawei and ZTE's market share in Africa and the Middle East is estimated to be close to 50-60% in total.