Solomons strikes $100m Huawei deal

The Solomon Islands is to borrow £55 million ($105m) from China to roll out a network of Huawei mobile phone towers, creating a debt trap for the Pacific nation at the centre of a struggle between Beijing and the West.

The government yesterday announced the deal with the Chinese telecom giant despite an internal report from consulting firm KPMG warning that the proposal was financially precarious.

The overview seen by Australia’s ABC network estimated the project would generate a financial loss of more than £80 million that would take 20 years to recover.

It said the planned three-year construction programme ahead of the 2023 Pacific Games in the capital, Honiara, was “overly ambitious” and “does not appear realistic”.

McKinnie Dentana, the permanent secretary of the ministry of finance and treasury, insisted, however, that the plan was viable.

He revealed that it would be fully funded by an unprecedented concessional loan from the Exim Bank of China at a rate of 1 per cent interest over two decades.

Huawei has been banned from building new networks in neighbouring Australia, as well as the United States and the United Kingdom, over national security concerns.

Critics believe the network could be used by Beijing to increase surveillance of the strategic archipelago.

The US and its Pacific allies are already keeping a wary eye on China’s growing influence over the islands.

A secretive security pact signed this year between Honiara and Beijing set alarm bells ringing in Canberra and Washington as it could pave the way for Chinese troops and naval warships to create a base on the islands.

China’s renewed interest in the Solomons has divided the country.

Opposition MPs are also concerned that the construction of a new sports stadium by a Chinese stateowned company could put the country further in Beijing’s debt.

“This gift has strings attached, but for what? Our resources? Influence? A base?” MP Peter Kenilorea jnr told