Australia keeps China out of internet cabling for Pacific neighbor

SYDNEY (Reuters) - Australia has agreed to fund underwater internet cables and a cyber security center for the Solomon Islands, forestalling plans by Chinese telecom giant Huawei Technologies Co Ltd that could have compromised Australian internet security.

The arrangement was announced on Wednesday in a joint-statement from the two governments during a visit to Canberra by Solomons Prime Minister Rick Houenipwela.

Houenipwela was quoted by Australian Broadcasting Corp. as saying last week that the contract signed with Huawei in 2017 was scrapped because of "concerns raised" by Australia.

Until Australia stepped in, Huawei had planned to lay the cables for the Pacific archipelago nation, which could ultimately have given the Chinese company access to a broadband hub in Sydney. Analysts say that would have raised a 'red flag' for Australian internet security.

"I would not elaborate on security issues, that's not appropriate, Australian Foreign Minister Julie Bishop told reporters in Canberra. "What we have offered the Solomon Islands, and they have accepted, is an alternative to the offer, and ours is cheaper."

In April, Australia effectively scuppered the Huawei plan with a promise to join the Solomons, and neighboring Papua New Guinea to high-speed internet via an undersea cable to Sydney, setting aside roughly A$200 million in its May budget for the task.

A Huawei spokesman told Reuters it was never informed of any security problems with its planned cables for the Solomons.

Huawei has faced scrutiny from security authorities around the world and especially in the United States, where it was the subject of a 2012 investigation over whether its equipment provides an opportunity for foreign espionage - something the company has consistently denied.

It was blocked on security grounds from working on Australia's national broadband system in 2012.

Jonathan Pryke, a Pacific Islands foreign policy expert with the Lowy Institute, an Australian think-tank, said Australia's move also pushed back Chinese diplomatic efforts in the Solomons, one of six in the Pacific to have official relations with Taiwan.

Relations between Australia and China are currently under a cloud as a crackdown on foreign meddling in Australia's politics appears to target China.

Australia's broadband network itself has come under fire at home for poor service and slow speeds. With an average internet speed of 11.1 megabits per second, Australia ranks 50th in the world, according to the most recent State of the Internet report by Akamai Technologies, a specialist in internet speed technology.

(Reporting by Tom Westbrook; Editing by Simon Cameron-Moore)

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