The US government has started to extend financial and other incentives to countries severing ties with Chinese company Huawei Technologies Co., Ltd. and ZTE Corp (OTC: ZTCOF) that would pose national security risks, reports the Wall Street Journal.
What happened: U.S. foreign affairs agencies are developing workshops and a manual to guide policymakers in Central and Eastern Europe and other developing countries to build next-generation 5G cellular networks with non-Chinese equipment.
The U.S. Department of Commerce’s Commercial Law Development Program aims to train foreign politicians, regulators, and academics to launch their 5G network.
A large bipartisan group in Congress has backed a bill for countries in central and eastern Europe to receive U.S. foreign aid specifically to purchase non-Chinese telecommunications equipment.
Washington had previously warned its allies against restricting intelligence sharing with countries that used Huawei equipment.
Germany refused to ban Huawei equipment. However, other allies like the UK have agreed to restrict Chinese equipment.
Telecommunications executives, the United States, and officials from allied countries have recognized China’s popularity due to its cheaper equipment than Telefonaktiebolaget LM Ericsson (NASDAQ: ERIC) and Nokia Oyj (NYSE: NOK).
Why is this important: U.S. officials and lawmakers have emphasized the importance of cybersecurity in 5G given its role in sensitive industries and devices.
US agencies under Trump’s presidency in 2020 offered loans to developing countries to buy from Ericsson, Nokia and Samsung Electronics Co Ltd (OTC: SSNLF). A US-backed consortium defeated a Beijing-funded rival to build a new nationwide wireless network. Washington had offered up to $ 500 million in loans.
Historically, the United States has prohibited such loans to developing countries. Many countries in Central and Eastern Europe, including Romania, Poland, the Czech Republic and the Baltic States, have endorsed the United States’ concerns against Huawei and are working to strengthen their military ties with the United States. In 2019, Poland jailed a Huawei executive for spying. The Baltic and Romanian governments have restricted the use of Huawei in their countries.
Czech Prime Minister Andrej Babis has called on China to replace its current ambassador after a series of public squabbles over Huawei’s role in the country.
In contrast, the Hungarian capital Budapest was home to a second Huawei research center after Serbia in 2020. Several countries have also subscribed to Beijing’s Belt and Road program, under which institutions supported by the Chinese government mainly finance and build highways , ports and other infrastructure.
Price action: NOK shares closed 0.46% higher at $ 5.45 on Monday.
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