US Entices Allies With Incentives For Banning Cheaper Priced Huawei 5G Equipment Over Security Concerns: WSJ

The U.S. government has started extending financial incentives and other enticements to countries severing ties with China's Huawei Technologies Co., Ltd and ZTE Corp ZTCOF that allegedly pose national security risks, the Wall Street Journal reports.

What Happened: The U.S. foreign-affairs agencies are developing workshops and a handbook to guide Central and Eastern Europe and other developing countries' policymakers to build next-generation 5G cellular networks with non-Chinese equipment.

The U.S. Commerce Department's Commercial Law Development Program aims to train foreign politicians, regulators, and academics about their 5G network launches.

A large, bipartisan Congress group has backed a bill for the Central and Eastern European countries to receive American foreign aid specifically to buy non-Chinese telecom equipment.

Washington had previously warned allies about the restriction of intelligence sharing with countries that used Huawei equipment.

Germany refused to ban Huawei gear. However, other allies like the U.K. have agreed to restrict Chinese equipment.

Telecom executives, the U.S., and allied countries officials acknowledged China's popularity due to their cheaper priced equipment than Telefonaktiebolaget LM Ericsson ERIC and Nokia Oyj NOK.

Why It Matters: The U.S. officials and lawmakers emphasized cybersecurity's importance in 5G considering their role in sensitive industries and devices.

The U.S. agencies under Trump's Presidency in 2020 offered loans to developing countries to buy from Ericsson, Nokia, and Samsung Electronics Co Ltd SSNLF. A U.S.-backed consortium beat out a Beijing-funded rival to build a new nationwide wireless network. Washington had offered up to $500 million in loans.

Historically, the U.S. disallowed such lending to developing countries. Many Central and Eastern European countries, including Romania, Poland, the Czech Republic, and the Baltic states, have endorsed U.S.'s concerns against Huawei and strive for stronger military relations with the U.S. In 2019, Poland imprisoned a Huawei executive for spying. Baltic and Romanian governments have restricted their countries' Huawei usage.

Czech Prime Minister Andrej Babis demanded China replace its current ambassador after a series of public spats regarding Huawei's role in the country.

In contrast, Hungary's capital Budapest was hosting a second Huawei research center after Serbia in 2020. Several countries have also subscribed to Beijing's Belt and Road program, under which Chinese government-backed institutions mainly finance and build highways, ports, and other infrastructure.

Price action: NOK shares closed higher by 0.46% at $5.45 on Monday.