US moves to turn Brazil’s operators against Huawei

US looks to turn Brazil’s operators against Huawei

The United States is in discussions with Brazil’s government over providing funding to help the country’s operators purchase 5G network equipment from Ericsson and Nokia rather than Chinese rivals.

In an interview with Brazilian newspaper Folha de S.Paulo, US ambassador to Brazil Todd Chapman said that state-run investment bank The US International Development Finance Corporation would offer financial support to Brazilian operators if they chose not to use cheaper network equipment from Chinese vendors such as Huawei and ZTE.

The US IDFC was created under the Trump administration in late 2018 as a response to China’s international Development Bank operations. It invests in critical infrastructure, energy, healthcare and technology to further US interests overseas.

Chapman described the issue as a matter of “national security” and noted that choosing Nokia and Ericsson’s equipment would allow Brazilian operators to "protect data and intellectual property, as well as sensitive information of nations". He added that similar talks were underway in other countries.

The US has long called for its allies to shun Chinese-made network equipment on the grounds of national security. Huawei has been a particular focus on the campaign, although the Chinese vendor denies that its equipment can be used for espionage purposes and few governments have responded decisively to pressure from the US.

Huawei has been present in Brazil for over 20 years, and all four of the country’s major operators – Claro, Oi, Telefonica Brasil SA and TIM Participacoes – have carried out successful 5G trials using its equipment. The vendor is working with all of these operators to modernise their networks as Brazil’s 5G spectrum auction approaches.

The US campaign has done little to deter the Chinese firm from strengthening its presence in Brazil. In August 2019, Huawei stated that it aimed to establish a second manufacturing plant in Sao Paulo state via an $800 million investment.

However, the US influence may be felt within Brazil’s government, with President Jair Bolsonaro recently reported as saying that the country’s 5G plans would be based not just on economics, but on foreign policy and security concerns.

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