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US offers to fund Brazil’s 5G, if Huawei is excluded

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The US Ambassador to Brazil, Toby Chapman, has told Brazilian press that the US is prepared to help finance the country’s 5G procurement as long as this funding is not used to buy Huawei equipment.

Chapman confirmed the talks between representatives of the US and Brazil, and said that the funds must be used only to purchase equipment from Ericsson and Nokia. The funding would be released via the US International Development Finance Corporation (DFC): a development bank formed in 2018 to offer assistance to foreign projects, while helping US and US-friendly companies enter markets and countering the companies boosted by Chinese international development drives.

“DFC is a fantastic organisation, with capital of $60bn,” he told the newspaper Folha de S.Paulo. “Before it could only finance projects for American companies, but the law has changed, and now it finances projects of national interest in the USA. This opens up the possibilities for companies in other countries that the US wants to help.”

“This makes it possible for Ericsson and Nokia to receive financial in 5G projects, including here in Brazil.”

Chapman claimed that barring 5G equipment made by Chinese companies was a matter of national security and economic security. He added: “Who wants to make investments in countries where their information will not be protected? All of this has an impact on the investment climate in the country.”

There is a very small number of companies which provide 5G equipment, the most advanced and cost-effective being Shenzhen-based Huawei. Huawei has become a bête noire for the Trump administration, which recently tightened measures against the company to restrict its use of technology with US origins.

US authorities have accused Huawei of posing a national security threat and pressured its allies (including the UK) to drop the company from their infrastructure; Huawei has denied these allegations.

So far, Brazilian leaders have not joined the Trump administration in condemning Huawei. The company has a strong position in Brazil, having already built longstanding relationships with the four major network operators (Oi, Claro, Telefonica Brasil SA, and TIM Participacoes) over its 20 years in the country. It is currently helping all operators upgrade their networks ahead of a 5G spectrum auction, as well as carrying out successful 5G tests.

In August 2019, the company announced that it would invest $800m in the state of São Paulo, including IT education for local schools and a new smartphone manufacturing plant.

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