Yves here. I am in no position to judge the “fairness” of this post. But it does get points for saying, very early on, that the World Bank cancelled bidding on fiber optic cable project to benefit Federated States of Micronesia, Kiribati, and Nauru due to US diplomatic pressure. The article also calls out why the US and China legal frameworks for underseas cable are ill-suited to this kind of initiative (i.e., critics in each country can make a case) and that New Zealand, Australia, and Singapore offer better models.
By William Yuen Yee of the Jamestown Foundation, an independent, non-partisan research institution founded in 1984 and dedicated to providing timely information concerning critical political and strategic developments in China, Russia, Eurasia and the world of terrorism. Cross posted from OilPrice
- The World Bank’s cancellation of submarine cable system bidding reveals deeper US-China diplomatic and security tensions over undersea cables.
- Both US and China’s legal regulations around submarine cables present unique challenges and inconsistencies with UNCLOS.
- Stringent permitting processes in China are causing multinational companies to reconsider cable routes through the South China Sea.
In May 2018, the World Bank opened bidding to “all eligible firms from any country” on a $72.6 million submarine fiber-optic cable system that sought to enhance the Internet infrastructure of three Pacific island nations: the Federated States of Micronesia (FSM), Kiribati, and Nauru (World Bank, May 1, 2018). Companies like Japan’s NEC, France’s Alcatel Submarine Networks, and China’s HMN Tech leapt into the procurement frenzy. HMN Tech, formerly known as Huawei Marine Networks, submitted a bid that was 20 percent lower than its competitors and seemed to be in a favorable position to win. But in February 2021, the World Bank canceled the bidding process altogether, invalidating all participants as “non-compliant” with the “required conditions” (Nikkei Asia, March 18, 2021). The procurement contest concluded without an award.
Subsequently, it was later revealed that the World Bank’s decision was largely influenced by US diplomatic pressure. In July 2020, a note from the US State Department warned officials in Micronesia that HMN Tech’s involvement in laying the cable posed a security risk of espionage by the Chinese government. In December 2021—three years after the World Bank initiated the bidding process—the United States, Australia, and Japan announced that they would finance a cable along the same route. In June, manufacturing work on the 1,398 mile-long East Micronesia Cable System was officially underway (US Department of State, June 6). The story of the East Micronesia Cable System is just one example of the intensifying competition between Washington and Beijing to assert their influence over the 800,000-mile ecosystem of undersea cables.
These cables are crucial to the world economy and international communications: 99 percent of intercontinental data traffic, the SWIFT financial messaging network that transfers $5 trillion worldwide daily, diplomatic cables, and military orders traverse these cables (Financial Crimes Enforcement Network, accessed August 3). However, the preeminence of these underwater fiber-optic systems also makes them attractive targets for sabotage and espionage. The US Office of the Director of National Intelligence has labeled cyberattacks against cable landing stations a “high risk” to national security (Director of National Intelligence, September 28, 2017).
Increasingly, policymakers view cables as critical infrastructure that must be protected. But asking whether a particular cable is owned by China Telecom or supplied by HMN Tech is not enough to guarantee a cable’s security from foreign and domestic threats. Another important question is whether the legal regimes of countries provide sufficient protection for the subsea communication lines in their waters. This article will analyze the governance regimes of the US and China, evaluating whether their domestic legal frameworks adequately deter against deliberate damage, comply with the United Nations Convention on the Law of the Sea (UNCLOS), and stipulate flexible policies to facilitate rapid repair in the case of damage. On each metric, both Beijing and Washington fall somewhat short, albeit for different reasons.
The Punishment Does Not Fit the Crime
The legal frameworks governing submarine cables in the US and China each face a distinct set of challenges. In the case of the US, the legal regime is hampered by antiquated and inadequate domestic legislation to protect its submarine cables. Conversely, while the PRC has relatively modern national laws in place, the country’s governance suffers from insufficient enforcement mechanisms.
The most recent US legislation to protect against submarine cable sabotage dates to the Submarine Cable Act of 1888. Under 47 US Code Chapter 2, breaking a cable results in a maximum prison sentence of two years and a $5,000 fine (United States Code, accessed August 3). This penalty offers little deterrence against prospective cable saboteurs and cannot compensate for the cost of repairs, which average between $1 and $3 million (International Cable Protection Committee, accessed August 3).
On the other hand, China does not have a strong track record of enforcing its laws. Under the “Regulations on the Protection of Submarine Cable Pipelines,” Beijing imposes different financial penalties depending on the type of criminal act. If a cable operator intentionally damages submarine cables or fails to take effective measures to ensure their protection, he will be ordered to cease operations and be subjected to a maximum fine of 10,000 RMB ($1,385) (State Council, January 9, 2004). Cable operators who lay submarine cables and pipelines without proper authorization face the harshest penalty, incurring a fine of 200,000 RMB ($27,700) (State Council, August 26, 1992). Despite these relatively robust measures, Beijing’s more modern legal framework has not achieved much success due to a lax record of enforcement; between 2008-2015, China averaged 26 cable faults each year, the highest of any nation in the world (Submarine Cables Protection and Regulations, 2021).
Although China has taken steps to improve its enforcement mechanisms, their long-term impact remains to be seen. In 2020, the China Coast Guard launched a special operation called “Deep Sea Defender 2020” in which it investigated potential threats to cables like sand mining, drilling, anchoring, and bottom trawling. In September 2021, the agency announced the seizure of a ship suspected of breaking a military communication cable (China Coast Guard, November 15, 2021).
Examples of strong laws and robust enforcement exist elsewhere in the world, from which both Washington and Beijing can draw lessons. In New Zealand, willfully or negligently damaging a submarine cable results in a fine of up to 250,000 NZD ($152,530 (New Zealand Legislation, October 28, 2021). In Australia, the offense carries a maximum penalty of three years’ imprisonment and a fine of 40,000 AUD ($26,550) (Australian Federal Police, August 21, 2021). In August 2022, Singapore imposed three fines totaling 300,000 SGD ($220,000) on a private construction company for damaging multiple telecommunication cables while carrying out sheet piling works. 
Inconsistencies With UNCLOS
Both the US and China also have domestic regulations that are inconsistent with the UN Convention on the Law of the Sea, the international agreement often described as the “constitution of the oceans.” China embraces an excessively liberal interpretation of the rights of coastal states, while the US lacks national legislation making damage of a submarine cable a punishable offense. Both countries also require cable laying ships to obtain permits before initiating operations in their respective waters, which contravenes Article 58 of UNCLOS.
China subjects the delineation of cable routes to the consent of the coastal state, although UNCLOS does not allow this. Under Article 79(3), “the delineation of the course for the laying of such pipelines on the continental shelf is subject to the consent of the coastal State,” and no such requirement is mentioned for subsea cables (United Nations Convention on the Law of the Sea, accessed August 3). This legal distinction reflects the disparate environmental impacts of a broken cable and a broken pipeline, the latter of which is far less ecologically benign. Under the “Implemented measures for the Provisions Governing the Laying of Submarine Cables and Pipelines”, foreign companies seeking to lay cables and survey cable routes on China’s continental shelf must notify the nation’s State Oceanic Administration, and all routes must receive the express consent of Chinese authorities (Ministry of Natural Resources, August 26, 1992).
The US also has domestic laws that are inconsistent with UNCLOS provisions. While Washington has not ratified the international agreement, US administrations have consistently treated the international treaty and its provisions as customary international law (US Embassy and Consulate in Vietnam, July 21, 2020). Article 113 of UNCLOS mandates that all states must adopt laws that define the breaking of a submarine cable “willfully or through culpable negligence” as a punishable offense. As previously mentioned, the US has not updated criminal penalties for cable faults for over 130 years—since the Submarine Cable Act of 1888.
Permits, Permits, Permits
Both countries impose strict permit requirements that run counter to UNCLOS. The licensing measures of both states highlight their prioritization of national security considerations, but these regulations do not come without cost. Article 79(2) of UNCLOS empowers states to adopt “reasonable measures” in exploring the continental shelf and the exploitation of its natural resources, although such measures should not “impede the laying or maintenance of such cables or pipelines” (United Nations Convention on the Law of the Sea, 1982). While states with licensing requirements might argue that they are necessary to ensure that foreign cable ships are not engaging in potentially harmful activities, the legal text of UNCLOS explicitly indicates that this remains outside the scope of their jurisdiction.
The US permitting process is particularly complex. Under the Cable Landing License Act of 1921, all submarine cable operators must acquire a license from the FCC (FCC, accessed August 3). For cables with significant foreign ownership—or cables that connect the US with foreign landing points—applications must undergo review by the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector, previously known as “Team Telecom” (Federal Register, April 8, 2020). Cables must also receive a federal permit from the Army Corps of Engineers to evaluate its potential impact on the environment and any endangered species.  This requirement is just at the federal level; it is often necessary to obtain state and local permits as well. Overall, the combined licensing processes can take up to two years. A 2016 report prepared by an FCC working group on enhancing submarine cable resiliency urged the US government to streamline its permitting requirements (FCC, June 2016). While many policymakers in Washington acknowledge the problem posed by such permitting standards, a workable solution that sufficiently balances legitimate national security considerations remains to be found.
In the case of China, cable-laying providers must first obtain a letter of nonobjection from the Chinese military before they can submit a formal application to land fiber-optic systems in Chinese-controlled territories or waters (Nikkei Asia, May 19). Should a foreign vessel successfully obtain a license and start carrying out any laying and repair activities, however, other burdensome requirements remain. Foreign ships must report their ship names, call signs, and numbers; current positions and previous locations; and satellite telephone numbers to maritime authorities (Baijiahao, August 29, 2021).
Chinese officials have also started requiring cable-laying permits in its exclusive economic zone, the waters that extend between 12 and 200 nautical miles from a state’s coastline. This infringes upon Article 58 of UNCLOS, which affirms the right of all States to “navigation, overflight, and the laying of submarine cables and pipelines, and other internationally lawful uses of the sea related to these freedoms” in the exclusive economic zone (United Nations Convention on the Law of the Sea, accessed August 3). Moreover, Beijing reportedly has a lengthy approval process for cable projects within its “nine-dash line,” an expansive claim over much of the South China Sea that was rejected by an international tribunal at the Hague in 2016 (Nikkei Asia, May 19).
In addition, the PRC has stringent cabotage laws that strongly preference domestically flagged and domestically crewed vessels for submarine cable installation and repair. Under Article 70(6) of the Marine Environment Protection Law, foreign vessels must obtain prior approval to enter China’s territorial sea to repair, adjust, or remove its subsea cable lines (National People’s Congress, 1982). That said, foreign maintenance ships may act where urgent repairs are required for damaged cables laid on China’s continental shelf, provided that such operations do not “violate China’s sovereign rights and jurisdiction” (State Council, January 20, 1989).
Such bureaucratic requirements can significantly impede the maintenance of broken cables. Between 2005 and 2009, there were 19 cable faults caused by fishing vessels in China’s EEZ in the East China Sea, and repairs were delayed by a couple of weeks due to Beijing’s requirements (Submarine Cables: The Handbook of Law and Policy, 2014). China is not likely to remove such requirements in the near future. The China Academy of Information and Communications Technology—part of the influential Ministry of Industry and Information Technology—published a white paper in 2018 that recommended establishing a security review process for foreign enterprises which aim to partake in China’s submarine cable construction environment (China Academy of Telecommunication Research of MIIT, August 2018).
Beijing’s cumbersome permitting processes have caused some multinational companies to rethink plans to lay subsea internet cables crossing the South China Sea. Examples include the Meta-backed Echo and Bifrost subsea cables, scheduled for completion in 2024. Meta aims to establish the first transpacific cables that chart a new route through the Java Sea (Meta, March 28, 2021). By the end of 2024, a consortium of companies including Meta, Google, and Japan’s NTT aim to complete Apricot, a 7,439-mile cable that passes through the waters of the Philippines and Indonesia. One executive involved in the cable projects noted that “over the past two to three years, we’ve been struggling with the permit acquisition, particularly for the territorial waters claimed by China” (Nikkei Asia, May 19). For many corporations, navigating China’s regulatory environment has become a major challenge to implementing cable routes that traverse its claimed waters.
Arguably, these permitting measures might be relevant to safeguarding national security interests, especially given the sensitivity of critical infrastructure like subsea cables. But such laws require difficult tradeoffs. Current regulations increase costs, slow installations, and can consequently delay repairs of much-needed Internet access. These policies contradict the recommendations of the International Cable Protection Committee, an international non-profit organization that promotes the protection of the world’s submarine cables. 
The US and China are not alone in the need to modernize their submarine cable regulatory provisions. The same is true for the UNCLOS framework, which still fails to address several critical issues. For example, deliberate attacks on cables lying outside territorial seas are unlikely to be crimes under international law.  Additionally, coastal states have no legal obligation to adopt laws protecting submarine cables in their territorial seas. 
If UNCLOS does not update its cable governance regulations to ensure adequate national security protections, states will take their own steps to do so, and the trend of a fragmented undersea cable landscape is likely to persist. This past March, the US House of Representatives passed the Undersea Cable Control Act, which would require the White House to develop a strategy to prevent “foreign adversaries” from acquiring American-made goods and technologies used in developing undersea cables, as well as establishing agreements with allies and partners to do the same (US Congress, accessed August 3).
The domestic regulations within the US and China are particularly significant given the importance of both countries to the international submarine cable market. State-owned China Telecom has a network of 33 submarine cables that connect 72 countries, and the US boasts 88 FCC-licensed systems of the 400 total submarine cables worldwide (China Telecom Americas, accessed June 29; Submarine Networks, accessed August 3). As policymakers in both capitals start to analyze, review, and update their respective legal regimes, the regulatory frameworks of subsea cables will remain a critical space to monitor.