“The cable doesn’t look to be as much of a done deal as one month ago,” Majuro attorney David Strauss, a board member of the National Telecommunications Authority, told the Marshall Islands Chamber of Commerce on Friday.
Marshall Islands Foreign Minister Tony deBrum said in an interview earlier in the week that he is asking the U.S. government to intervene and assist. “We were assured we’d get a fair shake on the deal, but they moved up the deadlines and increased the costs,” he said.
The National Telecommunications Authority has been negotiating with the U.S. Army and its contractors over the past three years to secure extension of a branch of the fiber cable to Majuro and Ebeye, the two urban centers in the Marshall Islands.
The Army is spending $100 million to bring the high-tech fiber optic cable from Guam to Kwajalein to ramp up the communications capability at the Reagan Test Site, a key missile defense-testing complex in the western Pacific.
In early November, the terms of a draft agreement were changed by the parent company that will own and operate the cable for the Army making it impossible for the Marshall Islands to participate, Strauss said.
National Telecommunications Authority officials have been alternately talking and negotiating with the Army and TKC Ltd., the company managing the bidding for the Army on the fiber optic cable project, he said.
The agreement for the Marshall Islands earlier called for a $15 million investment for a 25-year use period. But when officials from Hannon Armstrong, TKC’s parent, joined the talks earlier this month, they changed the terms to $18 million for 10 years, Strauss said.
Strauss added that in the new version of the agreement, the Federated States of Micronesia — a neighboring country that is also negotiating to get a branch from the main Army-funded cable — and the Marshall Islands are lumped together, such that if the FSM defaulted on its payments, the Marshall Islands would be considered in default, too, he said.
“Right now, there is no way we can do the fiber optic cable,” Strauss said. “They made an offer that we can afford to reject.”
Alan Fowler, a former general manager at NTA, who works for the U.S. Interior Department in Majuro, commented that based on the 10-year, $18 million price tag, “NTA is not going to get the U.S. Rural Utility Service loan (to fund the investment).
“I’m a strong proponent of the project but it’s not a good deal for the RMI,” Fowler said.
After debating the issue, the Chamber of Commerce issued a resolution of concern to Marshall Islands President Litokwa Tomeing.
As a result of these last-minute changes, the Chamber called on the Marshall Islands government to “deny the two American companies that are to own and operate the Army’s underwater fiber optic cable the use of its 200-mile exclusive economic zone until such time as the originally negotiated terms of use by the Federated States of Micronesia and the Republic of the Marshall Islands are restored.”
