The President of Costa Rica has issued a decree to maintain cybersecurity, setting strict security rules for international companies bidding for the country's fifth generation network (5G) contract, essentially excluding Chinese companies. Latin American governments and the United States are working hard to develop 5G cybersecurity standards and legal alternatives, fully safeguarding the sovereignty of key sectors and infrastructure.

After Costa Rican President Rodrigo Chaves visited Washington at the end of August and met with President Biden, he issued a law regulating the development of 5G mobile networks. The law prohibits countries that are not part of the Budapest Convention or Cybercrime Convention supported by 68 countries from participating in bidding. This ban applies to countries such as China, South Korea, Russia, and Brazil.

The Convention was signed in Budapest in November 2001 by 26 EU member states of the Council of Europe, as well as 30 countries including the United States, Canada, Japan, and South Africa. Since then, the Cybercrime Convention has become the world's first international convention against cybercrime.

Realizing the 5G dream is a difficult choice facing Costa Rica

Prior to Chavez's visit to the United States, General Laura Richardson, the commander of the Southern Command responsible for Western Hemisphere defense, visited Costa Rica. Richardson questioned China's growing investment in the development of ports and 5G network infrastructure in Latin America, and realizing the 5G dream was a difficult decision facing Costa Rica.

Costa Rica was the first Central American country to establish diplomatic relations with China in 2007, and it is also one of the top choices for American citizens to travel and retire in Central America. The growth of foreign exchange revenue and exports in Costa Rica relies on the United States, especially in medical devices and high-tech related products. However, the long-term delay of the road 32 widening project contracted by China under the "the Belt and Road" initiative has led to the expansion of the debt black hole, which has triggered criticism from President Chavez and public opinion, and has subverted the friendly image created by Beijing's foreign publicity.

A few days after Rodrigo Chaves took office as President in May 2022, Costa Rica suffered an unprecedented cyber attack, affecting the health system, taxation, social security, customs, transportation, electricity, and transportation departments.

Costa Rican President Chavez said during his visit to the White House and attendance at the Center for Strategic and International Studies (CSIS) in Washington at the end of August this year, "This is not a very good election gift, I believe it was caused by being the first leader in Latin America to say that Russia's invasion of Ukraine was a criminal act. At that time, including the meteorological bureau, all units were attacked and paralyzed, and we couldn't even figure out if it would rain.

After the cyber attack, an organization called "Conti" extorted approximately $10 million in ransom, but was refused by the Costa Rican government. Chavez said, "We will not pay ransoms, what we urgently need is a special bill that must have immediate effects

Chavez pointed out that this is due to Costa Rica's "negligence" in protecting information for decades, but with the help of the United States, this national security goal is now being achieved.

The United States extended a helping hand as soon as possible

Anne Neuberger, security advisor to Biden's Cyber and Emerging Technology, said that President Biden immediately learned of the cyber attack in Costa Rica and ordered assistance to be provided. Newberg recalled, "Within 24 hours of receiving the order, we dispatched a team from the Federal Bureau of Investigation (FBI) to assist.

In addition, the United States will provide $25 million to establish a security operation center, provide network security monitoring hardware and software, and an additional $10 million to build a security operation center for the Ministry of Public Security.

Beijing is attempting to enter Latin America by offering 5G services through Huawei at prices far lower than other competitors in the United States or Europe. The second step in cooperation between the United States and Costa Rica is to focus on a very sensitive issue in US China trade and technology competition - the 5G network.

Although some Latin American countries have engaged in relevant negotiations with China, the United States has taken commercial and diplomatic actions in an attempt to prevent this progress. Both Newberg and Nathaniel Fick, the State Department's Cyberspace and Digital Policy envoy, insist that the fundamental step in ensuring cybersecurity is to take stable steps in the development of 5G technology, ensuring 5G security in the right way and reliable suppliers

Faced with pressure from Huawei, Chavez emphasized: "Costa Rica is eager to embrace the potential of 5G, but will not pay the price of network risk. This means that Costa Rican utilities or telecommunications companies, as well as ultimately public or private 5G providers, will be limited to purchasing equipment technology from trustworthy suppliers. This decision is not based on liking or not liking some suppliers, although the price difference is huge“

He confirmed that in order to ensure the creation of a high-level and state-of-the-art network environment, the government is analyzing the security of American and European companies, and has decided to auction some frequencies so that the private sector can also participate in providing reliable 5G services. The connections provided by these companies will be fast, reliable, and affordable, with security being the most important

Due to the state-owned telecommunications company (ICE) considering Huawei as one of the suppliers of 5G mobile networks during the previous government, President Ch á vez's new restrictions have shattered the possibility of Huawei's participation.

Costa Rica's adoption of this measure comes as the international community is increasingly concerned about the security of the internet. The United States is leading efforts to persuade its allies to avoid using Huawei telecommunications equipment, believing that the company may be used by the Chinese government to monitor other countries.

In recent years, China has increased its influence in Latin American countries and become a major trading partner of many Latin American countries. However, some countries have expressed concerns about China's growing influence in the region and questioned the transparency of its investments. Costa Rica's decision also emerged against the backdrop of increasingly tense relations between China and several Latin American countries.

President Biden enacted the "Chips for America" plan in February 2023, with $39 billion of the $50 billion funding to fund the construction and expansion of manufacturing facilities. Intel has been manufacturing chips and operating in Costa Rica for 25 years, and Costa Rica is also a Central American country listed in Washington to ensure the supply of microprocessors.

China seems to be retreating from Central America

Ricardo Valencia, associate professor of global communication at Cal State Fullerton in the United States, told VOA: "China is excluded from the 5G bidding list. Since the United States has promised Costa Rica to contract its microchip manufacturing near shore, Costa Rica clearly wants to align with the United States

As for whether other countries in the region will be affected by the spillover effects of Costa Rica's decision, the Central American affairs scholar said, "With the progress of democracy in the region, this phenomenon is likely to occur. China seems to be withdrawing from Central America, especially with China's shattered commitment to the Najib Bukele government in El Salvador. I believe Central America is reviewing its shattered expectations of China

Chavez's Deputy Minister of Telecommunications, Hubert Vargas Picado, defended the new ban that came into effect in September, stating that China is a totalitarian country and its internal regulations force its companies to "carry out espionage activities in other countries" to support China's political intelligence agencies. Article 7 of the National Security Law of the People's Republic of China stipulates that all organizations (including enterprises) and citizens shall assist and cooperate with national intelligence work, and keep confidential any espionage activities carried out.

The Chinese Embassy in San Jose criticized this statement in a statement, pointing out that these remarks have seriously affected the confidence and expectations of Chinese enterprises in conducting economic and trade activities in Costa Rica, eroding the good energy for the development of bilateral relations. China believes that these remarks are "irresponsible and baseless".

It is no longer news in Latin America that China's diplomatic leaders or ministers openly criticize China despite the principle of friendship between the two countries.  

On October 3rd, Huawei filed a constitutional rights lawsuit with the Constitutional Court alleging that the company may be excluded from the 5G technology bidding process, accusing the Costa Rican Power and Telecommunications Company (ICE) of being unconstitutional. Huawei claims to have filed a lawsuit to "protect Costa Rican enterprises and citizens from accessing the best 5G communication technology and services".

Excluding Huawei's potential increase in customer costs

On October 25th, the International Center for Sustainable Development Economic Policy (Cinpe) of the National University of Costa Rica held a symposium on "Excluding the Economic Impact of Supplier Investment from 5G Networks". Olman Segura Bonilla, the head of the center, said: "Although cybersecurity policies are crucial for maintaining the integrity and security of the national network, they must be evaluated under the constraints of 5G network competition and the potential economic and technological impacts on the industry and country.

Costa Rica must carefully evaluate the impact of official policies on the modernization of the internet economy. Because this will lead to an increase in the cost of internet and mobile phone services, and cause economic losses to different production sectors, while deepening the digital divide and exacerbating social inequality

Marco Vinicio Ruiz, former Minister of Foreign Trade and former Ambassador of Costa Rica to China, supports the above statement, stating that excluding Chinese companies from 5G network competition will result in significant technological costs.

Ruiz stated that diplomatic and commercial relations between China and Costa Rica may also be influenced by such unilateral decisions, but due to Costa Rica's economic dependence on the United States, there may be a balancing effect. It is worth noting that his company is also a product agent for Apple in the United States.

Voice of America sent a letter to Olman Segura requesting comment on the $1.5 billion economic loss assessment mentioned at the symposium, but had not received a response by the deadline.

The President has no intention of changing the 5G regulations that exclude Chinese enterprises

In response to the media series reporting on the conclusions of the symposium, President Ch á vez publicly reiterated his intention to abolish 5G related regulations that exclude Chinese enterprises.

James Bosworth, founder of Hxagon, which provides political risk analysis, told VOA: "Costa Rica was a victim of last year's major ransomware attack and has every reason to establish strong cybersecurity rules in any of its public contracts

He said, "I believe the United States is aware that this will limit Huawei's ability to bid on 5G infrastructure, but I also believe that President Ch á vez said he wants to ensure that any winning company must comply with the Budapest Convention Sharing information makes sense. Regarding cybercrime, Costa Rica, after losing millions of dollars in previous cyber attacks, hopes to ensure its cybersecurity and be able to track criminals attempting to exploit the network

As for whether this' Clean Internet 'incident will exacerbate tensions between Costa Rica and China, and even spread to neighboring countries? Bosworth said, "It should not exacerbate tensions. In addition to this technical issue, China and Costa Rica have ample reasons to engage in trade. Only when China politicizes the 5G issue and attempts to punish Costa Rica will it become a problem

On November 3rd, at the first "Partnership for Economic Prosperity in the Americas" (APEP) Leaders' Summit initiated by President Biden, leaders of 11 countries in the United States, Canada, and Latin America agreed to strengthen cooperation in supply chains in areas such as clean energy, medical supplies, and semiconductors, and further expand regional trade connections. Biden said, "We want our nearest neighbors to know that they can make a real choice between debt trap diplomacy and high-quality transparent infrastructure and common development

The leaders agreed to hold a meeting every two years, and Costa Rica will host the next leaders' summit in 2025.