Monaco became the first country in Europe to inaugurate a next-generation 5G mobile phone network based on technology from Chinese firm Huawei, which is seen by the US as a major security risk.

As mobile operators shift away from slower 3G and 4G networks, Europe has been torn over its approach to the Chinese giant, which is a pioneer in 5G technology. Offering super-fast wireless access, 5G mobile networks offer much greater data transfer speeds.

In September 2018, Monaco Telecom, which is owned by French billionaire Xavier Niel, signed an agreement with Huawei to make the tiny principality the first country in Europe fully covered by 5G. “We are the first state to be entirely covered by a 5G network,” said Monaco Telecom president Etienne Franzi at the inauguration ceremony. “In Monaco, the 5G is the promise of a better quality of life for all and exceptional opportunities,” added the principality’s head of digital transition Frederic Genta.

For Huawei vice president Guo Ping, the rollout in Monaco is a major opportunity, despite the small size of territory covered. “It allows us to make a shop window in a number of areas, notably linking 5G development to this intelligent state. It can serve as a model for other operators and states,” he said.

Speaking to AFP in May, Monaco Telecom’s director general, Martin Peronnet defended the decision to work with the Chinese supplier.

“There are many countries and operators that are in the process of finalizing a 5G rollout with Huawei or who have already done so,” he said. Ahead of the deployment, the operator worked to update its network equipment and deploy 5G-compatible antennae, stressing that it had put in place the necessary security measures to protect its systems.

Huawei’s involvement in the roll-out of 5G networks has become an increasingly political issue after Washington raised concerns over potential security risks and pushed its closest allies to reject the Chinese firm. US intelligence agencies believe Huawei is backed by the Chinese military and that its equipment could provide Beijing’s intelligence services with a backdoor into the communications networks of rival countries.

Huawei has denied the claims, and so far, Washington has offered no evidence for its concerns. The company says it has signed 50 contracts worldwide, including 28 with European operators, for 5G.

South Korea has already announced complete nationwide 5G coverage while in Europe smaller nations like Switzerland, Finland, and Estonia have only just started deploying the technology.

Germany is only now handing out frequencies to operators, and France should follow in the final quarter of the year.

In May, Washington moved to block Huawei from the US market and banned the export of US technology and materials to the firm, in the latest salvo in a monumental economic showdown between the two superpowers.

Last month, an internal report by the GSM Association, which represents mobile network operators around the world, found that banning Huawei and fellow Chinese equipment maker ZTE from Europe’s 5G roll-out would cost European operators up to 55 billion euros (S$84 billion).