Israel Caught Between Beijing and Washington

By Henry Srebrnik, [Summerside, PEI] Journal Pioneer

China is now making a concerted effort to expand its strategic presence and economic clout in the Middle East.

Chinese officials see the Middle East as an intrinsic part of the Belt and Road Initiative, the framework of trade and commercial ties between China and various world regions that has become Beijing’s signature foreign initiative since its launch in 2013. 

So Israel, too, has been impacted by China’s deepening economic presence.

Over the past decade, the Jewish state has broadened its global appeal as a start-up nation in technology and innovation to attract foreign direct investment. This effort has proven extremely successful. 

As of mid-2018, Israel’s tech industry had drawn in more than $3.2 billion. A growing share is Chinese in origin. In fact, China is on track to overtake the United States as Israel’s single largest overall source of investment.

This will have a potential impact on Israel’s strategic partnership with the United States. Washington is increasingly alarmed over China’s growing penetration of Israel’s high-tech sector. 

The Chinese now directly control, or have influence over, as much as one-quarter of Israel’s total tech industry, including sensitive projects jointly being developed with the United States.

Officials in Washington worry that Beijing’s activities are not at present being properly scrutinized or controlled. So China’s growing involvement could end up adversely affecting joint projects between Jerusalem and Washington. 

Here’s one example: In 2015, a Chinese conglomerate known as the Shanghai International Port Group (SIPG) signed a multi-billion-dollar deal with the Israeli transportation ministry for the future rights to operate the Haifa port. 

SIPG will take control of day-to-day operations at the port for a quarter-century beginning in 2021. 

It was controversial from the outset because Haifa is more than simply a commercial hub; it also regularly hosts naval visits from the U.S. Sixth Fleet and joint drills between the U.S. and Israeli navies. 

This has made the question of who operates the port a key concern for Washington, with U.S. military officials warning that port visits could end, or at least lessen, once China assumes control of the facility, due to concerns over potential Chinese intelligence operations.

John Bolton, then the U.S. National Security Advisor, personally cautioned Israel when he met with Prime Minister Benjamin Netanyahu and other top Israeli officials in Jerusalem in January 2019.

Some Israelis agree. Israel should reverse its decision because a national security asset should never be in the hands of a foreign country, Matan Vilna’i, Israel’s former ambassador to China between 2012 and 2016, and an ex-deputy defence minister, told the Jerusalem Post. 

Vilna’i said that it is completely acceptable for Israel to deal with the Chinese on infrastructure projects because of their expertise. For instance, he pointed to the problems currently plaguing the Jerusalem-Tel Aviv train line, which, he asserted, probably would never have happened had the Chinese handled the project. But it should steer clear of deals like this.

Other senior Israeli officials said they are aware of Washington’s concerns and are working to address them.

“The State of Israel is dealing with all aspects connected to the establishment and management of infrastructure by foreign companies in Israel,” Transportation Minister Israel Katz, stated.

So China’s growing stake in Israel is one that, if not properly regulated and overseen to Washington’s satisfaction, could adversely affect the vibrancy of Israel’s strategic partnership with the United States, and even curtail future cooperation between the two countries.