Chinese spy alert

The Shin Bet keeps a wary eye on Beijing’s intelligence operations in Israel

By YOSSI MELMAN
Chinese Embassy521 (photo credit: REUTERS)
Chinese Embassy521
(photo credit: REUTERS)
The Chinese Embassy in Israel is located at 219 Ben Yehuda St. in Tel Aviv. The four-story residential building turned into offices houses 50 accredited diplomats and dozens of employees with non-diplomatic status, making it the fifth largest embassy among the 83 nations that have permanent diplomatic missions in Israel.
Given the state of Sino-Israeli relations, however, there is no apparent reason for China to have such a large presence; the relations between the two countries are reasonable and amicable, but nothing more than that.
The mutual trade balance stands at $8 billion dollars – two-thirds in favor of China. In the era of globalization, and in comparison to other countries, this balance is not impressive. Israel’s trade balance with the US and the EU is more than $30 billion each, which means more than four times bigger than its trade balance with China.
Efforts to boost and increase this trade balance were at the center of the recent visit by Prime Minister Benjamin Netanyahu to Beijing.
In the diplomatic arena, Israel has neither levers nor the ability to influence China’s foreign policy in general and its Middle East actions in particular. Chinese policy is dictated by two words – stability and oil. China wants a stable Middle East so as to ensure the supply of oil and other commodities vital to its expanding economy.
Iran is a case in point. Time after time, Israeli ministers, generals and intelligence officials have failed to convince China to change its policy and to support crippling sanctions against Iran in order to stop Tehran’s headlong rush to its first nuclear weapon. The latest failed attempt was by Netanyahu during his trip.
The situation is even worse when it comes to the security-military field. Once upon a time, things were good. In the mid-1970s, before diplomatic relations were established, Israel was the first Western nation to arm China with modern weapons. Brokered by the late businessman, Shaul Eisenberg, most Israeli arms manufacturers, including Israel Aerospace Industries (IAI), Israel Military Industries, Tadiran and Rafael, clinched lucrative deals worth billions of dollars. But the bonanza came to end in the mid 1990s, with the US shutting down the Chinese market for Israeli security contractors.
Two dramatic events sealed the fate of Israeli arms sales to China. One was IAI’s Phalcon project, designed to convert a Russian-made Ilyushin transport plane into an early warning spy in the sky for the Chinese Air Force. The second deal, also involving IAI, was for the upgrading of the Harpy attack drones that it had previously sold to China. The administration of then US president Bill Clinton, which perceived China as an emerging superpower adversary, set an ultimatum for Israel – to cancel the Phalcon project and not to upgrade the Harpies. Israel protested but gave in to the pressure of its strategic ally and financial benefactor.
As a result, Israel lost the expanding Chinese military market, brought upon itself the wrath of the Communist powerhouse, and had to compensate Beijing to the tune of half a billion dollars.
So why does China deploy such a vast array of diplomats and other employees at its embassy in Tel Aviv in a variety of guises – political and educational officers, economic and labor advisers, science and military attachés and intelligence officers? The answer can be summed up in one word – espionage; or to put it more gently – efforts to gather and collect information about Israel with an emphasis on its advanced technological capabilities.
There have been increasing reports in the international media about China’s spy activities in the US. A special report by the Pentagon, which was partly leaked to The Washington Post, revealed that Chinese espionage activities have reached the level of an unstoppable epidemic. Today, it is no longer classical espionage, that is the recruitment of human sources to become agents, though Chinese intelligence officers have been caught in several cases of doing this on American soil. Nowadays, however, Chinese collection efforts are focused on what is known as cyber warfare.
It is the effort to undetectably infiltrate databases and computers, and steal the stored and hidden secrets. China has also been involved in penetrating computer systems that operate strategic sites, such as power stations and banks, to practice its sabotage capabilities and to test the cyber defense measures of the US.
According to the report prepared by the Pentagon’s Defense Science Board, China’s computer whiz kids managed to steal some of America’s most advanced weapon systems, including at least some of the secrets of the US’s state-of-the-art F-35 fighter plane and the latest version of the anti-aircraft Patriot missile.
Incidentally, by doing so, China has also jeopardized Israel’s military capabilities. The Israel Air Force has already signed contracts to purchase the F-35 and occasionally deploys Patriot batteries to protect the northern fronts with Syria and Lebanon.
It was also reported that China penetrated Australia’s intelligence agencies and got its hands on some of its most sensitive data.
Chinese spokespersons have categorically denied that they are involved in such malpractice but very few believe them.
In its race to become the greatest economic and military superpower, China’s leaders and military and intelligence officers, are not selective. They are ready to target any developed country that has sophisticated technology. Thus, they have employed the same measures and methods to spy on Israeli soil and in Israeli cyberspace, and against Israeli corporations and military and scientific institutions.
For China, Israel has a double appeal. Israel is considered a high-tech superpower and has deep and friendly military-scientific and technological ties with the US. In this sense, Chinese efforts to target Israel is reminiscent of Soviet attempts.
Soviet espionage operations against Israel from the 1960s to the 1980s, before the collapse of communism, focused mainly on obtaining technological and military information, and taking advantage of the close ties between Jerusalem and Washington. “In that sense, Israel for us was a launch pad to penetrate America,” General Vladimir Kryuchkov, the last director of the KGB before the notorious Soviet security apparatus was dismantled and replaced by new agencies, told me in the mid- 1990s.
“The Chinese operate endlessly in Israel,” a senior source who is familiar with the topic told me. “They operate with a variety of methods. They try to obtain data from open sources. They try to recruit and run agents in the most sensitive fields: military industries, the army and air force, the intelligence community and high-tech companies.”
It is assumed that like other powers, the Chinese Embassy in Tel Aviv houses electronic and other equipment that enables them to bug Israeli communications and decipher coded messages – an art known as signal intelligence, or sigint .
Recently, Prof. Yitzhak Ben-Israel, one of Israel’s top experts on space, cyber and technological related security, said that Israel is facing hundreds of cyber attacks on a daily basis. Ben-Israel, a former major general in the IDF, who was appointed two years ago by Netanyahu to create an authority to combat computerized terror, did not specify who the attackers were. But a well-placed source said that among them were Chinese hackers, most probably military officers.
The overall responsibility to counter espionage activities and to protect state secrets is in the hands of the Israel Security Agency (Shin Bet). The agency has assigned two special units for these missions. One, technical in nature, provides guidelines to security officers and experts on how to protect computers and network systems at top-secret sites, such as the Dimona nuclear reactor and at the security services and military industries. The other operates in the more traditional role of a spy catcher.
In the past, this unit was responsible primarily for targeting spies of the Soviet Union and its Eastern bloc satellites. The unit’s officers shadowed the communist diplomats, bugged their phones and broke into their embassies. But with the end of communism in the Soviet Union and the Eastern European countries, the Shin Bet shifted its attention. Russia, which now liaises with Israel’s intelligence community, still remains a priority for the Shin Bet’s counterespionage mission. But no less important a target is China.
The issue of foiling espionage activities by operatives of states that are not hostile is very sensitive especially when you are dealing with a proud superpower. No wonder that the Shin Bet is very cautious in its dealing with the Chinese presence in Israel. However, the Chinese Embassy and some of its diplomats, as well as some Chinese businessman, are kept under surveillance. It is difficult to obtain details about the full extent of Chinese espionage operations in Israel.
It is not clear if any Chinese diplomats or businessmen have been uncovered and questioned, and if Israeli national interests have been compromised.
“But what can be said with certainty,” the senior source said, “is the fact that the Chinese are very professional, well positioned and acquainted with the art of spying and the collection of intelligence.
They have demonstrated this in the US and other countries, and there is no reason not to believe that they may have been successful here too.”
Both the Shin Bet and a spokesman for the Chinese Embassy declined to comment. 
Yossi Melman, a commentator on security and intelligence matters, is a senior contributor to www.thetower.org and a regular contributor to The Jerusalem Report