Chinese investment motives are 'not pure,' senior U.S. official warns

"I would urge Israel to be cautious about some of these types of [foreign] investments," US Deputy Secretary of Energy Dan Brouillette told The Jerusalem Post.

June 24, 2019 17:48
3 minute read.
US Deputy Secretary of Energy Dan Brouillette at the Tel Aviv Stock Exchange, June 24, 2019

US Deputy Secretary of Energy Dan Brouillette at the Tel Aviv Stock Exchange, June 24, 2019. (photo credit: DAVID AZAGURY/U.S. EMBASSY)


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Israel should proceed with caution when enabling Chinese investments in critical infrastructure, US Deputy Secretary of Energy Dan Brouillette warned on Monday, stating that the motives behind the country’s investments “are not pure.”

“I would urge Israel to be cautious about some of these types of [foreign] investments,” Brouillette told The Jerusalem Post after addressing an oil and gas industry conference in Tel Aviv organized by the Israel Innovation Authority.

“China in particular represents a particular threat, not only to Israelis but to the world. Their motives are not pure. We have seen that here in the Middle East and in Africa in particular.”

Brouillette, who also raised concerns over foreign investment during his previous visit to Israel in January, cited the fear of countries falling into China’s infrastructure “debt trap,” and the possibility of sensitive infrastructure-related data being transferred to the Chinese government.

“Many [Chinese] companies are directly connected to their government, and a lot of the information, such as artificial intelligence and cybersecurity, is data that is easily collected from these infrastructure projects,” said Brouillette.

“In many cases, countries are not aware that China is collecting that data or positioning themselves to literally control the infrastructure in their country.”

While Brouillette expressed his belief that Israel is currently “very conscious” of investments originating from nation states with “different priorities or goals,” he added that the United States was eager to share lessons based on past experiences with states wishing to develop infrastructure.

Recent American concerns regarding Chinese investments in Israel have focused on a deal beginning in 2021 to allow Chinese government-controlled Shanghai International Port Group manage Haifa Port, a frequent dock for the US Sixth Fleet. Earlier this month, a bill was introduced to the US Senate citing “serious security concerns” over the deal.

Emphasizing the growing energy independence of both the US and Israel, Brouillette said that no longer relying on Middle East oil provided potential foreign policy capabilities that were previously unavailable.

“A very powerful but somewhat simple example is that we moved our embassy to Jerusalem. I don’t think that option was available to past presidents of the United States, simply because of the stranglehold that Middle Eastern countries had on the United States,” Brouillette said.

“TODAY, OUR independence from that allows us these types of foreign policy options. It’s a striking example of the way the world has changed over the course of the last five to 10 years. I see that continuing into the future, perhaps as far as 30 years from now.”

Brouillette said the Department of Energy had been encouraging US firms of varying sizes to participate in the exploration of natural gas reservoirs in the Eastern Mediterranean, offshore from Israel.

Next month, a second round of bidding for exploration and production rights in Israeli waters will close. Licenses for 19 blocks, measuring up to 400 square-kilometers each in five zones, will be awarded.

“The East Mediterranean presents an enormous opportunity for not only US investment, but world investment. The gas finds are enormous, and the sheer size alone creates an economic opportunity for many countries,” said Brouillette.

“Our geopolitical interest is obvious. We think more gas in the marketplace is good for consumers. It reduces costs of production and reduces cost to the retail consumer. Importantly for us, it provides another opportunity for Europe and other places to perhaps lessen their dependence on Gazprom and Russian oil.”

In May, Israel’s Energy Ministry, the Israel Innovation Authority and the US Department of Energy issued a joint $40 million call for proposals for the newly-established US-Israel Center of Excellence in Energy, Engineering and Water Technology.

The center – managed by the Israel-United States Binational Industrial Research and Development Foundation – aims to promote the energy security and economic development of Israel and the US by collaborating on the research and development of innovative technologies by companies, research institutions and universities from the two countries.

“Energy Minister [Yuval] Steinitz has done a great job of not only developing Israel’s gas fields but moving towards a renewable energy economy in Israel. What we have learned in the United States and want to share in Israel is that they go hand in glove,” said Brouillette.

“Renewable energies can’t exist without base load power. You have to have natural gas, nuclear or coal or you don’t have renewable energy. Those lessons were hard to learn initially in the United States and Europe is learning them right now.

“We can share those experiences through the establishment of collaborative efforts... If we do this correctly, the security of both our nations is made stronger.”

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