Israel-China experts downplay impact of Haifa Port decision

"Israeli authorities were warned that the Haifa Port deal was dangerous for a long, long time, but infrastructure is secondary to technology in the way that China views Israel as a resource"

January 10, 2019 18:39
3 minute read.
Port of Haifa

Port of Haifa. (photo credit: REUTERS)


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If Israel chooses to reverse its decision to permit a Chinese company to manage Haifa Port 2021, a crisis will not erupt between the two governments, experts on China-Israel relations told The Jerusalem Post.

The Chinese management of the port was one of the issues that US National Security Adviser John Bolton discussed with Prime Minister Benjamin Netanyahu during his visit here this week. The port is a frequent dock for the US Sixth Fleet, and Washington is concerned that China will use the harbor to improve its standing in the Middle East and potentially gather intelligence on US interests.

The Post reported last month that the US Navy might change its longstanding operations there once the Shanghai International Port Group (SIPG) – a company in which the Chinese government has a majority stake – takes over management of the site in 2021. Israel signed an agreement in 2015 with SIPG to upgrade and manage the port.

Sam Chester – vice president at Indigo Global, an investment advisory firm focused on China, Israel and other emerging markets – told the Post that stripping SIPG of the deal would be frustrating for Beijing but not a deal-breaker for future trade.

“Israeli authorities were warned that the Haifa Port deal was dangerous for a long, long time, but infrastructure is secondary to technology in the way that China views Israel as a resource,” Chester said.

“Infrastructure and technology are two separate issues and I believe they will be delinked because the Chinese prime interest is not infrastructure.”

Citing 15 years of experience in Israel-China affairs, Chester emphasized that most government-driven business-to-business ties are on a provincial rather than national level.

“Representatives of cities and provinces are those coming on delegations, making deals, establishing incubators and encouraging grants to be given to local companies so they can make investments,” he said.

“It’s a challenge and frustration for Beijing on a national level, and a challenge and frustration on a financial level for SIPG, but for bodies in other provinces advancing every day projects with Israel, it’s not on their map.”

Chester said the current decision in light of American pressure must be placed in proportion, a long way from the damage caused to Israel-China relations in 2000 after Israel scrapped a deal to supply China with the Phalcon radar system.
“There, the Chinese president had put his own credibility on the line. Did the Chinese president put his own credibility on the line in the Haifa deal? No. Was the October visit of Chinese Vice President Wang Qishan to Israel focused on the Haifa deal? No,” said Chester.

“If canceled, the Haifa deal will be frustrating for the Chinese and it will bring up anxiety that Israel is not quite so reliable as it’s in the American camp. It can’t, however, be compared to 2000.”

Carice Witte, executive director of Sino-Israel Global Network & Academic Leadership (SIGNAL), told the Post that China-Israel relations – which have become far stronger in the last decade – are sufficiently resolute to overcome the current issue.
“The relationship today is deep and broad: you have scientific exchange, cultural exchange, increased tourism, etc. We [SIGNAL] alone have established Israel studies at 13 universities across the country,” Witte said.

“China also sees immense value in Israel’s innovation ecosystem. This is perhaps most reflected by the appointment of Wang Qishan as the [Chinese] head of the Joint Committee on Innovation Cooperation.

“The fact that amidst a trade war with the US, China sent the second most powerful person in the country, President Xi’s right-hand man, to Israel sends a powerful message that Israel is important to China. I think the relationship is strong enough to withstand the breakdown of any individual deal.”

Dale Aluf, SIGNAL’s director of research and strategy, said some recent media coverage of the Haifa Port issue had been disproportionate and had not necessarily captured the reality on the ground.

“Having said that, it has been an important development in the sense that it has brought to light a different way of thinking about foreign investment; illuminating that the lines between economics and politics in today’s globalized world have become increasingly blurred,” Aluf said.

“This means that when thinking about economic engagement, it is also imperative to always keep in mind the deeper geopolitical forces that interact with and influence the sphere of economic cooperation.”

Herb Keinon contributed to this story.

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