Security cabinet to meet as US-China trade friction escalates

Massive Chinese investments in Israel is ongoing bone of contention between Jerusalem and Washington.

August 7, 2019 04:31
2 minute read.
Security cabinet to meet as US-China trade friction escalates

Previous transportation minister Israel Katz and employees of the China Railway Engineering Corporation take part in an event in 2017 marking the beginning of underground construction work of the Tel Aviv light rail, using a Tunnel Boring Machine (TBM). (photo credit: BAZ RATNER/REUTERS)

Amid an escalating US-China trade war that is rattling the world’s financial markets, the security cabinet is scheduled on Wednesday – for the second time in a month – to discuss the establishment of a new mechanism to monitor foreign investments, particularly those coming from China.

Deliberations on creating a way to oversee infrastructure investment – especially from China – have been ongoing for months, and have been held intermittently in the security cabinet for more than a year.

This issue is one of the few points of friction between Jerusalem and Washington these days.

Israel is debating whether a new mechanism should be strict – the position of the National Security Council, which is concerned about how the issue may impact relations with the US – or more lenient, so as not to scare off investors, not only from China, but from other countries as well. The later position is being advanced by Avi Simhon, head of the prime minister’s National Economic Council, and other top economic officials.

According to a Channel 13 report, the Foreign Ministry warned the security cabinet when it met on the issue last month that if Israel does not implement tight supervision over Chinese investment, it could lead to a conflict with the Trump administration. As a result of this warning, a vote on the matter was delayed. The report further said that the ministry felt that the National Security Council’s recommendations were not strict enough because they did not include monitoring Chinese investment in hi-tech.

The report also said the Trump administration was beginning to lose patience with what it increasingly viewed as Israeli foot dragging on the matter.

The US – from President Donald Trump on down – has informed Israel in clear terms that it views Chinese investment and management of infrastructure projects in Israel, such as the Haifa and Ashdod ports, as a security concern for the US since the Sixth Fleet docks there. Washington has warned that its security cooperation with Israel would suffer if the issue was not sufficiently addressed.

China has become a major investor in Israel over the last 10 years, both by buying huge companies such as Tnuva and by building and managing major infrastructure contracts. The Chinese have also increasingly become a major investor in Israeli hi-tech companies.

Among the infrastructure projects that Chinese companies have been involved in are building the Carmel tunnels, the Acre-Karmiel railway project, port construction and management in Haifa and Ashdod, and building the light rail Red Line in Tel Aviv. These firms are part of Chinese government companies that are also involved in railway construction projects in Iran, another bone of contention with the Americans.

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