Guest Columnist: Big eyes turned to the East

The next decades will almost certainly belong to Asia, and it is imperative for Israel to be there. But the downsides are many.

By
August 20, 2010 16:45
CHINA’S GOVERNMENT played down its new status as the world’s second-largest economy, saying Tuesday

China construction 311. (photo credit: AP)

 
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If geography were everything, Israel would be happily positioned on the fulcrum as the balance of global power shifts from West to East. In the first half of the year, India vaulted to second place among markets for Israeli exports. China went from 11th place to fifth in the second half of 2009.

There are even early signs that the commercial ties between Israel and the emerging Asian powers are not just growing and deepening. Huawei, China’s biggest maker of phone equipment, has quietly opened an R&D center in Hod Hasharon. An Indian telecom firm bought start-up Ethos in June and turned it into an R&D center. In February, Pegasus Technologies became the first-ever Israeli start-up to be acquired by a Chinese company. India and Israel have developed very close military and aerospace ties. Israel’s economy is moving away from the tired old, indebted West and moving toward dynamic Asia. Welcome to the new world order.

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Well, not quite.

THE US remains Israel’s biggest export market by a long shot ($5.7 billion in the first half of the year), compared with $990 million for India and $755 million for China. Nor was Israel’s technology prowess evident in the numbers. India mostly bought oldeconomy fertilizer from us while sales to China soared because of the Intel plant in Kiryat Gat – America’s hi-tech, not Israel’s. Asia’s total share of Israeli exports is growing, but not by leaps and bounds. It was 14 percent eight years ago and 20% in the first half of this year.

The US and Europe remain much more deeply embedded in Israel. Americans and Europeans are the biggest foreign investors. The US supplies nearly all of Israel’s arms and shares its technology. In the increasingly important trade in services, Asia remains far behind the West. America and Europe are traditional and familiar markets to Israeli investors and exporters.

Asia’s miracle economies may end up sputtering just when they seem to be racing ahead at full throttle.

Two decades ago, that’s what happened to Japan.

But the bar to global economic dominance is likely to be lower in the coming years because of the immense problems facing the West. In any event, China and India are so enormous that they will dominate by virtue of size alone. The next decades will almost certainly belong to the East, and it is imperative for Israel to be there.



A WORLD where Asia is on top is of interest to more than businessmen. It’s a nearly ironclad rule of international relations that the merchants come first, and when they need help coaxing the locals into awarding them a contract or springing a colleague from the local jail, the diplomats follow.

Finally, when the suits can’t solve a problem, in come the troops.

In the Middle East, China is leading the charge of Asia’s merchants: The country imports half its petroleum from the region and sends back everything from plastic toys to locomotives. The diplomats are gradually making their presence felt. No one, from Barack Obama on down, could imagine an effective sanctions regime against Iran if China didn’t consent to it, a condition unimaginable a decade ago.

Israeli diplomats even paid a visit to Beijing last February to plead the sanctions case. It’s only a matter of time before China’s commercial and economic interests compel it to become a major player in the Middle East.

We shouldn’t be looking forward to that day. As China evolves from a global economic force to a political and military power, its way of governing and diplomacy will inevitably come to hold sway.

Indeed, that has begun. As the old “Washington consensus” on economic management gets thoroughly pummeled by the financial crisis, the socalled “Beijing consensus” has started to win admirers.

In foreign policy, the broad outlines of this consensus are quite discernible: A quiet, plodding but aggressive pursuit of long-term economic interests.

Some have naively suggested that this can only benefit Israel. A Chinese-dominated international system would ignore human rights. It wouldn’t be distracted by Western guilt over colonialism and imperialism, or by the short attention spans and fickle commitments of democracies. No more Goldstones.

No more pesky NGOs. No more imposed peace plans. Israel will be able to act as it pleases towards the Palestinians or Iran.

Economics will ensure that it doesn’t work that way. China recently surpassed the US to become the biggest investor in alternative energy, which is an exciting prospect for Israel with its technological prowess in solar power. All across the technology spectrum, the Chinese want to move up the value chain, a goal Israel can use to cement ties by helping them along. But China last year also became the world’s biggest consumer of fossil fuels, which will ensure its even deeper amity with the Arab world.

If you’re sitting in Beijing, the $107 billion of China’s two-way trade with the Arabs speaks a lot louder than the $4.5 billion with Israel. It goes a long way toward understanding how China has served as Iran’s shield against sanctions. Last year, China overtook Germany to become Iran’s largest trading partner. At least 100 Chinese companies are in Iran, building subways, power plants and factories.

So what if they are building a bomb, business comes first. China’s policies are already evident in Africa, where it unblushingly supports corrupt dictatorships so long as they deliver the timber and zinc on time.

Just as China ignores human rights, it won’t be swayed by a visceral attachment to the Jewish state or shared values. There won’t be pro-Israel lobbyists in the Forbidden City. The day may well come when Israeli prime ministers, flying to Beijing as the mustgo first meeting after taking office, look back longingly on those visits to the Obama White House.

The writer is a financial commentator.

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