Does Israel need to beware of Chinese gifts?

In the last five years, China has turned into Israel’s biggest infrastructure partner, building roads, tunnels, ports, train tracks and more.

By
December 20, 2018 22:36
Prime Minister Benjamin Netanyahu and Chinese VP Wang Qishan attend the Committee on Innovation in I

Prime Minister Benjamin Netanyahu and Chinese VP Wang Qishan attend the Committee on Innovation in Israel-China Foreign Ministry. (photo credit: GPO/KOBI GIDEON)

 
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In May 2013, Prime Minister Benjamin Netanyahu flew to China, the first visit by an Israeli leader to the country in six years. Netanyahu made all the mandatory stops – the Great Wall, the Jewish Museum in Shanghai, and of course industrial parks and tech companies. But most important was the message he brought with him: Israel, he said at almost every stop, was looking to make deals.

“I came with a simple proposal,” he said at a meeting with President Xi Jinping: “that we seize the future using our respective advantages.”

And boy, has China seized on its advantages.

In the five years since, China has turned into Israel’s biggest infrastructure partner, building roads, tunnels, ports, train tracks and more. In the coming years, China and Israel will have signed infrastructure deals valued at tens of billions of shekels.

On land, Chinese companies are building 10 kilometers worth of tunnels in Tel Aviv along with the Red Line for the city’s light rail. Both deals are estimated to reach about NIS 6 billion.

At sea, a Chinese company is close to completing the construction of the new Ashdod Port, and another one has won a tender to manage the Haifa Port starting in 2021. These deals, too, are worth around NIS 6 billion.

Other projects that Chinese companies have expressed an interest in are Jerusalem’s light-rail Green Line, extending to the south of the city; Tel Aviv’s Green and Purple light-rail lines; the proposed Eilat-Tel Aviv railway; and the new Sorek 2 desalination plant. Chinese companies are also competing to supply Israel with locomotives for its light-rail systems in deals that could reach over NIS 3 billion.

This is not to mention the acquisition of companies like the dairy producer Tnuva and Makhteshim Agan, a world leader in crop protection solutions, as well as investments China has made in Israeli tech companies. Chinese money is said to account today for one-third of all investments in the Israeli technology sector.

These Chinese companies are, by the way, not just ordinary privately or publicly owned entities. They are owned by the state, meaning that when they come to a country, their interests are not strictly financial – they want to boost Chinese power: economically, diplomatically and militarily.

BILATERAL TRADE has predictably expanded and recently surpassed $13 billion, 200 times more than what it was a mere 26 years ago when the countries established diplomatic ties.
The interests vary. China wants Israeli technology, but also wants to expand its influence in the Middle East, as part of its “Belt and Road” initiative that is supposed to connect Beijing with some 70 countries across Asia, Africa, the Middle East and Europe with the goal of improving trade primarily through infrastructure investments.

It wants a foothold and presence in the region, from which it can project its power and present an alternative to the United States.

Israel wants to use its economic ties with China to get the country to change its voting pattern at the United Nations, as has been happening in recent years with India. While for the time being this has failed, Netanyahu’s interest in cozying up to China is also being done to ensure Israel’s economic growth, at a time when ties with Europe remain rocky due to the deadlock in the peace process. The Chinese don’t care about the conflict with the Palestinians; they want Israeli technology and Israeli infrastructure deals. The same cannot be said about the European Union.

And lastly, Israel wants to obtain its infrastructure cheaply. European and Israeli companies have difficulty competing with the Chinese for government tenders. As one Israeli executive explained to me this week, a European measurer costs $20,000; a Chinese one costs a third of that.


But all of this is coming at a price for Israel, and one that could prove to be far costlier than a European measurer. As our Washington correspondent Michael Wilner reported exclusively this week, the US Navy is considering stopping all operations in Haifa starting in 2021 when the Chinese take over management of the new Haifa Port.

This is not a simple matter. The Americans are deeply disturbed by the growing ties between Israel and China, especially now when Washington and Beijing are engaged in a fierce trade war. If the Chinese manage the Haifa Port, US Navy ships will simply stop docking there. That could set off a ripple effect that could impact the deeper and more strategic defense ties Israel has with the US.

THE CONCERN though is not just due to the trade war. China is a known hacker. In 2014, for example, reports came out that Chinese hackers had stolen military documents on Iron Dome, Arrow and drones from Israel Aerospace Industries and Rafael Advanced Defense Systems, two Israeli government-owned defense companies. In 2017, Chinese hackers reportedly stole restricted data connected to the F-35 stealth fighter jet, made by Lockheed Martin and in use by the Israeli Air Force.

Take the Tel Aviv light rail as an example. A Chinese company is competing for the tender of the communications system. If it wins, this means that the Chinese government will control an estimated 3,000 closed-circuit surveillance televisions adjacent to the Red Line in the Tel Aviv metropolitan area, along with the radio frequencies and communication in the tunnels. That raises privacy and security concerns as well as the potential threat of surveillance.

Some Israelis and Americans have been speaking out openly about this. Shaul Horev, a former Navy rear admiral and head of the Israeli Atomic Energy Commission, has advocated for the creation of a government oversight committee that would have to approve future deals with China. The committee would include members of the defense establishment who, unlike the Transportation Ministry, would be suited to consider how such deals could impact Israel’s defense ties with the US.

“In a world in which so much depends on how information moves, the types of systems we are using and the ability to collect information and intelligence from those systems is of significant concern,” Admiral Gary Roughhead, former chief of US Naval Operations, warned recently. “It’s not something that just Israel and the Port of Haifa should be concerned about. What is being tested on an Israeli warship, and how easily can those signals be picked up? What are the mechanisms in place to prevent that?”

WHAT CAN be done? That remains unclear. Intelligence and Transportation Minister Israel Katz was asked this week about Wilner’s Jerusalem Post report; he responded that the government was working to defuse the tension with the US. But, he added - albeit with a different metaphor - that the Israeli-Chinese ship has already sailed.

Katz told the Globes Business Conference that he had been asked by Netanyahu some nine years ago to travel to China and sign an MOU with the government to increase cooperation in infrastructure projects.

“This was an excellent decision for Israel,” he said. “We allowed them to compete in tenders for projects... I think we need to develop oversight mechanisms, but we need to differentiate between security and civilian issues.”
Moving forward, Israel needs to tread carefully, as the Trump administration will not tolerate Israel cozying up to China while the trade war continues between Beijing and Washington. Jerusalem needs to avoid finding itself as collateral damage. On the other hand, China has expertise Israel should not simply rule out.

When thinking about this issue, it is worth remembering what happened in 1967 after the Six Day War, when French leader Charles de Gaulle decided to stop selling arms to the State of Israel. The IDF discovered that it could only rely on itself when it comes to developing weapons – and that is exactly what it did, creating one of the most advanced and technologically savvy militaries in the world.
That spurred an amazing culture of innovation and entrepreneurship that has boosted not only the IDF, but the entire Israeli economy.

It might be worth considering this model when it comes to future national infrastructure projects. While a state-owned Chinese company built the Ashdod Port, two Israeli companies built the one in Haifa. And while the Chinese are digging tunnels in Tel Aviv, a new section of Road 6 (the Trans-Israel Highway) recently opened with three tunnels that were dug by an Israeli company.

Israel has capabilities and skills that should not go to waste. If we’ve learned anything from the past it is that in the end, we can only rely on ourselves.

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