Remember who won the tender to build the Ashdod Port in 2014 for a hefty $1 billion? The answer: the China Communications Construction Group.
Remember the Alon Tavor power station sold recently for about $600 million? That was also sold to a subsidiary of the same Chinese group.
And what about the Tel Aviv light rail's Green and Purple lines? A tender is currently ongoing to see who will build the two stretches of track that will extend dozens of kilometers and entail around 100 stops. One group competing for the multi-billion dollar project includes a company called the China Railway Construction Company (CRCC). A decision will be made on the tender in the coming days.
That same CRCC has been in Israel for some time. One of its subsidiaries, the China Civil Engineering Construction Corp. (CCECC), dug the Gilon Tunnel in the North in 2014 at a cost of about $200m. In 2010, it worked as a subcontractor on the Carmel Tunnel project at a cost of about $150m., and in the last couple of years it has been working on the Tel Aviv light rail’s Red Line at a cost of about $500m.
The names of these companies are all worth keeping in mind, since last week US President Joe Biden issued an executive order banning them from receiving US investment due to suspected ties to defense or surveillance technology used outside of China, as well as inside to facilitate human rights abuses.
In other words, while Americans cannot do business with the China Communications Group that is building the Ashdod Port, Israel can, and while Americans can’t do business with the CRCC, which might be announced the winner of the Purple and Green lines in the coming days, Israel seems to think that it can.
This is a diplomatic crisis waiting to happen that keeps getting thrown around and will be one of the toughest issues the new government – led by new coalition leaders Naftali Bennett and Yair Lapid – will need to confront in its dealings with the Biden administration.
The issue of Chinese involvement in constructing and operating critical infrastructure in Israel has already come up in talks between Biden officials and their Israeli counterparts. For now, it appears that the conversations have mostly been amicable and polite, but in Jerusalem there is already an understanding that it will not stay that way for long.
It is also not a new problem for Israel. Before the outbreak of the coronavirus pandemic, Israeli-Chinese business ties had turned into a minefield for Prime Minister Benjamin Netanyahu and his dealings with US president Donald Trump’s administration, which was adopting a tough policy stance when it came to Beijing.
In October 2019, and under pressure from Washington, Netanyahu set up an advisory committee to vet foreign investments, with a particular focus on China. The advisory committee is headed by the Finance Ministry and is meant to examine national security aspects in the process of approving foreign investments.
In January, just days before leaving office, former US ambassador David Friedman told The Jerusalem Post that the threat China poses to the world will continue to be an “ongoing and dynamic issue” between Israel and the US.
Israel, he said, was in a better place than it had previously been, but still “guardrails have to be strengthened in terms of Chinese malign investment.”
And again, just this past Tuesday, the Biden administration said that it was setting up a new “strike force” to combat unfair trade practices, particularly from China.
Israel will have to adapt to this new reality and start to take the China threat more seriously. It will also have to pick a side, and the answer should be easy. Otherwise, this could become the next big crisis between a new government in Jerusalem and the US president.