Pivoting East: Israel's developing strategic relationships in Asia

Fueled by unpredicted, massive, and rapidly growing Asian trade, Israel’s foreign relations are steadily gravitating from West to East.

Chinese Premier Li Keqiang with Israel Prime Minister Benjamin Netanyahu attend a signing ceremony at the Great Hall of the People in Beijing, China March 20, 2017. (photo credit: REUTERS/LINTAO ZHANG/POOL)
Chinese Premier Li Keqiang with Israel Prime Minister Benjamin Netanyahu attend a signing ceremony at the Great Hall of the People in Beijing, China March 20, 2017.
David Ben-Gurion foresaw the future in 1959, when he told the Knesset plenary that the Soviet-American domination of the world was “transient” because China and India would replace the geopolitical duo.
Noting that ancient Israel’s foreign relations were first confined to the Fertile Crescent and then extended only as far as Persia and Rome, Ben-Gurion realized that the modern world was built entirely differently; that Asia’s place within it would be dominant; and that this prominence would materialize sooner rather than later. “Two decades,” he predicted in 1966, while fielding questions from youths in Tel Aviv.
Indeed, it took not much longer than that for both Asian giants to morph into economic powers, and for Israel’s originally Western-oriented foreign relations to start pivoting East.
Ben-Gurion’s Asian vision was, to be sure, ahead of its time.
Recognizing Communist China as early as 1950 in disregard of Washington’s misgivings, Ben-Gurion persuaded China to announce in 1954 the imminent establishment of diplomatic ties with Israel, only to then see Mao Zedong change course and fully back Israel’s enemies.
What began with utilitarianism – Mao’s concern for ties with the Arab world and the Nonaligned Bloc, co-founded by Egyptian president Gamal Abdel Nasser – morphed by the next decade into ideological zeal, as Israel was part of the Western civilization that was the Cultural Revolution’s antichrist.
A similar pattern evolved with India, under the anti-Zionist Jawaharlal Nehru.
After first refusing to recognize Israel, New Delhi finally did so in 1950, but it took another three years for it to let Israel open a consulate in Mumbai (then called Bombay), while refusing to exchange ambassadors with the Jewish state.
The situation was better with Japan, which did exchange ambassadors with Israel in 1952, less than a month after the end of its occupation by the US. Unlike China and India, Japan was now an American satellite, and as such lacked its fellow Asian powers’ urge to impress the Nonaligned Bloc.
However, Tokyo had economic reasons to keep Israel at arm’s length because its heavily industrialized economy depended for its existence on Middle Eastern oil. Japan’s leading firms, including its major automakers, from Mitsubishi and Toyota to Mazda and Honda, surrendered to the Arab League boycott.
Israel’s ties with Asia were therefore initially subdued. While altogether ostracized by the Muslim belt that stretches from Afghanistan through Bangladesh to Indonesia, not to mention the Arab lands on Asia’s opposite end, Jerusalem cozied with relatively peripheral Thailand, Burma and the Philippines while patiently awaiting a breakthrough with the Asian powers.
Ironically, the only strategic partner the Israeli economy initially found in Asia was Iran, where Israel sold arms and food and built farms and neighborhoods, while helping Iranian oil’s transshipment to Europe through the Eilat-Ashkelon pipeline.
Israel would lose Iran in the wake of its Islamic Revolution, which coincided with China’s abandonment of its own anti-Western fanaticism, but well before all of this, Israel-Asia relations would begin transforming improbably, and unnoticeably, in unassuming Singapore.
Surrounded by hostile Muslims while at odds with the Communist powers but also unable to enlist Western governments to defend it, Singapore’s urgent need for an army was happily supplied by Israel.
IDF generals arrived in the city-state soon after its independence in 1965 and secretly built from scratch a powerful military that to this day is considered the best-equipped and trained army in its region. Israel, for its part, emerged with a strategic foothold in the Far East, forging a close alliance that flourishes to this day with what has since become one of the world’s richest and most stable countries.
The Singaporean saga was followed closely in Beijing, where Mao and his legacy were giving way to Deng Xiaoping’s economic U-turn and to alarm in the face of the Soviet invasion of Afghanistan in 1979.
Moscow’s new unpredictability spurred Deng to inspect the Chinese military’s hardware, after which he concluded that an upgrade was urgently needed. Realizing what Israel did in Singapore, he began secretly buying Israeli arms.
Initially administered through the Israeli consulate in British-ruled Hong Kong, the Israeli-Chinese relationship would quietly mature while communism itself withered. The consequent disappearance of the Soviet Union and the Eastern Bloc, and America’s emergence as the sole superpower, paved the way to the great diplomatic breakthrough Israel had awaited since its inception.
Israel and China exchanged ambassadors in January 1992. The following week, India said it would open an embassy in Tel Aviv. The following year, Israel and Vietnam established full diplomatic relations and Israel also reopened its embassy in Seoul, which it had closed in 1978 due to cutbacks.
The diplomatic path to Asia that Ben-Gurion had mapped had thus been paved. Now, with military traffic already bustling along this route, the stage was set for the commercial relationship that would soon grow at breakneck speed.
The Israeli economy’s Asian era was launched by Japan, whose cautious investors concluded by the early 1990s that their fear of the Arab League boycott had become anachronistic.
The turning points in this regard were the First Gulf War, which, as seen by Tokyo, pitted Arabs against Arabs regardless of Israel, and the Madrid Peace Conference in 1991, which gave reason to believe that the Arab-Israeli conflict’s intensity was waning.
Japan, therefore, changed course.
Tokyo’s big investment houses began sending delegations to Tel Aviv, signaling that they now saw Israel as a diplomatically safe and financially lucrative destination for their clients.
Asian capital thus began arriving in Israel’s fast maturing hi-tech sector while the Japanese car models that Israelis had previously seen only in Europe and America now sparkled in Tel Aviv car dealerships and soon crowded Israeli highways.
Asia’s newly rising powers arrived on the heels of their Japanese role model.
With all diplomatic barriers collapsed, Asian-made clothes, toys, electronics and white goods swamped Israel’s newly proliferating shopping malls, while Israeli goods – from foodstuffs and computer software to military radars and avionics – flocked East.
By 2015, Israel saw, to its astonishment, that its exports to Asia – which less than a quarter-century earlier were negligible – had eclipsed exports to America, comprising a quarter of overall Israeli exports, and nearly equaling exports to Europe, which in 2015 stood at 28%.
Though Asia’s share has narrowed a bit last year, thanks to renewed growth in Europe and the US, the general trend is clear: Israeli exports are tilting East. This is already obvious in Israel’s arms industry, whose $5.7 billion in sales in 2016 was dominated by Asia’s 40.1% share, well ahead of Europe’s 27.5% and North America’s 19.3%.
Considering demographic and economic trends, there is reason to believe that within some two generations, most Israeli exports will head to Asian destinations.
In terms of imports, China already sells to Israel more than any other country, totaling 13.5% of Israeli imports at $7.9b. in 2016, ahead of the US (12.3% at $7.2b.).
Hardly a decade after China supplied a mere 0.6% of Israeli imports, it suddenly seemed only natural that Shanghai-based Bright Food bought in 2015 a controlling share in Israel’s largest dairy food company, Tnuva, for an estimated $1.4b. (the deal’s details were not publicized), while investment group Fosun bought cosmetics giant Ahava for $27m.
Trade with India, while quantitatively smaller than with China – $1.15b. in exports and $800m. in imports as of 2016 – is even more dramatic in its quality, as the same Israel where India once would not even station an ambassador is now its second-largest arms supplier after Russia, having sold the subcontinent missiles, radars, artillery batteries, surveillance aircraft and whatnot.
A quarter-century’s worth of commercial commotion was underscored by a slew of high-profile diplomatic visits that in Israel’s first decades were unthinkable.
Chinese president Jiang Zemin’s five-day state visit to Israel in 2000 was followed by five visits to China by Israeli presidents and prime ministers, the last of whom were Benjamin Netanyahu in 2017 and the late Shimon Peres in 2014.
Netanyahu visited Japan in 2014 and Japanese Prime Minister Shinzo Abbe visited Israel in 2015; president Ezer Weizman and prime minister Ariel Sharon visited India, respectively, in 1993 and 2003, Indian president Pranab Mukherjee visited Israel in 2015, Prime Minister Narendra Modi visited Israel last July, and Netanyahu visited the subcontinent in January accompanied by 130 businessmen.
The gradual pivot to Asia that all this traffic reflects is also expressed in the Foreign Ministry’s recasting of its outposts  worldwide, having decided to close its consulates in Minsk, Marseilles, Philadelphia and San Salvador, and open new ones in Shanghai, Guangzhou and Bangalore.
That also explains Israel’s decision to join, as a cofounder, the Asia Infrastructure Investment Bank, a Chinese-led version of the World Bank, despite American misgivings.
The relentless effort to create strategic partnerships with Asian powers registered one great failure, in 1999, when the Clinton administration torpedoed a signed deal to sell China Israeli-upgraded, but American-made, Phalcon spy planes.
The cancelation cost Israel a $350m. compensation fee to Beijing, and a broad retreat from defense deals with Jerusalem, though the two armies’ chiefs of general staff exchanged visits in 2011 and 2012.
Israel thus received a humbling reminder that with all due respect to its burgeoning Asian ties, they must be cultivated without compromising its most important ally, Uncle Sam. Israel, therefore, sought a different kind of strategic relationship with China. Having found that formula within a few years, its implementation is now well underway.
Israel was not unique in buying toys, sweatshirts or dishwashers made in China. Similarly, what China bought in Israel, scores of other countries bought here as well.
All this changed, however, when the two countries set out to help each other advance to the next phases in their very different economic histories, with Israel selling China educational goods and China selling Israel infrastructure projects.
Chinese public works giants have teamed up with Israeli companies in building the Carmel Tunnels under Haifa and the Acre-Karmiel railroad, and are now involved in upgrading the Ashdod seaport and constructing Tel Aviv’s subway.
Most crucially for Israel, China wants, and is indeed poised, to build the planned Tel Aviv-Eilat railway, which will be the greatest infrastructure project in the history of the Jewish state.
Israel, at the same time, set out to help China realize its next national aim: to shift part of its workforce from manufacturing to invention, and thus transition its economy of mass production to a post-industrial future.
Realizing Israel’s technological accomplishments, China’s Tsinghua University signed a deal in 2014 with Tel Aviv University to create a joint center for research of solar, hydrological and other environmental technologies.
The following year, Haifa’s Technion-Israel Institute of Technology was hired to build a $130m. technological institute in Guangdong. And in April 2016, Jilin University signed an agreement with Ben-Gurion University to establish a center of entrepreneurship and innovation.
Several days later, East China Normal University said it would open together with the Technion a Chinese-funded program on its campus that would specialize in neurobiology, biomedicine and other fields.
Israel and China are thus forging a type of strategic partnership the like of which Israel never had because no superpower had ever used Israel to cultivate its own industrial development.
It is only a matter of time before this economic and educational hyperactivity impacts the Middle Eastern conflict.
China, India and Japan can do wonders in this regard by imposing on Israel’s enemies a peace deal while the US imposes one on Israel.
This will be particularly true for Iran, which vitally needs China to buy its oil and gas, but it will also be true for Saudi Arabia and the rest of the Gulf States. China’s leverage in Tehran as a major petroleum buyer also applies to Japan and India.
The day when Asia plays such a role in the Mideast conflict may seem a distant reality right now, but then again, it has only been one generation since Chinese and Indian ambassadors arrived in the Jewish state, and but 40 years since Jerusalem’s lone strategic partner in Asia was Tehran.