Israeli-Chinese trade under American pressure?
On Monday, sources in the Israeli government leaked the news that Israel had informed the US State Department that, from now on, all major trade deals between Israel and China would be approved with Washington first, Middle East Eye writing. According to Haaretz, this was an Israeli move rather than succumbing to a direct American request.
The announcement comes after the Israeli government has pushed the boundaries of American goodwill towards the country in recent months. In September, Israeli Foreign Minister Yair Lapid urged the US Congress to hold a separate vote to approve funding for Israel’s Iron Dome system. In October, Israel blatantly ignored strong US opposition to the rapid expansion of illegal settlements. Meanwhile, in recent months Israeli Prime Minister Naftali Bennett has repeatedly pressured US President Joe Biden to take a hard-line approach to nuclear talks with Iran.
Israel’s trade with China is second only to its trade with the United States. In 2020, Israel imported $ 7.7 billion in goods from China and exported $ 4.2 billion, compared to $ 8 billion in imports from the United States and 13.1 billion in exports. This indicates that Israel has a trade deficit with China and a surplus with the United States. However, it is doubtful that the Israeli government fully realizes the cost of appeasing Washington on the issue of trade with China.
Some of Israel’s growing trade with China and other non-Western countries can be attributed to the effects of the boycott, divestment and sanctions (BDS) movement. In 2013, Bennett, then Israel’s economy minister, warned that the growing BDS campaign against Israel threatened the country’s foreign trade. Since he believed support for BDS was a Western phenomenon, that same year Bennet traveled to India and China to seek new markets without being hampered by the movement.
Omar Barghouti, co-founder of the BDS movement for Palestinian rights, told Middle East Eye: “Israel has preemptively and desperately tried to pivot strategically to China, India and other non-Western states to compensate the possible loss of its catalysts. , donors and sponsors in the West, and with them its political and diplomatic shield against UN sanctions. “This attempt is unlikely to be successful given that in these countries, unlike the United States and Europe, Israel lacks strategic leverage – whether through the burden of a busy history or the use of groups. effective pressure. “
As the United States increasingly suspects increasing Chinese power, Washington has in recent years used its influence over Israel to thwart possible Israeli arms deals with Beijing. In 2000, the United States ended a deal in which Israel was about to sell its Phalcon spy plane to China, while in 2005 it also blocked the sale of Israeli Harpy drones to Beijing. Last year, the Israeli secret service dismantled an arms export network that reportedly planned to sell suicide drones to China. These failed export attempts showed that Israeli arms exports, the most well-known brand in the Israeli industry, were tightly controlled by the United States and that China was off limits to Israeli arms dealers. However, amid a crisis of its decaying infrastructure, imports from China were far more critical to Israel than lost export deals.
The most famous case concerns the privatization of the Haifa seaport. In 2014, five European companies withdrew their bids for the contract for fear of a boycott of their operations in Israel. The following year, Israel awarded a tender to the Chinese state-owned Shanghai International Port Group (SIPG) to operate the commercial transportation facility for 25 years, causing friction with the United States, which made argue that Beijing’s presence in Haifa, a port in which US warships frequently dock and refuel, could be used for espionage. While the terminal opened in September last year, Haifa’s port infrastructure is far from complete. Meanwhile, in December, Israel’s finance ministry disqualified UAE-based company DP World from the port buyout bid, further increasing reliance on Chinese companies.
In September 2020, Hong Kong’s Hutchison sold his shares in Israeli telecommunications company Partner, after his controlling license was rejected on security grounds and US pressure. Partner has been in crisis since 2016 after its partner, French company Orange, announced it would end all trade deals with Israel – one of the biggest divestments since the BDS movement started in 2005.
Meanwhile, Tel Aviv‘s light rail system has seen some of its lines (the green and purple ones) delayed, as Israel continues to procrastinate over the announcement of the successful bidder. Chinese companies were among almost every group that made offers for the construction, some of which were banned by Washington because of their ties to the Chinese defense industry. Earlier this week, the Jerusalem Post reported that the United States feared that a Chinese company could lay an optical cable in the tunnels dug for the streetcar and use it for spy purposes. On Monday, Israeli communications firm Gilat boasted of a “hundreds of millions of dollars” deal with an undisclosed “Asian cell giant with growth potential”. Israeli companies regularly advertise their contracts in order to attract investors, but usually only the arms companies hide the name of the country to which they are selling. As Gilat’s products are classified as civilian and do not require an export permit from the Ministry of Defense.
On Wednesday, Noam Gruber, the former head of research at Israel’s National Economic Council, protested in an article for the Marker, an Israeli economic newspaper, against Israel’s pledge to the United States to restrict trade with China.
Gruber warned that without Chinese companies, the number of foreign companies willing to undertake infrastructure projects in Israel is small, resulting in wasted time and resources. When approached by MEE to comment on Israel’s decision to consult with the United States, the Israel Chamber of Commerce declined to comment.
“Israel’s value to China, which is on the verge of becoming the world’s greatest economic power, is rather low,” Barghouti said. Ultimately, Israel’s promise to the United States regarding China indicates a short-term perspective, aimed at gaining points with the Biden administration. to the detriment of Israel’s long-term economic interests.