By Mor Sobol

On May 13, 2020, amid COVID-19 pandemic and strict international travel restrictions, the United States (US) Secretary of State, Mike Pompeo, made a short one-day visit to Israel. His message to Jerusalem and the Israeli Prime Minister, Benjamin Netanyahu, was loud and clear – Jerusalem’s close ties with Beijing runs to risk of impairing US-Israel relations.[1] Evidently, Pompeo’s warning could not be viewed as an isolated event as the American administration has been warning and pressuring its Israeli allies to limit Israel’s engagement with the People’s Republic of China for quite some time now.[2]

For students of the US-Israel-China triangle, this situation should not come as a surprise since “American displeasure with Israel’s China links is almost as old as Israel itself.”[3] In fact, Israel’s recognition of the People’s Republic of China (hereafter China) in January 1950 following Mao Zedong’s independence declaration was not seen favorably by the US.[4]

Still, two more serious incidents took place after Israel and China established formal diplomatic relations in 1992 and revolved around Sino-Israeli security cooperation and arms transfer. The first incident occurred in the late 1990s and concerns the sale of the Israeli Phalcon Airborne Early Warning and Control Radar System. The US objected to the deal as the Phalcon would have provided “China a set of capabilities it would need so as to confront the U.S. Air Force over the Taiwan Strait.”[5] As such, and due to immense pressure from the American administration, Israel was forced to cancel the deal in July 2000, despite multiple assurances it gave to China that the deal would go through. Eventually, not only that Israel lost a significant financial opportunity (ca. $1-2 Billion), and had to pay China $350 million as compensation, but the dispute over the Phalcon is also considered one of the lowest points in Israel’s relations with both the US and China.[6]

Four years after the failed Phalcon deal, a similar dispute took place. Essentially, during the 1990s, Israel sold around 100 Harpy drones to China. According to the contract signed between Jerusalem and Beijing, the drones were to be sent to Israel in 2004-2005 for maintenance. Although the US did not object to the original deal, it was worried about the expected outcome of the maintenance work. Specifically, Washington suspected that rather than conducting a routine check and repair, Israel would actually upgrade the drones. Thus, the US was not only concerned that joint US‐Israeli advanced technologies might leak to the Chinese, but also that “the upgrade would make it technologically superior to that of the U.S. Military.”[7] In the end, due to American opposition, Israel had to break its contract with China and also paid compensation to Beijing. Once again, military deals managed to deteriorate Israel’s relations with both China and the US. What is more, following the Harpy fiasco, “[e]xplicit rules regarding the transfer of technologies to China have since been agreed on, or more precisely, dictated to Israel by Washington.”[8]

Notwithstanding the aforementioned, and despite the fact that further Sino-Israeli cooperation in the context of military technology transfers was blocked by the Americans, the relationship between Jerusalem and Beijing has significantly developed in other policy areas.

Since the establishment of diplomatic relations in 1992, and particularly in the last two decades, the relations between China and Israel have been growing exponentially on all fronts including, inter alia, trade, investment, culture, healthcare, education, and scientific exchanges. For example, in terms of economic cooperation, in the last decade, the trade between the two countries grew by 402% and reached about $14 billion in 2018.[9] Accordingly, China is Israel’s largest trade partner in Asia and third in the world after the US and the European Union. In terms of investment, Chinese investments and construction in Israel reached $12.97 billion between 2005 and 2020, according to the American Enterprise Institute’s China Global Investment Tracker.[10] Against this backdrop, during the visit of Prime Minister Netanyahu to China, Sino-Israeli relations have been upgraded to ‘innovative comprehensive partnership,” while Netanyahu told the Chinese President, Xi Jinping, that Israel is “your perfect junior partner,” and adding that this “is a marriage made in heaven.”[11]

Now, when we examine the strategic interests involved in the US-Israel-China triangle, it is rather clear why Israel views the US as its most important ally and seeks to maintain a good and stable relationship with the American administration. Indeed, one could highlight that both countries share similar democratic values, underline the longevity of Israel-US relations, or mention the fact that the US hosts the largest Jewish community in the world besides Israel. More importantly, the US is not only Israel’s biggest trade partner, but also serves the role of Israel’s key security and political patron in the international sphere.[12]

That said, it is worthwhile to identify the strategic interests that brought Israel and China closer in the last two decades. In the case of China, there are various reasons why Beijing wishes to strengthen its ties with Jerusalem. First, China has started to direct its efforts towards economic development and modernization while endeavoring a shift from an export-oriented to an innovation-oriented economy. As such, it views Israel as a major source of advanced technological innovation that could provide China with the necessary knowledge to pursue this strategic shift. Furthermore, in a broader geopolitical context, the Middle East plays an important role in the realization of China and President Xi Jinping’s flagship project, that is, the Belt and Road Initiative (BRI). Due to its strategic geographical location, level of technological development, as well as its stable economic and political situation, Israel is viewed as a regional hub and important partner in Beijing ambitious infrastructure plan of connecting China with its immediate and wider periphery (including Eurasia, Africa, and Europe). Finally, China has attempted to be more involved in the Middle East Peace Process in general and the Israeli-Palestinian peace process in particular as it wishes to improve its image as a responsible global actor that seeks peace and regional stability.[13]

As for Israel, one could underline a number of reasons that could explain Israel’s motivation in strengthening its relations with China. First, Israel’s interest in China is economic. On the one hand, Sino-Israeli economic cooperation provides Israeli businesses access to the second-largest (and ever-growing) economy in the world. On the other, Israel benefits from Chinese investments in its economy. Here, one should highlight the significance of the Chinese investment in Israeli technology as it “represent[s] an important opportunity for Tel Aviv to keep its absolute edge in the high-tech sector over the competition.”[14] Moreover, China, as the world’s leading (and cost-efficient) infrastructure actor, plays a crucial role in improving Israel’s deficient infrastructure.[15]

What is more, strong relations with Beijing allows Israel to diversify its partnerships with its traditional allies, namely the US and Europe. In this context, the rationale is not only economic (i.e. due to uncertainties regarding the growth rate of American and European markets), but also political. Specifically, the economic partnership with China provides Israel with a safety net in case of a deterioration of Israel’s relations with the US or the European Union (EU), as the US or the EU could decide to place significant pressure (or even sanctions) on Israel due to stagnation in the Israeli-Palestinian peace process.[16]

Now, the question is what has led the American administration to increase its efforts to limit Israel’s engagement with China. In general terms, the tension in the US-Israel-China triangle is caused by the growing rivalry between the two great powers. Evidently, this rivalry has intensified following the election of Donald Trump to office, and against the backdrop of US-China trade war and the COVID-19 pandemic.[17] Principally, what worries the American administration the most regarding the growing Sino-Israel cooperation is the transfer of technologies (including US technologies) that would strengthen China’s military and (to a lesser extent) economic edge. Evidently, during a conference in Israel, the US Undersecretary of Defense for Policy, John Rood, stated: “For us in the United States, the long-term threat from China is the greatest national security threat we face.”[18] Moreover, the American administration has voiced its concerns that enhanced Sino-Israeli ties that includes the acquisition of Israeli companies and assets in strategically important sectors (e.g. infrastructure, communication, and health), as well as over-reliance on Chinese investment represent a threat to Israel’s own political, security, and economic interests.[19]

There are two prominent examples that could illustrate the increasing tension in the US-Israel-China triangle, namely the disputes over the Haifa Port and the Sorek B project.

In 2015, the Shanghai International Port Group (SIPG) won a bid to build and operate the new Haifa Port for 25 years, beginning in 2021. Accordingly, Israel’s Minister of Transportation, Israel Katz, declared: “This is an historic day for Israel...It’s an expression of confidence in the State of Israel on the part of a superpower, which has decided to invest billions of shekels in Israel and turn it into an international cargo center for all the world.”[20] Nevertheless, in the last 3 years, US officials, former diplomats, navy, and intelligence officers, as well and policy analysts have started to raise concerns regarding the implications of Chinese control of the Haifa Port.

Principally, the key problem is the proximity of the new port to Israel’s navy port, which serves as a port of call to the US Sixth Flee. Importantly, the navy port is also where the Israeli submarine fleet is based. Therefore, the location of the Haifa Port provides China with the opportunity to gather critical intelligence concerning Israel and American navy operations.[21] Furthermore, Yellinek maintains that “the duration of the initial contract to operate the port (i.e., 25 years) would allow for China to implement a long-term plan of espionage.”[22]

Against this background, the American administration including, inter alia, President Trump himself, National Security Adviser John Bolton, US Secrete of State Pompeo, and other senior officials, warned Israel that if it would continue to allow increasing Chinese investment in strategic sectors and assets, US-Israel relations would suffer, especially in the context of security cooperation and intelligence sharing.[23]

Now, a more recent controversy is linked to the tender for building a desalination plant in Israel – the Sorek B project. The plant is expected to be the world’s largest, with an annual production of 200 million cubic meters of water (i.e. a quarter of Israel’s annual consumption). Worthwhile to mention, though, that besides its importance in the context of Israel’s water supply, the desalination plant is located near Air Force base Palmahim, which serves as Israel’s primary spaceport.[24] Initially, two companies have reached the final stage of the tender process: Hutchison, a Hong Kong-based Chinese company with an Israeli subsidiary, and the Israeli company IDE Technologies. Still, Hutchison was considered as the frontrunner to win the $1.5 billion, 25-year-long contract. Also in this case, senior officials from the American administration have expressed their strong disapproval and raised their concerns regarding the possibility that a Chinese firm would build and control this strategically important infrastructure project. In fact, Secretary of State Pompeo’s visit to Israel in May 2020 is linked to the increased American pressure on Israel to reassess the Sorek B tender.[25]

Against this background, it is important to examine what Israel has done to mitigate the American pressure and respond to the American concerns. First and foremost, the Israeli government established in October 2019 an interagency advisory committee that would screen foreign investments in Israel. The Israeli Prime Minister’s Office stated that the Committee’s objective is to “find the appropriate balance between the need to encourage foreign investments in Israel and ensure continued economic prosperity and considerations of national security.”[26] Indeed, no foreign country was mentioned by name, but “it is clear that this decision was concerned primarily with China, with the aim of easing the tensions with the U.S. without compromising the relationship with Beijing.”[27] Second, two weeks after Pompeo’s visit to Israel and following reports that Prime Minister Netanyahu order the screening committee to reassess the Sorek B tender, it was announced that the Israeli company IDE Technologies is the winning bidder for the project.[28] Finally, there are recent reports that Israel signed a Memorandum of Understanding (MoU) agreeing not to use Chinese equipment in its 5G networks.[29]

Principally, the Israeli reaction is certainly a step in the right direction. The establishment of a foreign investment screening mechanism and the fact that Hutchison eventually lost the Sorek B deal could be viewed as an important win for the US, and a demonstration by Israel that it understands and takes into consideration the concerns of its most important ally. In the words of Witte: “Sorek-2 was a good result. It shows the Americans we get it.”[30]

Notwithstanding the aforementioned, the Israeli response might be viewed by the American administration as too little, too late.

It is too late since it will not prevent China from taking over the Haifa Port or diminish its present involvement in other infrastructure projects such as the Tel Aviv Light Rail project. Furthermore, China already owns, has shares, or heavily invested in various strategically important sectors and companies in Israel. Prominent examples include the acquisition of Tnuva Food Industries by China’s Bright Food Group; the acquisition of Adama Agriculture Solutions by ChemChina; the acquisition of an Israeli state-owned electric power plant by a group that includes China Harbor Engineering and; the significant Chinese investment in the Israeli health and biomedical sectors.[31]

Equally worrisome are the various deficiencies of the newly-established screening committee. First, the committee is not formalized through legislation, thus lacking transparency. Second, it is an advisory committee. As such, not only that its decisions are not legally-binding but “regulators in different fields can choose whether to bring a potential investment before the committee.”[32] Third, the committee’s mandate is rather narrow as it includes only investments in finance, communications, infrastructure, transportation, and energy. Hence, the technology sector, which is the main target for Chinese investments in Israel, does not fall under the mandate of the committee. Finally, the committee does not have the competences to review a tender that was open before the committee was established.[33] In this context, the Sorek B case illustrates the problem since in response to American inquiry as to how Hutchison’s bid passed through the screening committee, Israeli officials argue that the committee could not intervene in a bid that was opened a year before it was established.[34] Against this background, I agree with Feith’s assessment that the committee’s “limitation was crafted to avoid offending China, so it antagonized U.S. officials instead.”[35]

In fact, not only that Israel’s response did not satisfy the Trump administration, but there are also some signs that China is displeased with the fact that the US is endeavoring to obstruct valuable Sino-Israeli cooperation. For instance, since the sudden death of Mr. Du Wei, the Chinese ambassador to Israel, in May 2020, China has delayed the appointment of a new ambassador. Moreover, while trying not to be excessively critical towards Israel; China is viewing the American concerns as unfounded allegations and “trust that the Jewish friends are not only able to defeat the coronavirus but also the “political virus”, and choose the course of action that best serves its interests.”[37] Still, Chinese commentators appear to be more critical of what they view as an Israeli surrender to American pressure. For example, following the reports of US-Israel MoU regarding 5G networks, Chen Weihua, a journalist for the China Daily, a Chinese state media outlet, tweeted that “Chinese cities like Shanghai provided safe haven to some 30,000 Jews fleeing Nazi Europe in WWII, but now Israel returns the favor by being a US poodle against China in 5G.”[38]

Regardless of the upcoming US 2020 election results, it seems that the American approach towards China is not going to change. After all, both Republican and Democratic parties share the view of China as a threat to US’ position in the international arena. Thus, Israel’s dilemma as to how to balance its relations with Washington and Beijing will likely continue to trouble Israeli policy-makers in the near future. Still, the question stands: how to mitigate the tension in the US-Israel-China triangle?

Indeed, it will be rather unrealistic to assume that the US and China will significantly change their views of each other anytime soon. Moreover, it is questionable whether both the US and China will devote substantial resources to easing the pressure on Israel. That said, both sides could still take some confidence-building steps. Specifically, China and the US should enhance their bilateral dialogue with Israel in order to ensure Jerusalem understands their position and concerns, as well as anticipating problems in any future cooperation.

In the case of the US, whereas the American administration seeks to limit the ties between Jerusalem and Beijing, it would be wise not to over-securitize every policy area and every project that involves Sino-Israeli cooperation. Furthermore, in the future there will be certainly more cases where Israel is forced to concede to the American pressure, thus not only losing financial opportunities but also the prospect of strengthening its relations with China. In those cases, it would be beneficial if the US could make an effort to find other alternatives that will somewhat compensate for Israel’s loss.

As for China, Beijing has to make it clear that under no circumstances it aims to replace the US as Israel’s key ally or cause any conflict between Washington and Jerusalem. As such, and in order to protect its strategic interests in cooperating with Israel, Beijing has to demonstrate some restraint and understand that ‘you win some you lose some’ (as in the case of losing the Sorek B bid).

At any rate, while strong American and Chinese public condemnations can be utilized as a tool to ‘blow off steam’ and for domestic consumption, both Washington and Beijing should not put Israel in the impossible position that it has to choose sides.

Now, the case of Israel is more complicated as it is the smallest and weakest player in the triangle. Accordingly, Jerusalem is burdened with the task of finding ways to keep both sides happy. In other words, it needs to find the right balance that would allow it to enjoy the vast opportunities that enhanced Sino-Israeli cooperation entails while avoiding a situation that will antagonize the American administration.

First of all, Israel must develop a long-term plan as to how to make this triangle work. In order to do so, it should obtain a better understanding concerning its cooperation with the US and China as well as the American and Chinese way of thinking. Specifically, this means not only to open a dialogue with Washington and Beijing (and maybe other countries that face the same challenge), but also building expertise. In this context, Israel would benefit from integrating more China and (to a lesser extent) US experts into official positions.

Second, I am in agreement with Witte who maintains that “[i]n order for Israel to have what it wants...it's going to need to show the Americans that it takes Washington's strategic perceptions into consideration and not only that, that it's two steps ahead on strategic thinking with respect to China.”[39] In this regard, it would be useful to establish an inter-ministerial coordination body that will manage Israel’s policy towards China. In addition, Israel should expand the mandate of its screening committee. In so doing, Jerusalem should not only make the committee’s rulings legally-binding, but also broaden the committee’s mandate to include investment in key areas in the technological sphere (e.g. biotechnology and artificial intelligence).[40]

Finally, Israel should convey its appreciation to China and express the strong Israeli interest in further cooperation. At the same time, Israel needs to highlight the challenging geopolitical environment in which Jerusalem and Beijing operate, and the fact that there will be times when Israel would be forced to surrender to the American pressure. Still, Israel should be exceptionally careful as to avoid any chance of repeating past mistakes (such as the Phalcon, Harpy, and to a lesser extent, Sorek B incidents) thus allowing Beijing to save face; a concept of utmost importance in the Chinese culture.

Mor Sobol is an Assistant Professor in the Department of Diplomacy and International Relations at Tamkang University. His main research interests center on European and Chinese foreign policy, Mediterranean politics, and Taiwan/China–Israel relations.