As part of U.S. President Joe Biden’s visit to Israel last week, an unprecedented diplomatic-strategic summit took place on Thursday afternoon.
Biden, Prime Minister Yair Lapid, United Arab Emirates ruler Mohammed bin Zayed and Indian Prime Minister Narendra Modi met virtually under the aegis of the new group established by the United States, I2U2, to increase entrepreneurial cooperation between the four countries (and perhaps to signal to the Chinese that a new strategic forum has been created to counter the one China has established with Pakistan and Iran).
As the four leaders overcame the limitations of Zoom and discussed the need for joint investments in infrastructure, health and food security, the new alliance was already seemingly bearing fruit.
The infrastructure empire belonging to Gautam Adani, a personal friend of Modi and the richest person in Asia, was declared the winner of the move to privatize the state-owned Haifa Port, together with the Israeli company Gadot Chemical Terminals. This followed immense pressure by the United States on the Chinese not to submit a bid and after the Emiratis withdrew at the last minute.
Adani Ports offered a rather staggering 4.1 billion shekels ($1.18 billion) for the port – 55 percent more than the second highest bid. This is a much higher price than the government had first anticipated and has a price-to-earnings ratio of 18 (roughly calculated, based on the average of the past three years). It is as if Adani is saying: “Step aside, this is a strategic purchase – and for us the price is less important.”
‘Proud to be in Haifa’
In fact, when local groups competing to buy the port heard the price that Adani Ports had offered, they all backed out. “With such a gap, you understand that this is a completely different ball game. There’s no point facing off against a player who sees the asset as a strategic investment,” said a person close to one of the rival bidders.
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Adani’s company operates 13 sea terminals in India and controls 24 percent of India’s maritime commerce. He has no holdings in the West – so his entry into Israel is a signal for increased maritime traffic between Asia and Europe, and the major Asian players’ need for a hub in the Mediterranean.
“Delighted to win the tender for privatization of the Port of Haifa in Israel with our partner Gadot [which has a 30 percent stake in the port]. Immense strategic and historical significance for both nations! Proud to be in Haifa, where Indians led, in 1918, one of the greatest cavalry charges in military history!” Adani tweeted on Thursday to his near-638,000 followers.
By noting the Indian cavalry charge in World War I when Indian troops defeated the Ottomans, the fourth-richest person in the world – Adani is worth nearly $113 billion – wrapped the deal in a nationalist-historic aura whose meaning is clear to everyone: When it comes to purchasing a controlling interest in a strategic asset like a port, it’s not just a private deal but also a political maneuver. Behind the winner of the bid stands a country, for better or worse.
Israel expects that Adani’s entrance on the local scene will now lead to more Indian investment, especially in the fields of renewable energy and defense. Adani, by the way, has already collaborated with the aerospace and defense company Elbit Systems on a drone-manufacturing facility in India.
Another expectation, powered by the vision of a new Middle East, involves the construction of a rail link from Haifa Port to Jordan. This would be a diplomatic and logistical game-changer, one that has been discussed a great deal in the past. Now that an Indian company holds a controlling interest in Haifa Port and the Chinese (through the Shanghai International Port Group) hold a controlling interest in the nearby Haifa Bayport container terminal – it might finally become a reality.
This is even more likely given that the Jordanians might soon have an economic interest in such a link as well. This is because the possibility of Saudi Arabia allowing Muslim pilgrims to fly directly from Israel to Mecca would mean a major reduction in Jordanian income from the Allenby Bridge land crossing between the West Bank and Jordan.