Amid mounting U.S. pressure to adopt a tougher stance on Chinese investment out of espionage fears, Israeli officials are countering that the concerns are overwrought and that investments are vetted for security risks.
The latest U.S. official to caution Israel was Deputy Secretary of Energy Dan Brouillette, who cited cybersecurity concerns and the prospect of Israel’s allies limiting intelligence-sharing with it. “We know that the threat of cyberattacks is growing each and every day,” Brouillette said in a statement to Reuters.
A week earlier President Donald Trump’s national security adviser John Bolton raised U.S. concerns about the use of Chinese telecommunications equipment in sensitive sectors and the role of a Chinese company in operating a port in Haifa now being developed.
But Israeli officials, who spoke on condition of anonymity, discounted American concerns concerning the Chinese presence at Haifa Port.
“The security warnings about the Chinese are a joke, completely mad,” said one senior government source. “If they want to gather intelligence, they can simply rent an apartment in Haifa instead of investing in ownership of a port.”
Shanghai International Port Group won a 2015 government tender to operate the new port in Haifa for 25 years starting in 2021. SIPG, which is 44%-owned by the Chinese government, was the only company that bid to operate the new facility.
“The Chinese were the only one to submit a bid and Chinese involvement is more political than economic — to create a footghold for China in Israel, which has been limited relative to the rest of the world,” said one transportation industry source.
American concerns are that the Chinese will use the port to gather intelligence on the Israel Navy facility nearby and on visiting U.S. Sixth Fleet’s warship. In a possible sign of U.S. displeasure at the Chinese involvement in Haifa, one of the Sixth Fleet’s ships in October docked in Israel’s second-tier Mediterranean port of Ashdod, for the first time in nearly 20 years.
An Israeli official who was involved in awarding the contract to SIPG said the process was vetted by all the relevant Israeli security arms.
“Chinese ships dock all over the world. At any given moment, there’s a Chinese ship at every port, so why would they need to invest in operating a port?” he said.
The goal in awarding a company rights to operate the port was to create competition from the existing state-owned port after the government failed over the year to implement labor and other reforms. A similar contract was awarded in Ashdod, but in that case a Dutch company, Terminal Investment Limited, won the operating contract.
In any case, the contract with SPIG allows Israel to nationalize the port for national security reasons.
To be sure, not all Israeli officials share this view.
Shin Bet security service chief Nadav Argaman warned last week that Chinese investments in Israel could put state security at risk, Channel 10 News reported.
He told a conference at Tel Aviv University that legislation was needed to create a mechanism for supervising foreign investments, citing Chinese interests in infrastructure projects and involvement in Israeli technology companies.
Yaakov Amidror, who headed Israel’s National Security Council from 2011 to 2013, said the problem remained that investments by China without any direct national security implications were not subject to any kind of systematics vetting process.
“The problem isn’t China or Haifa Bay port, the problem is the mechanism,” Amidror told TheMarker.
“There’s no body that examines foreign investment in Israel that isn’t security related. If Saudi Arabia decided it wanted to buy a Tel Aviv skyscraper, there’s no supervising body.”
Other countries have or are establishing bodies to vet foreign investments and Israel has been slowly moving forward on legislation that would create a committee composed of the finance, defense, public security and justice ministers, or their representatives, as well as the head of Israel’s National Cyber Authority.
Amos Yudan is chairman of the Israel-China and Hong Kong Chamber of Commerce and a representative in Israel for many Chinese companies.
“We have come under attack. It’s been under way for some time, but right now it hasn’t changed anything concrete,” Yudan said. “I don’t see how it will influence relations with China. They plan to participate in more Israeli tenders.”
In any case, said a source in the Israeli transportation industry, it would be virtually impossible for Israel to cancel the Haifa Port agreement with SIPG. Even if Israel tried to, it would involve heavy financial penalties and damage to Israeli-Chinese business relations
“I think we’ve passed the point of no return,” the source said. “The tender was completed more than two years ago and the port is expected to open no later than 2021.
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