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China penetrates Israel, worrying America

By July 21, 2019June 12th, 2023Print

As published on The Atlantic

By Kathy Gilsinan

US national-security officials have for years warned developing nations about the dangers of allowing Chinese investment in their countries. But now the Defense Department is worried about China’s investments in one of America’s closest allies, Israel. China’s ultimate aim, defense officials fear, is the same as the one it has pursued in Africa, East Asia, and elsewhere: to chip away at America’s influence.

For the US, a Chinese incursion in Israel, which cooperates with Washington on some of the most sensitive national-security issues—including Iran’s regional activities and the ongoing fight against the Islamic State—is especially concerning.

China’s economic campaign is under way as it builds up its military across the board. Beijing is, for the first time in the modern era, beginning to project its military power outside its own region—most notably building its first-ever overseas base in Djibouti, on the Horn of Africa and adjacent to one of the world’s most important oil-transit choke points, through the Bab al-Mandeb Strait. That base also happens to sit cheek by jowl with a US base of about 4,000 people; it is a key hub in the US drone wars in Somalia and Yemen.

“While we are not asking Israel to avoid dealing with China entirely, we have open discussions with all our closest allies and partners on the national security implications of Chinese investment,” said Michael Mulroy, the deputy assistant secretary of defense for the Middle East, in a written statement to The Atlantic.

Mulroy noted that within three years, a Chinese state-owned company is expected to operate part of the Haifa port, near an Israeli naval base that serves as a frequent port of call for the US Navy’s Sixth Fleet. China’s investment in the port prompted a rare objection from the US Navy to Israeli counterparts when it was first disclosed last year. As Amos Harel, a correspondent for the Israeli newspaper Haaretz, noted in the paper, “China is acquiring vast influence over essential infrastructures in Israel and, indirectly, also a closer look at some of Israel’s military capabilities.”

“The Department of Defense is concerned about China’s desire to erode US military advantages, as well as China’s push for access and basing, use of economics to intimidate through the One Belt One Road initiative”—a worldwide campaign of infrastructure investments—“and technology and intellectual property theft, acquisition and penetration,” Mulroy’s statement said. (The Israeli Embassy declined to comment.)

Why worry? As Undersecretary of Defense for Policy John Rood put it during a recent visit to Israel: “China wants to own the road, and wants to control the belt.”

Yet Israel is in a different position than, say, Sri Lanka, which couldn’t pay back a Chinese loan to develop a port and ended up having to hand it over to China on a 99-year lease. Israel is not in danger of such a “debt trap,” according to Galia Lavi, a researcher in the Israel-China program at Israel’s Institute for National Security Studies. She noted that a Chinese company is on contract to operate only one dock of the Haifa port—it isn’t loaning money to Israel. And the dock at issue wouldn’t host the Sixth Fleet or any fleet; the naval base does that.

“You cannot see the navy base” from the dock the Chinese company will operate, Lavi, who visited the port recently, told me. “Even if you have binoculars. Even if you stand on stop of a big building.”

But US defense officials’ concern is not just about China’s physical access to a sensitive region where the US has for decades been the dominant outside power. It’s also that certain commercial deals, particularly in the technology sector, could be a back door to Chinese spying in sensitive national-security realms. “The openness of the US and Israeli economies is a strength for our countries, but malign actors can take advantage of that if we are not cautious,” Mulroy said.

The US has raised similar issues, including with the British, whom President Donald Trump is prodding not to partner with the Chinese company Huawei to build next-generation telecommunications networks known as 5G. (The US, meanwhile, has taken its own measures against the company, sharply restricting its sales in the US while citing fears for national security.) One problem with that, from the US perspective: America and Britain are very close intelligence partners, and the US doesn’t want to effectively be sharing intelligence with the Chinese. The intelligence-sharing issue is also a sensitive one in Israel’s case. The allies coordinate closely on a range of regional-security issues, with Iran a key concern for both. China, however, also maintains close ties to Iran.

And elsewhere in the Middle East. It is perhaps to China’s advantage that it has adopted an agnostic posture on some of the major disputes roiling the region, especially the enmity between Iran and Israel as well as many Gulf countries. Where there are US interests in the region, these days there is also often Chinese money. China has launched major industrial investments in the United Arab Emirates, another wealthy ally of the United States, which has backed the US pressure campaign against Iran and which defense officials characterize as America’s most capable military partner in the Gulf. Beijing has invested in energy projects and railroads in Egypt and ports and car plants in Tunisia. It’s also getting involved in Syrian reconstruction and in the Iraqi oil sector.

On the technology front too, though, Lavi was circumspect. Huawei does sell cell phones in Israel. But its presence in the country is modest, and Israel, like most places, doesn’t have 5G networks yet.

As Mulroy took care to emphasize, nothing is inherently wrong with Chinese investments, which aren’t necessarily destined to strain ties among allies. Nor are Israeli officials blind to the risks—from either Washington’s perspective or their own. A 2019 Rand Corporation report says that current and former Israeli parliamentarians had noted a variety of problems, including “China’s cyber espionage record; corruption allegations; the links between Chinese companies and China’s government; and the issue of having a foreign entity control major infrastructure, including infrastructure that might be integral to Israeli security.”

Yet the investments continue, and despite US concerns, the ultimate effect on US-Israeli ties that both sides tout as unshakable may be muted. “While some of the recent US rhetoric about Chinese investment generally in Israel and ramifications for US-Israel defense and intel ties strike me as overblown and likely to be exposed as hollow threats, I do think there is reason to be concerned about China managing a major port of call for the Sixth Fleet,” a former US official who worked on China issues, and who requested anonymity to discuss the issue, told me. This person noted that China’s presence at Haifa was less a concern than its Djibouti base. “But our closest friend in the region allowing Chinese management of a regular [US Navy] port of call would definitely be a bitter pill.”

(The featured image at the top shows Chinese President Xi Jinping greeting Israeli Prime Minister Benjamin Netanyahu)