Haaretz Cites JINSA Report on Curtailing Chinese Investment in Israel

U.S. Offered to Inspect Israel’s Haifa Port Due to China’s Involvement
By Amos Harel

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Washington is concerned that Chinese company’s presence could provide an opening for technological surveillance of what goes on at the port, including collecting information about joint Israeli-American operations

Last year, the U.S. administration offered to conduct a comprehensive security review of the Haifa port, due to Washington’s concern over a Chinese company’s involvement in the expansion of the port. The review would have been conducted by a team from the U.S. Coast Guard, but Israel declined the offer.

Chinese involvement in the port project has been harshly criticized for several years in Washington, particularly at the Pentagon. The American defense establishment is concerned that the Chinese activity at the port could provide an opening for technological surveillance of what goes on there, including collection of information about operations of the Israel Navy and joint operations with American ships.

That prompted Washington to warn Israel against continuing to work with China on the project. At various meetings, Israeli officials were even told that the American Sixth Fleet would stop docking at Haifa port as a result of Chinese presence.

The disagreements between Israel and the U.S., as first reported by Haaretz two and a half years ago, continue to weigh on the bilateral defense relationship. Senior American officials have repeatedly expressed their reservations over expanding Chinese influence in Israel and have warned their counterparts that the trend endangers America’s strategic interests in the Middle East.

Several Israeli and American research institutes, including the Institute for National Security Studies at Tel Aviv University, the Maritime Policy and Strategy Research Center at the University of Haifa and the U.S.-based RAND Corporation, have published reports over the last two years describing the tensions with Washington over China’s involvement in Israel as among the most burning issues in the bilateral relationship.

There is now a new report on the subject, produced by the Washington-based Jewish Institute for National Security of America. The institute works to protect American interests in the Middle East and to strengthen U.S. ties with Israel. It brings together retired senior defense officials, including retired generals and admirals, who frequently visit Israel and are in close contact with Israel’s top leadership.

Blaise Misztal, JINSA’s vice president for policy, spoke with Haaretz last week about the American offer for the Coast Guard inspection that Israel turned down. He said Washington was still concerned about the Chinese presence at the Haifa port, and the disagreement with Israel over the issue had not yet been resolved.

The new report was authored by two retired admirals, John Bird and Jonathan Greenert. “As the United States seeks to minimize its footprint in the Middle East while reducing its economic dependence on China, Washington will need the assistance of its partners. Israel already plays a critical role in protecting U.S. interests in the Middle East and, through closer linkage with its innovation-driven economy, could help sustain U.S. global economic primacy. However, Chinese investments in Israel if left unaddressed, could undermine this strategic partnership and endanger Israel’s own economic dynamism and security,” the report said.

“China invests in Israeli companies and buys Israeli technology to fuel its own military and industrial ascent, and to expand its influence. Beijing has also invested in a new terminal at the Haifa Port, which may inhibit U.S. naval vessels from safely visiting the port. Unless Israel acts, with U.S. assistance and support, to limit Chinese penetration and exploitation of its economy, it could find itself subject to Chinese influence and isolated from its Western partners,” the two admirals wrote.

“With a concerted, comprehensive, and cooperative strategy, however, the United States and Israel can protect themselves from Chinese economic exploitation, build deeper strategic and economic ties, and, perhaps most importantly, develop a model of democratic economic governance that can serve as the foundation for a new, broader international coalition against great authoritarian powers.”

The authors recommend that Israel adopt a government strategy for assessing the threat posed by China, which would include reviewing Chinese misappropriation of Israeli technology, counterintelligence efforts to detect Chinese penetration of Israeli academia, systematic screening of foreign investments and tighter export controls. As for the United States, they said, it should help Israel defend itself against Chinese penetration by elevating the level of intelligence sharing, expand financing of Israeli infrastructure projects and enable U.S. government investment in Israeli technology. They also proposed various measures to bolster trade between Israel and the United States.

Speaking to Haaretz, both Misztal and JINSA’s senior vice president for Israeli affairs, Maj. Gen. (res.) Yaacov Ayish, said strategic competition with China would remain a top American foreign policy priority under the Biden administration. This was nearly the only issue on which there is broad bipartisan consensus between Democrats and Republicans, the two said, and the Biden administration might even take a harder line towards Beijing than the Trump administration did over the past four years.

At the urging of the United States, last year Israel’s security cabinet decided to establish a mechanism for scrutinizing foreign investment in Israel. Although never stated explicitly, the mechanism was meant to enable greater oversight of Chinese investment in Israeli companies in sectors that could have security implications or clash with American interests.

Nevertheless, the Trump administration wasn’t satisfied with these steps on Israel’s part and thought more stringent oversight was necessary. Misztal confirmed that Washington will expect tight oversight on Israel’s part to reduce Chinese penetration of sensitive sectors in Israel.

In the summer of 2019, U.S. Under Secretary of Defense John Rood visited Israel and pressured it to exclude Chinese companies such as Huawei from contracts to install 5G cellular infrastructure, due to concern that defense-related information could leak to the Chinese. The Netanyahu government didn’t respond directly to the request, but it apparently accepted the American demands on this issue.

In May 2020, Israel awarded a contract to build a large desalination plant at Nahal Soreq to a local company rather than a Chinese competitor. This was apparently due partly to American pressure and partly to Israel’s own concerns regarding the plant’s proximity to sensitive defense facilities.

Originally published in Haaretz