The result of the rivalry between Washington and Beijing
Israel will have to choose between America and China
Haifa Port is set to replace the Chinese company that operates a container platform there.
archival
The Advisory Committee to Verify the National Security Profiling of Foreign Investments is a boring title for one of the most secret and sensitive bodies in the Israeli government.
Its membership is unknown, and its meetings are held under a veil of mystery.
It is a committee that is already working on studying and evaluating deals with China.
It was created in 2020 after pressure from the United States, which was concerned that China could acquire Israeli weapons technology.
Indeed, the disturbing impact of this committee on trade and relations with China is already beginning to appear.
Although there is no official policy, directive, or written principles prohibiting Chinese investment in sensitive areas of the Israeli economy, there has been a significant slowdown in new dealmaking.
"The Americans have made it clear to us that they will not accept any Chinese participation in sensitive infrastructure, and Israel is getting the message late," said a former Israeli government minister who left his post on June 13.
In May 2020, for example, Israel rejected a bid by the Chinese company, Hotsune Water, to construct a desalination facility. Chinese companies are still participating in previously signed infrastructure projects, including a light rail network. But Israel, as a result of American pressure, is trying very discreetly to replace the Shanghai International Ports Group, which is scheduled to operate a container platform in Haifa Port, with an Emirati one.
“In the past we used to get a lot of direction from the government about how to do business with China," said one Israeli CEO who has spent nearly a decade working on Chinese investments. But now it seems clearer. The Chinese can invest in areas such as agricultural and financial technologies, but not in anything to do with cyber or security sciences, not in infrastructure.” Chinese investments in Israeli technology companies decreased from 72% in 2018 to 45% in 2020. This is in part as a result of the “Corona” pandemic and new regulations inside China related to the transfer of foreign funds, in addition to what can be interpreted as a “re-evaluation of relations.”
“During the rule of Benjamin Netanyahu, Israel felt that it could take its cake and eat it, as it trades with China without angering the Americans,” says the Israeli expert on relations between Israel and China at the Institute for National and Security Studies in Tel Aviv.
But it took Israel a long time to understand to what extent the United States sees China as a competitor.
Although there is no official policy, directive, or written principles prohibiting Chinese investment in sensitive areas of the Israeli economy, there has been a significant slowdown in new dealmaking.
• Chinese investments in Israeli technology companies decreased from 72% in 2018 to 45% in 2020.
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