A Pearl Necklace

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“The Jews are the cleverest people in the world” and “Israel must be a huge country” were the two most repeated perceptions about Israel and Israelis I heard from Chinese people during my visit to the “Middle Kingdom” back in 2006. The reasoning I heard for these impressions was hardly logical (out-of-proportion media coverage and plenty of Nobel laureates), and yet the fact remains – that is what the average Chinese thought, and probably still thinks, of Israel.

Israel’s size and the intellectual level of her citizens are not the reason however, for the blossoming relationship between Jerusalem and Beijing, and after the visit last week of Chinese Foreign Minister, Wang Yi – the third visit to Israel by a Chinese Politburo member in half a year – there can be little doubt that China and Israel are indeed upgrading their relationship. Israel is going out of its way to appease the Chinese, even to the extent of withdrawing its support from a lawsuit against the Bank of China for laundering millions of dollars for Hamas and Islamic Jihad (For more info on this, see Between Two Fires). Let’s try and figure out why.

Since diplomatic relations were established in 1992, Israel’s relationship with China has seen ups and downs. As a whole, China has tended to hold Israel an arms-length, mainly due to the fact that its main oil imports originated from Arab countries and Iran which meant that a warm relationship was never a viable option. Despite this, Israel began to give China access to its most lucrative industry – weapons. Israel soon became China’s second-largest arms supplier, but relations collapsed in 2000 when the U.S. forced Israel to cancel a billion dollar sale to China of its Phalcon early warning aircraft systems. A few years later, Israel agreed to American demands to cease selling arms to China, heralding frosty period in the ties between the two countries.

So what has changed?

Israel

  • Political support – In pursuing warmer ties with China, Israel hopes to leverage its skills in hi-tech and agricultural innovation to win the political support of the Chinese government, which has signaled it wants to play a greater diplomatic role in the region. For Israel, China’s willingness to do business without attaching conditions related to human rights or the negotiations with the Palestinians looks particularly attractive in the face of growing Western frustrations with Israel’s policies in Gaza and the West Bank.
    The recent deterioration in relations with the U.S., together with the growing criticism and sanctions coming from Europe, has strengthened the realization in Israel that it must look elsewhere for political support. As if saying “the hell with the U.S. and Europe, let’s go to China, India and Russia”, Israel is expanding its traditionally limited horizons to the east.
  • Economic support – Over the last few years, China has increasingly invested in the Israeli economy, as reflected in an increase in Chinese investments in venture capital funds; a rise in direct investments in Israeli high-tech companies; the growth in acquisitions of Israeli high-tech companies by the Chinese and the establishment of Chinese research and development centers in Israel, and in joint academic projects, as in the case of the huge donation made in September by the Li Ka Shing foundation in support of the Technion – the Israel Institute of Technology. During his visit, the Chinese Foreign Minister was quoted as saying China was about to invest 500 billion dollars overseas – Israel wants to be as high as possible on the receiving list.

China

  • Money, money, money – China has been focused on one thing, and one thing only, over the past three decades – its expanding economy. To ensure the continued growth of its economy in the near future, the Chinese government has adopted a new global policy, and is increasingly allowing private ownership of businesses and properties, and enabling overseas investments. The process, slow as it may be, is radically reshaping Chinese business management, and is also opening new opportunities for strengthening cooperation between Israel and China.
  • Global strategy – China’s growing economy consumes a huge amount of natural minerals – iron, oil, ore, copper, etc. China has managed to secure future supplies of these materials by investing heavily in African countries rich with these resources. In a similar way to how Great Britain and France sought to secure their colonial interests (India and the North African colonies, respectively) by territorial expansions in Africa, China is now establishing what the Americans term a “pearl necklace” consisting of a series of Chinese funded and controlled ports all the way from the Far East, through the Middle East, to Africa. In Israel, China is planning to construct the railway between Eilat and Ashdod – linking the Red Sea and the Mediterranean, giving the Chinese a substantial amount of control in the port of Eilat.

To sum up – the changing global order is beginning to take form in the Middle East. China is beginning to slowly project its power beyond its traditional spheres of influence. The vacuum created by the strategic withdrawal of the U.S. from the region has attracted old and new players.  China is just beginning to learn the ropes, as reflected by the highly unusual Israeli delegation sent to Beijing last month to “teach” Communist party officials about the roots of the Israeli – Palestinian conflict, and it is still not entirely clear as to whether China intends to take on a more active role.

Until then, Israel needs to be extremely cautious. Israel is wise to look for support in any place it can find it, but there is more than one reason to take this dance nice and slowly:

  • Lying in bed with the dragon runs the risk of being consumed by its fire, meaning that inviting mass Chinese investments in the Israeli economy could lead to losing control of vital and strategic assets (e.g. Chinese attempt to buy out ICL – Israel Chemicals Ltd.).
  • Israel’s current PR situation is weak at best, and being overly identified with China’s communist regime might not be such a hot idea.
  • Israel should be careful not to be lulled into thinking it can now afford to defy the world (by pronouncing further construction plans in the West Bank, for example) since China has its back. The U.S. is at present, and will be in the near future, Israel’s major strategic partner and ally, and Europe – its largest export market. Israel would do well not to make the mistake of thinking China today can take their place – not politically, and not economically. I for one, would rather not be just another pearl on China’s necklace.

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