newsU.S.-Israel Relations

Chinese company set to manage Haifa’s port, testing the US-Israeli alliance

According to China’s Ministry of Transport, a total of 52 ports in 34 countries are managed or were constructed by Chinese companies, and that number is set to grow as Beijing expands its Belt and Road Initiative.

View of the port in the northern Israeli city of Haifa. Credit: Marcelo Sus/Flash90.
View of the port in the northern Israeli city of Haifa. Credit: Marcelo Sus/Flash90.

The presence of Chinese state-owned companies at Israel’s seaports is acting as a thorn in U.S.-Israeli relations.

According to China’s Ministry of Transport, a total of 52 ports in 34 countries are managed or were constructed by Chinese companies, and that number is set to grow as Beijing expands its program.

These include Haifa’s new private seaport, which the Shanghai International Port Group (SIPG) will begin to manage from 2021 for 25 years. Meanwhile, China’s Pan Mediterranean Engineering Company (PMEC) is currently building Ashdod’s private port and is due to complete the project in 2021.

The Israeli government views both new sites as alternatives to the older, state-owned ports, which are prone to costly strikes, but which will continue to operate.

In particular, the Haifa port project is drawing the concern of the U.S. Navy, which often docks at the Israeli naval base in the northern coastal city. That close cooperation could change if the nearby civilian port comes under Chinese management, American officials have warned.

With the issue continuing to stir controversy and debate in Israel, a number of commentators have expressed concern over the harm that it might cause to Israeli-American naval cooperation.

“There is no doubt that this has reached a crucial junction,” Professor Uzi Rabi, director of the Moshe Dayan Center for Middle Eastern and African Studies at Tel Aviv University, told JNS. “The American antagonism is clear to all, and Israel will—like on many aspects of the Middle East and in general—find a middle way that is very creative.”

Asked whether Israel can indeed find a path that would let it enjoy the economic benefits of relations with Beijing, Rabi said that Israel will have to “dedicate a lot of energy and creativity” in charting a future of reciprocal economic relations. Such relations would have to ensure that China does not “take control of central pillars of the local economy, or taint relations with the U.S.”

An early sign of pressure on Israel to keep China out of the loop of new infrastructure projects may have emerged last week, when Israel reportedly restricted a tender for the construction of a major new international airport to NATO nations only.

‘Israel will not be able to deal with security risks’

Washington has made no secret of its displeasure over developments at Haifa. During his visit in mid-January, U.S. National Security Advisor John Bolton conveyed the Trump administration’s concern about China’s involvement at the port.

Dr. Ofer Israeli, a geostrategist and international-security policy expert, said that while the construction of the Ashdod port is nearly complete—meaning that the matter is closed—the situation at Haifa port is very different.

“In Haifa, a Chinese company would operate the port for 25 years, and therefore, the possibility of withdrawing from the deal is possible and essential to Israel’s security,” said Israeli.

Israeli Minister of Transportation Yisrael Katz (second from left) seen at the signing of an agreement in Tel Aviv for construction of new ports in the Israeli cities of Haifa (north) and Ashdod (south). The contract is between the Israel Port Authority, and Chinese and Dutch companies. May 28, 2015. Credit: Photo by Flash90.

Israeli, who lectures at the Institute for Policy and Strategy at the Interdisciplinary Center (IDC) in Herzliya, argued that giving away the keys to a strategic port to any foreign party means a loss of Israeli control over a central gate to the outside world.

Israeli is also concerned by numerous reports of China taking advantage of the infrastructure it builds in other countries for surveillance, intelligence gathering, or cyber warfare.

The proximity of the civilian port to the Israeli Navy base at Haifa could allow the Chinese to track Israeli naval activity, which is supposed to be classified, warned Israeli.

“In my view,” he said, “Israel will not be able to deal with the security risks—not just in terms of spying, but also on other matters, such as the Chinese desire to bring ships to the port that could be on their way to train or assist Syrian forces or Hezbollah.”

Washington will in all likelihood “force us to withdraw from the deal, and Israel will pay a higher price to the Chinese for every passing day, through the rising exit fines, and through the harm that would come to relations with China,” he cautioned.

‘Washington and Beijing competing over areas of control’

Roie Yellinek, a doctoral student in the department of Middle East Studies at Bar-Ilan University in Ramat Gan, recently published a paper at the Begin-Sadat Center for Strategic Studies, in which he placed the Haifa-port tension within the wider context of growing, global American-Chinese competition.

Israeli Prime Minister Benjamin Netanyahu and his wife Sara, along with U.S. Ambassador to Israel David Friedman during a visit on the U.S. navy ship “USS ROSS,” which is docked at the Ashdod port, on Oct. 11, 2018. Credit: Marc Israel Sellem/POOL.

Yellinek, a fellow at the China-Med Project, which monitors relations between Beijing and regional countries, wrote that “while the direct implications of the port’s management are of interest to China and the U.S., their concerns are more related to a Cold War-type struggle.”

“Similar to the Soviet-American struggle during the Cold War, Washington and Beijing are competing over areas of control and patronage. The question of influence over Israel is very important to both countries,” said Yellinek. “From the American perspective, Israel is its oldest and most important ally in the Middle East, and one of the current administration’s closest friends. From Beijing’s perspective, the opportunity to increase its influence on a country that maintains such close ties with the U.S. can have deep implications for China’s international status.”

Speaking to JNS, Yellinek said that he believed that Israel could deal with the potential security challenges created by the Chinese company’s presence at Haifa. But the strain this issue would cause to relations with the United States would be too costly for Jerusalem to bear, he argued.

“My personal view is that we need to satisfy American expectations because they guarantee Israel’s security, while China has few sentiments for Israel’s security needs,” said Yellinek. “I think the government will have to act. … Ultimately, China is closer to Iran than it is to Israel.”

Yellinek noted that China has quietly begun establishing soft power channels in Israel to promote its cause.

He also noted that Chinese companies operate ports around the world, and that there is nothing inherently unusual about the Israeli case.

As the world’s second-largest economy after the United States, China has been rapidly expanding its global presence. Under President Xi Jinping, the country launched its ambitious Belt and Road Initiative, creating a lucrative network of land and sea trade hubs across Eurasia. It is a network that greatly expands China’s access to and influence on global trade.

In September 2018, Rear Adm. Oded Gour-Lavie (Res.), a former head of the Israeli Navy’s Strategic Task Force, told JNS that given its location in the eastern Mediterranean, and coastline on the Red Sea, Israel is well suited to benefit from China’s initiative.  But in a situation in which economic interests clash with security interests, Israel will have to make future decisions differently, “so that we don’t shoot ourselves in the foot,” said Lavie.

From Yellinek’s perspective, the alliance with Washington is the most important factor to defend.

“The Israeli government should tell the U.S. that yes, Washington is undoubtedly Israel’s best friend, but also that no American company offered to manage Haifa’s port,” said Yellinek. “And that this is aboveboard.”

You have read 3 articles this month.
Register to receive full access to JNS.

Just before you scroll on...

Israel is at war. JNS is combating the stream of misinformation on Israel with real, honest and factual reporting. In order to deliver this in-depth, unbiased coverage of Israel and the Jewish world, we rely on readers like you. The support you provide allows our journalists to deliver the truth, free from bias and hidden agendas. Can we count on your support? Every contribution, big or small, helps remain a trusted source of news you can rely on.

Become a part of our mission by donating today
Thank you. You are a loyal JNS Reader.
You have read more than 10 articles this month.
Please register for full access to continue reading and post comments.
Never miss a thing
Get the best stories faster with JNS breaking news updates