Australia
should be careful to ensure defence cooperation with Israel does not leave a
back door open for Chinese infiltration.
The hosting
of the Israel-China Innovation Conference in Jerusalem on 24-25 October 2018
highlighted the growing ties between Israel and China.
Chinese Vice President Wang
Qishan attended the conference, as did Alibaba’s Jack Ma and former Google CEO
Eric Schmidt. The Conference was sponsored by the Israeli Ministry of Foreign
Affairs (which sits with the Prime Minister). There were representatives from
13 different Chinese and Israeli government agencies. Wang is the
highest-ranking Chinese official to visit Israel since President Jiang Zemin’s
visit in 2000.
Wang emphasised Israel’s
importance to China, saying
“Israel leads the world in electronics, information technology, modern
medicine, and agriculture… China is still striving to achieve modernisation.”
Leading Chinese tech companies,
such as Huawei, Legend and Xiaomi, have established operations in Israel. In
2017, 34 Chinese
companies were investing in Israeli companies, up from 18 in 2013.
This amounts to around US $500 to $600 million or approximately 12 per cent of
the total capital raised by all Israeli startups between 2013 and 2017.
Israeli Prime Minister Benjamin
Netanyahu has made it his mission to improve relations with China. In 2017, he
travelled to China where he met President Xi Jinping and the two agreed to
upgrade the relationship to a Comprehensive Innovation Partnership (during
the trip 25 cooperation agreements were signed valued at around $2 billion).
Netanyahu wants
a free trade agreement between the two countries by 2019.
Wang and Netanyahu led
the fourth meeting of the China-Israel Innovation Committee, which is an
intergovernmental meeting aimed at improving cooperation in economy and trade,
science and technology, health, agriculture, environmental quality, education
and academy.
Another important example of the
increased cooperation between Israel and China was the Technion Institute of
Technology, Israel’s equivalent of MIT, opening a joint venture
in Shantou Province with Shantou University in 2017. The event was attended by
Hong Kong billionaire Li Ka-shing, who had donated US $130 million to the
Technion in 2013.
Netanyahu’s commitment to open
the Chinese market to Israeli companies explains why there has been a boom in
economic terms between the two countries. In 2017, the volume of trade between
the two countries totalled $9.67 billion – with Chinese exports to Israel twice
as large as Israeli exports headed the other way. China is now Israel’s second
largest trading partner after the US.
With China seen as a key market,
the Israeli Ministry of Economy and Industry has established six economic
offices in China (by comparison, Israel has four in the US). In 2017, the two
countries opened direct flights from Tel Aviv to Shanghai and from Tel Aviv to
Chengdu, which may explain why in 2017, Israel received over 110,000 Chinese
visitors.
The Israelis have reportedly
made it clear to the Chinese that defence technology is off the table, although
healthcare, sustainable development equipment, bio-technology, medical
equipment and precision farming, are all fair game. Notably, the Israelis say
nothing about ‘dual use’ products.
The problem with the improved
relationship is that one doesn’t know how the Chinese will exploit the
technology, especially innovations relating to artificial intelligence and
civilian cybersecurity (around 120 Israeli
hi-tech companies receive Chinese investment).
In a remarkable op-ed,
Gilad Cohen, the Deputy Director General for Asia-Pacific Affairs at the
Israeli Ministry of Foreign Affairs, discounted the growing criticism appearing
in the Israeli media over the extent of China’s penetration into Israel.
In September 2018, Shaul Chorev,
the former deputy commander of Israel’s navy and chairman of the Atomic Energy
Commission, warned
as to the danger of Chinese penetration, specifically the fact that the
Shanghai International Port Group would manage Israel’s port of Haifa for 21
years, starting from 2021.
Similarly, Ephraim Halevy, the
former head of Israel’s national intelligence agency, has gone on
record saying that growing Chinese influence is a threat to Israeli
national security. This may explain why Dorit Salinger, Israel’s Commissioner
of Capital Markets has blocked
Fosun’s $462 million attempt to acquire Phoenix Holdings, an insurance and
financial group.
Cohen’s response to such concerns
was dismissive, arguing
that Israel has nothing to worry about when it comes to China as Israel “is not
a country like Djibouti or Somalia”. Cohen further emphasised the economic
aspect of the relationship before also pointing out that Israel is committed to
penetrating the Far East.
In a separate op-ed,
Cohen described criticism over Duterte’s visit as “superficial and exaggerated”.
Like his boss Netanyahu, Cohen seems to only see dollar signs when it comes to
relationships with Asian nations – in the op-ed on Duterte, Cohen notes the
economic potential of six million Filipino Christian pilgrims to Israel.
The commitment to earn hard cash
may also explain why Netanyahu conveniently ignores China’s relationship with
Iran, his bête noire. In other words, money and politics trump ideology.
Israel’s domestic debate about
Chinese penetration has parallels with Australia.
It is increasingly recognised
that our greed
has allowed the Chinese to outmanoeuvre and outplay us. This highlights the
need to look at who our allies and friends are working with, to ensure that we
don’t get infiltrated through the back door.
Malcolm Turnbull and Benjamin
Netanyahu worked hard to improve relations between the two countries, with
Netanyahu in February 2017 becoming the first Israeli prime minister to visit
Australia.
Later that year, Australia and
Israel signed a defence industry cooperation memorandum, with one of the aims
being to set up the Australia-Israel Defence Industry Cooperation Joint Working
Group. The goal was for Australia to benefit from Israel’s world-leading
innovation in cyber technologies, because as part of Australia’s investment in
defence, the government has allocated
more than $1.6 billion to expand Australia’s innovation capabilities.
As Australian policymakers and
businesses increasingly take the view that Chinese penetration of critical
infrastructure assets should be curtailed, there will be more questions over
the extent of China’s investment and presence in Israel.
For their part, Israeli
policymakers must eventually decide whether greed trumps values, friendship and
allies.
Isaac Kfir
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