US asking Israel to eliminate China ties in sensitive areas
The US is asking its allies, including Israel, to sever ties
with China in areas with security risks, a US official with knowledge of talks
on the matter said on Tuesday.
The demand marks an escalation, since previous public
statements US Ambassador to Israel David Friedman and State Department
officials had focused on the establishment of a more robust review process for
foreign investments that could pose risks, and a reduction of reliance on China
for emergency equipment in light of the coronavirus pandemic.
Asked whether the establishment of an Israeli version of the
Committee on Foreign Investment in the United States (CFIUS) would satisfy the
US, the official said: “I’d go further. Reduction of entanglements overall.
Elimination in critical areas altogether.”
“A CFIUS-type mechanism is a good start,” he added.
As Pompeo has done in the past, the official emphasized that
“this is not exclusive to Israel. We’re having similar conversations with all
of our allies and partners.”
The Trump administration official said that Israel must be
prepared to take concrete action to reduce its ties with China.
“I don’t think polite deflection will cut it anymore,” he
stated. “This is a high priority for the US.”
In past meetings on the matter, “the Israeli side has
politely acknowledged our concerns without committing to action,” the official
based in the US recounted.
Multiple US government sources denied knowledge of an
Israeli request for indemnity from the US in exchange for reducing trade ties.
Army Radio reported on Tuesday that US officials declined the request, but
still expect Israel to be on their side in their standoff with China.
The ongoing friction between the US and China escalated in
recent months, in the wake of the COVID-19 outbreak, and the US has put
pressure on many of its allies as a result.
The US has repeatedly and publicly asked Israel to make its
system of regulating foreign investments more comprehensive. The Prime Minister's
Office established an advisory committee on the matter last
month, but its recommendations are nonbinding and regulators
are not required to bring investments before the panel. In addition,
investments in technology are outside its narrow mandate.
China is Israel’s third-largest trading partner, and trade
between the countries grew by 402% in the past decade, reaching about $14
billion in 2018.
One industry that the US has fingered as particularly
sensitive is technology, so much so that the US has been eyeing Chinese-Israeli
joint academic research in the field, the source confirmed.
The US is especially concerned with the billions of dollars
Chinese companies have invested in Israeli technologies that Israel has
classified as commercial, but could be used by Chinese intelligence, like
artificial intelligence, satellite communications and cybersecurity. Some of
the technology companies investing in Israel, like Huawei and ZTE, are known to
sell products with security vulnerabilities.
Another one of the “critical areas,” as the official called
it, that the US has pointed out to Israel is Chinese companies’ involvement in
major infrastructure projects in Israel in recent years, because of the ability
of Chinese operatives to gather intelligence while working on them, and the
massive economic, social and environmental losses, and even casualties that
could be inflicted if that infrastructure is damaged.
The best-known project of this kind is a new terminal,
partially constructed and to be operated by a Chinese company next year, in the
Haifa Port, where the US Navy’s sixth fleet docks at least once a year. There
has also been increased attention paid to Sorek 2, planned to be the world’s
largest desalination plant. Hutchison Water International, a subsidiary of a
Hong Kong-based company, is one of the two finalists for the tender to operate
the plant, and following US pressure Prime Minister Benjamin Netanyahu ordered
Israel’s committee on foreign investments to reassess the tender.
Friedman warned earlier this month that China uses its
investments and infrastructure projects to “infiltrate” countries.
“They crept up on the entire world in a benign but dangerous
way. They didn’t do it with rockets and tanks; they did it with cheap labor
projects,” he added, saying that “these [Chinese] companies have the ability to
flick various switches and gain access to the most sensitive communications.”
The the biomedical field is also likely to be a sensitive
one in the aftermath of the coronavirus crisis. A report by the RAND think tank
found over $1 billion in Chinese investments in the Israeli health and
biomedical sectors in 2013-2018. CFIUS monitors these kinds of investments in
the US, and the EU instructed its members in April to be more cautious about
foreign investments in public health companies.
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