Israeli firm signed MOU with blacklist Chinese company without telling DM
An Israeli company working on a civil aviation project signed a memorandum of understanding with a Chinese state-owned corporation which is blacklisted by the US for a sensitive public project, without informing the Defense Ministry, Haaretz reported on Tuesday.
The Israeli firm Airpark was contracted by the ministry to
build a civilian aircraft manufacturing facility in 2019 near the Israeli Air
Force's Ovda base in southern Israel, but later signed an MoU with the Chinese
state-owned Commercial Aircraft Corporation of China (Comac) corporation.
Comac was blacklisted by the Trump administration earlier
this year for allegedly being tied to the Chinese military. American investors
are prohibited from buying securities of companies on the list and will need to
divest their holdings by November, according to Bloomberg magazine.
Aviation Industry Corp. of China, a Comac shareholder, which
was also on the list, was later targeted by more severe sanctions, including
limits on access to American technology which could impact Comac as it relies
on American imports for some aircraft parts.
Sources in Israel's Defense Ministry told Haaretz that they
were unaware of the signing of the MoU and that the Prime Minister's Office and
National Security Council were also not informed about the deal.
The agreement between the Defense Ministry and Airpark
allows the company to access the air base and provides assistance and services
to set up the civilian facility. The agreement also includes cooperation with
the IAF in operations and infrastructure. The MoU with Comac was signed seven
months after the agreement with the Defense Ministry was signed.
According to the MoU, in exchange for extensive remuneration,
Comac will receive cooperation in the aviation sector and the two companies
will share information and advance technological and innovative projects that
Israeli firms can offer.
Airpark told the Israeli Securities Authority that the MoU
was meant to "promote the shared goals of local and international
aviation" and would be valid for five years from the date it was signed,
according to Haaretz.
In March 2020, Israel Aerospace Industries joined the
civilian facility project and signed an MoU with AES Aviation, the company that
owns Airpark, to work together to form a joint company to operate Airpark.
No security check has been carried out on Comac, according
to the Haaretz report, despite other Chinese companies which were involved in
other public infrastructure projects, like the expansion of the Haifa port and
the light rail in Tel Aviv, being required to undergo security checks.
The Defense Ministry told Haaretz that "This is a
completely civilian project authorized by all the relevant bodies...It should
be noted that the project has not yet been launched. The claims raised will be
examined."
A security official told Haaretz that, besides for the
possible security risk posed by Comac's involvement in the civilian facility,
their involvement could also damage Israel's ties with the US.
US officials have expressed opposition to Israel's economic
ties with Chinese companies in recent years.
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 in May of last year.
A US official warned last year that “the Israeli government
is trying to have it both ways with us. It wants approval for annexation and
the continuation of beneficial economic, diplomatic and security ties, while
opening the door to China in critical infrastructure projects [such as] 5G and
the light rail.”
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.
A report by the RAND research institute for the US
Department of Defense published last year warned that China has close ties with
Iran, and that “the Chinese government might require Chinese companies doing
business in Israel to share insights with the Iranian government in order to
win friends and influence in Tehran.”
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