China-Israel Bilateral Relations Harm Washington’s Interests In The Middle East

Israel’s Haifa Port

Beijing builds a new port in Haifa and this is likely to hamper US Navy activities.

Written by Lucas Leiroz, research fellow in international law at the Federal University of Rio de Janeiro.

Chinese investments have been present throughout the world in recent decades. Even in the US and in nations allied to Washington, the high presence of Chinese companies and products cannot be avoided. However, when investments shift from a strictly commercial aspect to complex infrastructure projects, American interests become directly threatened. This is precisely what is currently happening in Israel, the US’s biggest ally in the Middle East, which is giving space to the Chinese state for a large investment in port infrastructure, creating such a scenario that could strongly harm the actions of the US Navy in the region.

A few years ago, the Shanghai International Port Group (SIPG) – a Chinese state-owned company – won the right to run port operations in the Haifa Bay. The contract, signed between Beijing and Tel Aviv in 2015, allows China to create its own commercial platform in Haifa within 25 years. However, despite operations being authorized, their start was postponed and “forgotten” by both sides, after a series of objections raised by the US Navy at the time. However, what Washington did not expect is that Israel would pursue the idea of building another port in the same region, regardless of criticisms made by the US military. Recently, the Israeli government officially announced a new port terminal in Haifa, which will allow large transport ships of around 400m in length and carrying around 18,000 containers each to dock in Israel’s busiest maritime hub.

In a statement, the Minister of Transport, Merav Michaeli, also emphasized the importance of the project to improve trade relations with Arab countries such as Bahrain and UAE, allowing to “strengthen our regional capabilities in maritime trade (…), not only for local prosperity, but for the realization of opportunities and a genuine contribution to our neighbors in the Middle East.”

For China, this is a very profitable investment, further expanding its influence abroad. The project is part of a wide range of Chinese investments in the Middle East and the Mediterranean, as part of the expansion of the Belt and Road Initiative. For Israel, it is a big step forward in infrastructure and could generate good results for the national economy in the coming months. Tel Aviv’s Ministry of Transport said in his statement that loading and unloading activities would begin soon, which will significantly improve the dynamics of Israeli international trade.

Until now, Israel’s naval transport structure was very precarious, with only small vessels operating, and it was also hampered by a huge naval congestion in Haifa’s ports. The practical result of this is a drop in quality and an exponential increase in prices for all products that arrive in the country by ships, including raw materials, domestic utensils, automotive parts, and agricultural commodities. According to data from the media agency “Channel 13″, it is estimated that the Israeli economy has a monthly loss of 218 million dollars with delays in vessels. In this sense, the Sino-Israeli project is essential to develop the national economy.

However, the US is the most damaged side in these transactions. Washington deeply fears that a port controlled by a Chinese state-owned company could disturb its navy’s operations on the Israeli coast. Haifa is a strategic region for the US armed forces, which use the port area to manage the flow of their transport of people and military equipment. It is very common for American vessels to anchor in Haifa during their naval patrol activities and joint military exercises with Israel. The site is known for hosting US Navy’s amphibious assault ships, which, at the same time, facilitate military operations, but obstruct the flow of trade by worsening naval congestion. Under the new administration, commercial operations will certainly be prioritized, which worries the US Navy.

In this regard, Seshadri Vasan, former Indian navy officer and director of the Chennai Center for China Studies, commented during a recent interview: “For Israel, this project will not only create resentment with the US, but it will also raise questions about the broader shape Israel’s foreign policy has been taking. Already, some reports in Israeli media indicate that the exact terms of the agreement haven’t been clear until now. Although Israel wants the US to believe this is a commercial contract, the reality is that the dimensions are strategic and military too (…) We must note that Israel has already been exporting defense equipment to China and has been strengthening its ties”.

In fact, there is a common interest growing between China and Israel, but this reality is much bigger than a mere bilateral partnership. China tends to gradually boost its presence throughout the Middle East and Israel tends to expand its trade with Arab nations due to the recent diplomatic rapprochement (interestingly, promoted by the US itself). There is a favorable situation for the formation of a trade platform that makes the transportation of products between Arab, Chinese and Israelis viable, expanding the BRI.

In the same sense, this approach also takes place in a military way, considering that Israel wants to deepen its export of military material to China and that Beijing will hinder the activities of the US Navy in Haifa, which tends to be accepted by Tel Aviv because of the high economic interest in the Chinese port administration.