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Netanyahu Favors Chinese Interests in Terror Case, Causing Dismay All Around

Sheryl and Yekutiel Wultz say Israel promised to help them sue the Bank of China for funneling money to Palestinian terrorists. Why is Bibi backtracking?

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The headquarters of the Bank of China in the Xidan district of Beijing on May 8, 2013. (Mark Ralston/AFP/Getty Images)
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Last year, the prime minister’s office tried to backtrack on their promise to allow Shaya to testify—until Eric Cantor, the House majority leader and a first cousin of Sheryl Wultz, called Dermer and berated him for this breach of trust, prompting him to provide emailed assurances to the Wultz family that Shaya would appear in court. The Wultz family also says Michael Oren, Israel’s current ambassador to the United States, repeatedly promised them Shaya would testify. In the meantime, the Wultz family won a $323 million judgment in May 2012 in a similar case they filed against Iran and Syria.

As recently as March 20, Shaya signaled to the court that he was ready to testify. Word of Shaya’s forthcoming deposition arrived just as the Bank of China was reeling from a series of damaging court orders that forced the Chinese bank to provide a range of private bank materials, including internal communications between the bank and the Chinese government. Beijing responded by informing Netanyahu that his visit to China in May would be scrapped if Shaya testified in New York. Since Prime Minister Ehud Olmert’s visit to Beijing in January 2007, and especially since 2010, Sino-Israeli relations have rebounded; the trade relationship was worth more than $8 billion in 2012. After several failed attempts to visit China in 2012, Netanyahu’s impending visit was viewed with the utmost importance in Jerusalem.

Beijing’s actions left Netanyahu facing a difficult decision. Would he stand by Israel’s pledge to terror victims and key political allies in Washington? Would he live up to the stirring words he declared in front of the United Nations in September 2009, promising to fight Iran’s support of terrorist groups? Or would he take advantage of an opportunity to usher in a strategic—and profitable—change in Israel’s relationship with China? Netanyahu chose China, wrapping up a six-day visit to Shanghai and Beijing in early May that Chinese officials described as “determining the direction the relationship will take in the coming years, elevating ties to a new level.”

Netanyahu’s decision to block Shaya’s testimony met with a stinging rebuke from Daniel Wultz’s parents and their allies in Washington, including Florida Rep. Ileana Ros-Lehtinen, a Republican who chairs the House Foreign Affairs subcommittee on the Middle East. Meanwhile, other members of Congress complained to Haaretz, anonymously, that Netanyahu’s office was refusing to answer their phone calls.

Still, Netanyahu has so far avoided paying any real price for succumbing to Chinese pressure. With the renewal of peace talks this month, the Obama Administration has too much invested in maintaining diplomatic calm to take the Israeli leader to task for interfering with an American court case. Netanyahu may have even been counting on the American peace process to provide him with the necessary political cover to side with China over American interests. After all, the Chinese were pressuring Netanyahu to stop Shaya’s testimony in early April, just as U.S. Secretary of State John Kerry was meeting with the Israeli leader. And Israeli audiences have ironically been distracted by a separate instance of Netanyahu sacrificing justice on the altar of national interest: the prime minister’s recent decision to release Palestinian prisoners as a prelude for relaunching the peace process.

In any event, the clear lesson from this wretched chapter in Israeli diplomacy is the degree to which Israel’s policy on China has been mismanaged from day one. Israeli officials created this problem for themselves, when they misjudged the degree to which the Bank of China and its government supervisors would take offense to being labeled in American court as bankrolling terrorism. In many ways, Israeli officials followed the same mistaken script of the arms-sale scandals from a decade earlier where Chinese policy was set by security officials who ignored predictable political concerns in the United States and China over Israel’s sale of advanced weaponry to China. Those scandals ended with Jerusalem tarnishing its credibility in Washington and Beijing and sacrificing a profitable arms business with Beijing to mend fences in Washington.

What should be of even greater concern for policymakers in Jerusalem this time around is that this latest instance of Israel’s short-sighted China policy was brought to crisis point by Beijing rather than Washington. And unlike American diplomats, Chinese officials in this case showed no interest in resolving the dispute peaceably. In insisting that Israel bend to China’s diktat, Beijing demonstrated the same authoritarian tendencies that are increasingly on display in China’s more assertive foreign policy.

Netanyahu wrapped up his visit to China on May 9 by establishing a new inter-ministerial committee that will streamline Israeli policy on China and expand direct communication with Chinese leaders in Beijing. To avoid having to choose between the United States and China in the future, Israeli leaders better hope that the new China committee will produce policies that are more far-sighted and informed than is being demonstrated by the government’s conduct toward the case on trial in New York.

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Netanyahu Favors Chinese Interests in Terror Case, Causing Dismay All Around

Sheryl and Yekutiel Wultz say Israel promised to help them sue the Bank of China for funneling money to Palestinian terrorists. Why is Bibi backtracking?

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