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As Chinese-Israeli Relations Enjoy a Second Honeymoon, America Frets

The last time China and the Jewish state drew close, the United States drove them apart. Now there’s even more at stake.

Sam Chester
June 28, 2013
China's Premier Li Keqiang toasts with Israel's Prime Minister Benjamin Netanyahu during a signing ceremony at the Great Hall of the People on May 8, 2013, in Beijing.(Kim Kyung-Hoon-Pool/Getty Images)
China's Premier Li Keqiang toasts with Israel's Prime Minister Benjamin Netanyahu during a signing ceremony at the Great Hall of the People on May 8, 2013, in Beijing.(Kim Kyung-Hoon-Pool/Getty Images)

“Like it or not, when President Peres celebrates his 100th birthday in 10 years’ time, this [conference] will be half Asian,” the Chinese real-estate tycoon Ronnie Chan boldly declared at last week’s Presidents Conference in Jerusalem, as he sat alongside outgoing Bank of Israel Governor Stanley Fischer and former U.S. Treasury Secretary Larry Summers. “I guarantee you.”

With Chinese-Israeli relations enjoying a new honeymoon capped by Prime Minister Netanyahu’s recent state visit to Beijing, Chan is one of many observers now speculating that Israel’s future lies in the east. At the same time, China’s dependence on Arab and Iranian oil and the growing rhetoric from Beijing about the Israeli-Palestinian peace process are often depicted as the obstacles that could overshadow Sino-Israeli relations. “As the People’s Republic discovers the Jews,” warns a recent article in Foreign Policy, “it should remember an old Yiddish proverb: You can’t dance at two weddings at once.” But the reality is that Israel is less worried about the Arabs challenging its relationship with China than it is about the United States. Israeli officials at a recent meeting on China were concerned about how Jerusalem can strike a balance between Beijing and Washington. These officials remember that the previous era of close Sino-Israeli relations was brought to a sudden halt by American pressure.

Indeed, Israel has found itself forced to choose between China and the United States at several critical junctures in the recent history of both nations. Although Israel was the first Middle Eastern state to recognize China, the two newly independent states failed to establish official ties due to U.S. opposition at the outbreak of the Korean War. Israel and China had to wait until Nixon went to China in 1972 to begin a bilateral relationship.

The two sides quickly found common ground in the sale of Israeli weapons to China; for the next two decades—secretly during the 1980s but with increasing openness after the establishment of official ties in 1992—arms sales defined Sino-Israeli relations. As Israel became China’s second-largest weapons supplier, right-wing Israeli politicians chafing under the U.S.-led peace process suggested Beijing could emerge as an alternative to Washington. When Netanyahu visited Beijing in 1997, he expressed this sentiment to his hosts by remarking, “Israeli know-how is more valuable than Arab oil.”

Even as Israeli leaders anticipated a profitable future partnership with China, they failed to address growing U.S. unease with Sino-Israeli weapons sales. With China the key rival for U.S. strategists in the post-Cold War era, Jerusalem’s sale of advanced weapons to Beijing came under heavy scrutiny in Washington. During the 1990s, U.S. officials accused Israel of illegally providing China with weapons such as the Patriot missile, Lavi jetfighter, and Phalcon airborne radar system.

American pressure on Israel to cancel the Phalcon reached a fever pitch during the final years of the decade. During a historic visit to Israel in 2000 by Chinese President Jiang Zemin, Prime Minister Ehud Barak assured his guest the Phalcon deal would go through. But two months later the Israeli leader gave in and canceled the billion dollar deal. Having personally insulted the Chinese president just as China was prepared to usher in a new era of strategic ties, Jerusalem’s eastern aspirations imploded. Whatever was left of Sino-Israeli strategic ties collapsed five years later when the United States prevented Israel from upgrading Harpy drones previously purchased by the Chinese. Forced to again choose between Washington and Beijing, Jerusalem committed to no longer selling weapons to China.

If the Obama Administration took a more adversarial stance toward Beijing, Israeli officials remain uncertain whether history would repeat itself and Sino-Israeli relations would again fall prey to U.S. fears.


China’s leaders have been credited with long political memories ever since Henry Kissinger was famously told by Premier Zhou Enlai that the impact of the French Revolution was “too early to say.” Fortunately for Israel, China’s leaders in the last decade have been far more forgiving of what a former Israeli politician calls “one of the most wretched chapters in Israel’s diplomatic history.” Since Prime Minister Ehud Olmert’s visit to Beijing in January 2007, and especially since 2010, Sino-Israeli relations have rebounded to encompass new forms of commercial, military, political, and cultural exchange.

In the absence of arms sales, the trade and investment at the core of contemporary Sino-Israeli ties may seem fairly harmless to U.S. interests. However, the growing prominence of cyber-attacks between America and China, coupled with Israel’s position as the global leader in this field, may reopen a Pandora’s Box of pressure between Israel and the two global powers. Cyber-security is just one cutting-edge field, along with drones, in which Israel excels and China wants to improve—and where civilian applications blur the line over whether these dual-use technologies can be sold to China under Israel’s 2005 agreement with the United States.

Although China and Israel are no longer in the weapons business, both sides are still driven by similar motives that guided their trade in arms. Israel remains addicted to the export potential of the vast Chinese market. China is still interested in acquiring Israeli technology. A key difference from the past is that China’s interest in Israel is no longer only about modernizing the Chinese military. With Beijing trying to build an economy that relies on innovation rather than imitation, Israeli technologies are desired across a range of industries. In the absence of a collapse in China’s economy, these favorable commercial trends will likely only improve over time.

Or at least they are supposed to. So far, a few big deals—Intel Israel’s spike in sales to China in 2012 and a $2.4 billion Chinese acquisition of an Israeli pesticide company in 2010—exaggerate fairly modest commercial numbers. Meanwhile, elaborate Israeli schemes to export Israel’s new natural gas to China and to have the Chinese build a rail alternative to the Suez Canal across the Negev Desert remain years from any possible real-world completion date.

Shipping gas to China and having the Chinese run an Israeli railroad that competes with Egypt’s Suez Canal are political projects masquerading as commercial ventures. In this sense, they are similar to a restoration in Sino-Israeli military ties that began in 2011 but whose true importance is difficult to measure. In 2012, Israel augmented the recent chorus of visits by generals, admirals, and spy chiefs from both countries by appointing a senior military figure to the position of ambassador in Beijing. Some observers assume the renewed prominence of security officials signals the emergence of a new clandestine arms trade between the two countries. With Syria enmeshed in violence, Chinese military strategists are in need of accurate intelligence and friendly ports of call as Chinese influence expands in the Eastern Mediterranean. Israel is uniquely positioned to supply both needs.

If Israel and China have secretly returned to the arms business, it is far more likely to be taking place with covert U.S. permission than without. It is hard to imagine that within a decade of the Phalcon and Harpy scandals, Israeli leaders would so blithely disregard America’s hypersensitivity to the transfer of advanced weapons to China. If the military meetings are about sharing intelligence and port access, American officials who keep a careful eye on China’s naval ambitions have greater reason to be concerned. Were Chinese flotillas to make a regular practice of patrolling the Eastern Mediterranean, the U.S. Navy’s Sixth Fleet would likely step up its own activity off of Israel’s shores, bringing the threat of conflict between the great powers to Israel’s doorstep.

Whatever impact the Arab Spring has had in stimulating China’s military collaboration with Israel, the upheaval has certainly caused Beijing and Jerusalem to adopt similar positions on regional crises—a development that takes on greater significance with China’s intent to ramp up its political involvement in the Middle East. In Egypt and Syria, Israeli preferences are not too different from China’s desire for stability and a return to the status quo. Neither country is enamored with America’s inchoate policy of hesitating to support opposition groups before rushing to abandon traditional allies like Hosni Mubarak. China and Israel both remain largely disinterested in actively embracing the peace process, despite Beijing’s past and present rhetorical embrace of the Palestinian cause. When it comes to Iran, Beijing and Jerusalem clearly disagree what if any level of outside pressure should be applied to Tehran. However, China’s leaders have responded to Israeli lobbying by becoming increasingly critical of Iran’s nuclear program.

While China is generally the lead actor in other avenues of Sino-Israeli relations, Israeli government and especially non-government programs have taken the lead in developing academic and cultural ties. These Israeli programs are responsible for a vast range of activities that include academic centers, cultural exhibits, translated literature, language courses, tourist initiatives, and expanded and informed media coverage. Together these activities have had great success in rebranding Israel in China as the Start-up Nation—a center of dynamic commercial innovation and economic development—rather than a religious conflict-zone. Although Beijing has opened a Confucius Institute in Tel Aviv and is planning a second such language and cultural center in Jerusalem, Israeli interest and understanding of China have largely developed independently. The allure of China’s economic growth makes Chinese languages the most popular (besides English) in Israeli universities, with over 800 college students studying them every year.

Although academic and cultural ties between China and Israel are far less likely to unnerve American officials than military and political initiatives, the former are uniquely capable of truly transforming ties between the three countries. The most fundamental obstacle to Sino-Israeli relations remains the fact that China and the East remain foreign concepts for Israelis whose personal and professional connections are often embedded in Europe and the Americas. With a vibrant American Jewish community and a shared democratic and Judeo-Christian heritage, Israel and the United States appear unlikely to back away from six decades of incredibly close bilateral ties.

Nevertheless, the Phalcon crisis that destroyed Sino-Israeli ties in 2000 did not come out of nowhere. American pressure on Israel stemmed from the deterioration of U.S. ties with China. Today, the two great powers are again divided by naval face-offs in the East and South China Seas, ever-growing trade disputes, and are one mistyped cyber-attack away from causing an amount of damage far greater than the 1999 embassy attack in Belgrade. If U.S. and China ties came undone, Israel can take solace in knowing that the complex reality of its modern ties with Beijing will ensure that any American pressure will not cripple ties as occurred in 2000. At the same time, the changing Sino-U.S. dynamics in the Middle East present valuable opportunities for Israel to leverage its ties with both countries.


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Sam Chester is an expert on China-Middle East affairs, managing technology funds for investors in China, Europe and the Middle East.

Sam Chester is an expert on China-Middle East affairs, managing technology funds for investors in China, Europe and the Middle East.