US official: Oversight of China-Israel deals will help grow US-Israel ties

US official: Oversight of China-Israel deals will help grow US-Israel ties

The establishment of an oversight mechanism for Chinese investments in Israel is important to ensure the continued growth of Israeli-US ties, a senior official in the Trump administration has told The Jerusalem Post.

The official spoke ahead of a planned security cabinet meeting scheduled for Wednesday afternoon in Jerusalem during which Prime Minister Benjamin Netanyahu and his ministers are expected to finalize a decision on the establishment of a mechanism that will oversee foreign investments in Israel.
This issue is one of the few points of friction between Jerusalem and Washington these days.

“We see infinite possibilities in our relationship with Israel,” the senior official told The Post. “We see Israel currently one of our most important allies, certainly in the Middle East. And we see that role becoming global.”

The official gave as an example the meeting that was hosted in Jerusalem in June with national security advisors from Russia and the United States and said that it demonstrated the potential for American-Israeli ties.

"We think that strong decisions taken now will ensure that trajectory," the official added.

The official recognized that America “woke up late” to the challenges that Chinese investments in Israel's infrastructure and high tech industry create for the US-Israel alliance.

"We saw a real pattern emerge and certainly, it is not surprising [that] the Chinese would target Israel with Israel's very robust, emerging technology sector, which is something they've always lacked," the official said.

Israel is debating the type of mechanism to adopt. The position of the Israeli National Security Council, which is concerned about the impact China is having on Israel’s ties with the US is pushing for more stringent oversight while the Finance Ministry wants something more lenient to not scare off investors, not only from China, but from other countries as well.

"We have the same range of views in our own government," the official told the Post. "And one thing that's important to note is the United States is saying that we haven't been perfect in ourselves. I think we woke up late to the problem. But for that reason, we have some best practices and some models that we can offer the government of Israel. That doesn't mean ‘no China,’ but it means that you're watching very closely the nature of Chinese investment and making sure that we preserve Israel's innovation and technological edge, which is what has been such an extraordinary driver of the Israeli economy. So, it's balancing the need and desire [for] robust foreign investments, with maintaining the conditions that has made Israel such an attractive destination for foreign investments."

Last month, the Foreign Ministry warned the security cabinet when it met on the issue that if Israel does not implement tight supervision over Chinese investment, it could lead to a conflict with the Trump administration. As a result of this warning, a ministerial vote on the matter was delayed.

Asked what the desirable outcome of the process would be, the US official said that "it would be a mechanism by which Israel can keep a continual review of foreign investments, specially of technology and critical infrastructure. You’ll certainly be looking at things like 5G, that we would in consultation going forward continually could review and redefine what counts as a sensitive technology, as it's constantly changing."

Another major challenge to US-Israel relations is the Port of Haifa, which a Chinese company is set to operate starting in 2021 and which has been used in the past by the US Navy’s Sixth Fleet. The US official said that America is looking at ways to mitigate China’s ability to “glean from that activity.”

"It's a work in progress. We woke up late to the problem. We didn't take the opportunity to bid on the Haifa project when that was open and that was a mistake,” the official said. “And now we can continually work with our Israeli colleagues to mitigate any issues that may have slipped under the bridge so far and to prevent future ones."

The administration official said that given the close relationship between the Trump Administration and Netanyahu's government, the sides had many conversations on that topic. "We've been very encouraged by the responsiveness of the Israelis," the official added. "It's difficult, it's a process. I'm not saying that this is an easy walk in the park. But I think that the Israelis understand the nature of the problem and the necessity of getting it resolved."