Foreign Ministry said to warn of clash with US unless China investments curbed

Issue reportedly causing friction with Trump administration; security cabinet delayed vote on supervision mechanism amid disagreement between foreign, finance ministries

China's Vice President Wang Qishan, right, laughs as Prime Minister Benjamin Netanyahu makes a face as they tour the Israeli Innovation Summit in Jerusalem, October 24, 2018. (AP Photo/Ariel Schalit, Pool)
China's Vice President Wang Qishan, right, laughs as Prime Minister Benjamin Netanyahu makes a face as they tour the Israeli Innovation Summit in Jerusalem, October 24, 2018. (AP Photo/Ariel Schalit, Pool)

The Foreign Ministry reportedly warned the security cabinet in a recent meeting that Israel is headed toward a confrontation with US President Donald Trump’s administration unless tight restrictions are imposed on Chinese investments in the country.

As a result, Prime Minister Benjamin Netanyahu decided to postpone a vote, planned for the July 24 meeting, on establishing a mechanism for monitoring Chinese investments in Israel, and ordered discussions in order to revise the plan so that it would satisfy the White House, Channel 13 reported Monday, citing two unnamed ministers who participated in the meeting.

In March, Trump reportedly warned Netanyahu that if Israel did not curb its ties with China, its security relationship with the United States could suffer.

Similar messages have reportedly been relayed in recent months by top Trump administration officials, including National Security Adviser John Bolton and Secretary of State Mike Pompeo.

The report described the matter as the chief cause of friction between the Trump administration and Netanyahu’s government in the last two years. It quoted senior Israeli officials as saying the Americans have in recent months expressed irritation due to perceived foot-dragging by Netanyahu.

Prime Minister Benjamin Netanyahu, center, Foreign Affairs and Defense Committee chair MK Avi Dichter, left, and National Security Adviser Meir Ben-Shabbat, right, at an FADC meeting in the Knesset, November 19, 2018. (Amos Ben Gershom/GPO)

During the security cabinet discussion, Foreign Ministry staff panned the suggestion by National Security Adviser Meir Ben Shabbat for a supervision mechanism, saying it was too weak and didn’t include monitoring of high-tech investments, a sensitive issue for Washington.

“If the decision we make doesn’t satisfy the Americans, it might cause a confrontation with the United States,” they were quoted as saying.

However, Finance Ministry representatives reportedly warned that tightening the supervision too much and restricting high-tech investments could harm Israeli companies and lead others to move their operations outside of the country.

Subsequently, the vote was delayed and Netanyahu instructed Ben Shabbat to hold more discussions with the Foreign Ministry, the Finance Ministry and the ambassador to the US, Ron Dermer, to formulate a plan that balances both sides, the report said.

That plan will be brought for a vote on Wednesday, according to the report, which quoted a senior White House official as saying: “We hope the Israelis will take steps to address our concerns about China — including passing a resolution in the cabinet on monitoring Chinese investments.”

China and Israel have stepped up business ties in recent in years and launched free-trade talks.

In October, Netanyahu and China’s Vice President Wang Qishan co-hosted a high-profile trade and innovation conference in Jerusalem. Netanyahu announced at the time that the two countries would complete a free-trade agreement in 2019, and that China plans to invest heavily in Israeli infrastructure, including new ports and a light rail.

Chinese firms have made major inroads in Israel, including the takeover of local food giant Tnuva in 2014, and deals to manage the key Haifa and Ashdod ports.

During his visit to Israel earlier this year, US National Security Adviser Bolton encouraged Israeli officials to take a tougher stance against Chinese electronics manufacturers ZTE and Huawei.

Prime Minister Benjamin Netanyahu (R) speaks with the US National Security Adviser John Bolton, during a statement to the media follow their meeting in Jerusalem on January 6, 2019. ( Matty Stern/US Embassy Jerusalem)

“We are all concerned about theft of intellectual property and Chinese telecoms companies that are being used by China for intelligence-gathering purposes,” said a senior administration official who was briefed on the talks, according to Reuters.

Washington has expressed security concerns in regard to a proposal to let China run the Haifa Port. The US Navy’s 6th Fleet often docks at Haifa and is a major economic boost to the city. Successive administrations and leaders of both parties see China as a security threat and are wary of any deals that facilitate its access to US security.

In January, the head of Israel’s Shin Bet security agency, Nadav Argaman, was said to raise similar concerns over China’s involvement in the country’s national infrastructure.

“Chinese influence in Israel is particularly dangerous in terms of strategic infrastructure and investments in larger companies,” Argaman said at a closed-door speech at Tel Aviv University.

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