The change of government in Israel didn’t stop Gautam Adani’s $1.2 billion privatisation deal. Israel’s outgoing ministers approved the purchase six months after the Adani Group won the tender by a wide margin. This is further proof that the India-Israel relationship is stronger and goes beyond the left-right political dynamic. This deal should not be perceived merely through a buyer-seller prism but through wider geopolitical binoculars.
Israel’s attempt to divest itself of its ports is rooted in the Trachtenberg Committee, which was appointed by then-prime minister Benjamin Netanyahu following the social protest that broke out in 2011. The committee determined that the Israeli ports were not productive enough and were inefficient, costing hundreds of millions of shekels per year to Israeli taxpayers. It was also concluded that the main failure of the industry was the lack of competition. In December 2011, the Israeli government adopted the committee’s conclusions and instructed the various ministries to accelerate port reform, based on the implementation of the landlord model.
As part of the reform in Israel’s port industry, in 2012, the government decided to establish two new ports—the Gulf Port near the existing Port of Haifa and the Port of the South near the Port of Ashdod. These new ports were intended to compete with the existing ports and increase the capacity of Israel’s ports to handle containers by 50 per cent in the first stage. In 2015, the Chinese company SIPG won the tender to operate the Gulf Port for 25 years. The port has been operational since 2021. Additionally, the South Port was constructed by the Chinese government company PMEC at a cost exceeding $930 million and was opened a few months after its counterpart. In January that year, the company also won a tender for renovating the docks in the governmental Port of Ashdod.
Also Read: Netanyahu’s judicial reform has brought Israelis to the streets, even IDF is protesting
A red flag for US
The expansion of economic relations between Jerusalem and Beijing hasn’t escaped Washington’s opprobrium. The White House has exerted pressure on Israel to downgrade its ties with China.
These pressures increased when Donald Trump took office and called for curbing Chinese investments in the US’s infrastructure and in the fields of advanced technology. Washington has claimed that the Chinese presence in the Port of Haifa as well as in Tel Aviv poses a security risk both to the US Navy ships anchored in Haifa and to Israel’s naval facilities and military base in Tel Aviv.
But even if the port does not represent special risks or forges a significant Israeli dependence on China, it is still seen as a red flag by the US.
This is not the first time that the US has intervened in the relations between Israel and China. In the late 1980s and the early 1990s, the US began to view Israel’s military and technological cooperation with China with increasing suspicion and even hostility. Three famous incidents contributed to this tension: Israel’s sale of the Patriot missile technology to China, the agreement to jointly develop the Phalcon airborne early warning system, and Israel’s sale of the Harpy drones to China. The US government pressured Israel to cancel or modify these deals, and in some cases threatened to withhold military and economic aid to Israel. Following these incidents, the issue of controlling arms sales came up for discussion in the Knesset, the legislative branch of the Israeli government, and in 2007, for the first time, an arms export control law was enacted.
The American pressure largely did the job for Indians. Having established full diplomatic relations only in 1992, New Delhi’s relations with Jerusalem suffered from a lack of trust due to India’s historical support for the Palestinians. India was not in a position where it could make any claims, certainly not when Israel was one of the few countries that was ready to sell weapons and advanced technologies to India, following its nuclear tests.
In the two decades since, India–Israel relations have emerged from the shroud of secrecy. India abstained from several votes against Israel at the United Nations and continues to cut and sign deals to upgrade the capabilities of its military.
During this time, India–US relations also underwent upheavals. From being a country that seemed to be plagued by famine and epidemics and was aligned with the Soviet Union, India has become a rising power and an important partner for investments and trade as well as for dealing with the ‘China challenge’. This view has been shared by all American presidents since George W Bush.
Also Read: Why Israel must be seen as a sister democracy of India
Israel can’t be picky
For a long time, Washington has been trying to convince Delhi to reduce its relations with Moscow, without guaranteeing alternatives for its weapons, technology, and energy requirements. The new understandings brought by the Abraham Accords and the I2U2 may lead to the expansion of these partnerships in a way that will answer some of India’s concerns.
One of these opportunities brought by the new dynamic in the region is the Arab–Mediterranean Corridor. The project will cut the shipping time from Mumbai to Europe by 40 per cent and allow Delhi to ship goods to Europe within 10 days via a connecting railway passing through Saudi Arabia, Jordan, and Israel. While India is trying to counter the Chinese ‘string of pearls’ with its ‘necklace of diamonds’ strategy and expanding its cooperation with the American Navy in the Indian Ocean, the new corridor will be a massive achievement for India’s competition for connectivity with its neighbour.
Trade between Israel and China is booming, and the Free Trade Agreement, which is expected to be signed this year, will strengthen it even more. Today, China is Israel’s largest trade partner in Asia and third-largest in the world, after the EU and the US. Despite China’s significant presence in the Israeli market, it has not fully translated its bilateral relations with Israel into robust support on international platforms. A point of contention arose during Israel’s military operation in Gaza in May 2021 when China called for four meetings of the UN Human Rights Council in response to the situation. Israel viewed China’s action with great displeasure.
But life in Israel does not allow this small country to be picky. Although Israel sees itself as a member of the Western democratic camp that shares its common vision and values, the multitude of security challenges in a strategic environment makes it nearly impossible for Israel to sever economic ties with China. Therefore, the tightening of relations with India and the expansion of the foothold of Indian companies in strategic infrastructure in Israel may be Israel’s answer to American pressures.
Dr Oshrit Birvadker is an Indian-origin member of the Bene Israel community, based in Tel Aviv. She is a leading analyst of India’s foreign policy in Israel, a senior researcher at the Jerusalem Institute for Strategy and Security (JISS), a business development expert, and an entrepreneur. She tweets @birvadker. Views are personal.
(Edited by Theres Sudeep)