He told JNS that “as China became a central focus of the US national security strategy and national defense strategy under the Trump administration, the overall US posture has shifted significantly and has thereby put Israel under some pressure to shift as well.”
Schanzer noted that for decades, Israel was doing what every other country in the world was doing: to engage in commerce with China.
“It took a while for the China-Israel relationship to develop,” he said, “but it did eventually, due to Israel’s technological prowess.”
For its part, Schanzer said, Israel “warmed to China for its cheap labor when it came to infrastructure projects and generous offers when it came to technology.”
China is currently Israel’s third-largest trade partner in the world. Therefore, stepping away from lucrative deals will prove difficult, particularly for a small country like Israel; so, too, will rejecting such a large economic, political and military power. Whichever direction it chooses, Israel might jeopardize its relationship with either China or America, placing it in a damned-if-you-do, damned-if-you-don’t situation.
Schanzer said the United States is “absolutely justified in expressing concern about Chinese investment in Israel,” but he also emphasized that there would have to be “a process.”
He added that it should “lead by example.”
America is heavily dependent upon China for certain products with the stock market interwoven with Chinese companies.
“These are all things that do not play well with the US making demands,” he said.
According to Schanzer, if the United States wants its allies to follow its lead, it must set a good example, it must have patience, and it must be able to assist them in projects they would have pursued with China.
Israel has already taken steps largely in line with the US vision for decoupling, such as blocking Huawei from a 5G network, as well as setting up a committee to review foreign investments.
“We are at the beginning of a long road,” he said. “The coronavirus outbreak from China has sharpened the focus. The expectation is that there will be increased dialogue and even increased pressure.”
“The Israelis are going to have some tough choices ahead,” he said.
‘China likely to increase its footprint in the Middle East’
Alexander Pevzner, director of the Chinese Media Center (CMC) at the College of Management Academic Studies, and a fellow at the Jerusalem Institute for Strategy and Security, told JNS “distinction should be made between different industries and between Chinese investments.”
“For example,” he said, “I don’t see a problem with a Chinese company operating an extension at the Haifa port. Israel has established a screening committee to deal with incoming investments, so there will be more scrutiny.”
Last October, Israel’s security cabinet announced the establishment of an advisory committee to weigh national security aspects of prospective foreign investments. The move came following a visit to the country by US Treasury Secretary Steven Mnuchin.
Pevzner said there is no doubt the US position “will weigh heavily on Israel’s ties with China.”
“The US-China contest will define the first half of the 21st century,” he predicted. “China will remain important for Israel’s economy and also because China is likely to heavily increase its footprint in the Middle East. This brings with it both challenges and opportunities.”
Pevzner said that “the key to a successful relationship for Israel vis-à-vis both the US and China is to define clearly what are Israel’s interests in its ties with China, and to communicate these interests clearly to the United States.”
“Only this way,” he said, will Israel be able to “avoid surprises from all directions.”