Party and State: China and Israel: A Marriage Made in Haifa

Tuesday, September 3, 2013

China and Israel: A Marriage Made in Haifa

The cozy relationship between Israel and China has been receiving more than it's fair share of column inches over the summer. Exports to China in 2012 totalled $2.74billion, and with only two companies are currently exporting goods to China, the puff pieces and arslikan seem somewhat misplaced.

In July, an American-Jewish teenagers, Daniel Wultz, was killed when Islamic Jihad bombed a restaurant in Tel Aviv. Encouraged by the incumbent Israeli government, his parents sued for damages, but officials soon changed their minds when a money trail seemed to implicate Bank of China in a money laundering operation that effectively financed the bombing. After initially supporting the legal action, Israeli officials are currently trying to make up their minds whether or not to allow a former intelligence operative, Uzi Shaya available to a New York court.

The fact that Israel is delaying the availability of a key expert witness in such a case has been leapt upon by the Chinese, saying that the delay "proves" the Israelis have found fault with their evidence that implicates the Bank of China. Essentially, the court case may grind to a halt because the Chinese are pressuring Israel into dropping legal action against it's flagship bank.

Beginning their odd relationship after the Six Day War with Israel selling seized weapons to China in order for the PRC to upgrade the weaponry in the PLA, the economic relationship between the two countries has blossomed, and now includes a $300m investment aimed at bringing Israeli businesses to China.

In an 2012 interview with Bloomberg, then-Israeli Finance Minister Yuval Steinetz said of the $300 credit deal "We do hope that if we are able to improve economic ties and connections between Israel and China, it will help us also to explain our positions with regard to the Iranian nuclear threat, with regard to the events in Syria."

Now serving as Israel's chief spook, Steinetz's play is obvious: Israel also hopes to change Beijing's mind when it comes to dealing with Iran. Repeated efforts to crackdown on Iran's nuclear program have been blocked on more than one occasion by China. With Prime Minister Benjamin Netanyahu leading an entourage of Israeli businessmen in May this year aimed to top trade between the two countries at $10billion, Israel should brace itself for a bit more kowtowing before the "Iran issue" can be settled to China's satisfaction.