Benjamin Netanyahu ignored the intelligence operations of Beijing and Moscow for too long. Now, the Israeli government is finally paying attention, but it could be too late.
This month, Israel’s National Security Council (NSC) will present the cabinet with its recommendations on foreign investments in Israel. Because of the sensitivity of the issue, no one in the cabinet is prepared to talk about the elephant in the room. Nevertheless, it is clear that the policy review and the report are primarily focused on China.
In the past decade, Beijing has increased its economic and military investments and interests in the Middle East, including Israel.
The Israeli government ignored China’s behavior for too long, but lately it has begun to pay attention. The National Security Council has to reconcile two contradictory policies, both of which are important to the Israeli economy and its national-security interests.
The first is a policy embraced by all government across the political spectrum for decades: encouraging foreign investment, privatization of national assets and utilities, and the expansion of international markets for Israeli goods. In recent years, like many other exporters, Israeli firms have looked eastward to the growing and developing economies of Asia—and China’s in particular.
A recent survey by the Israeli intelligence community that is not in the public domain shows that Chinese investment in the Middle East rose by 1,700 percent between 2012 and 2017. Altogether, the Chinese have invested $700 billion in the region. Nearly half of it is in the energy sector, $150 billion in research and development, $113 billion in industry, $103 billion in transportation, $68 billion in the military field, $4 billion in financial loans, and only $155 million in humanitarian aid.
From 1992 to 2017, China’s bilateral trade with Israel has grown from $50 million to $13.1 billion, making it Israel’s largest trading partner in Asia and its third-largest trading partner in the world after the European Union and the United States. In the first half of 2018, China’s imports from Israel reached $2.77 billion, an increase of 47 percent compared with the same period in 2017.
The second policy is to defend national and strategic assets and infrastructure from being controlled and taken over by foreign governments and corporations, even if they are not hostile to Israel. Because of its high-tech economy, Israel also faces the delicate problem of foreign spying and theft of its advanced technologies and know-how. Russia and China have in recent years enhanced their espionage efforts in Israel, particularly to obtain access to both state-owned and private-sector Israeli tech companies, and through them to the United States, a close ally of Israel.
China has targeted Israel’s two largest arms exporters, Israel Aerospace Industries and the arms manufacturer Rafael, along with the company Elbit Systems. The first two are state-owned corporations, and all three have subsidiaries in the United States that help manufacture Israel’s most advanced weapons, including missiles and avionics. These designs and trade secrets are coveted by intelligence agencies and governments throughout the world.
Investigations by Israeli counterintelligence agencies discovered that Chinese hackers were particularly interested in the Israeli companies’ ties with U.S. defense contractors. The Israeli firms are collaborating with their U.S. counterparts such as Raytheon, Boeing, and Lockheed Martin in the joint projects, which include F-16 and F-35 warplanes and the Arrow anti-ballistic missile defense systems. Clearly, China perceives Israel as a back door through which it can access and penetrate secret U.S. programs.
Israel is an international powerhouse when it comes to cyberwarfare, which is of the utmost importance to Moscow and Beijing. If they can steal state-of-the art technologies, it could create havoc in the United States and other Western democracies.
It’s no wonder that both countries have large embassies in Tel Aviv, which serve as hubs to advance their interests. Until recently, China was interested in purchasing a chunk of land in the posh neighborhood of Herzliya Pituach for its new embassy. It is located very close to Mossad headquarters and those of the military intelligence agency Unit 8200 at the Glilot Junction, north of Tel Aviv.
BY YOSSI MELMAN