Pivoting East: Israel’s Developing Strategic Relationships in Asia

April 11, 2018
Israeli Prime Minister Benjamin Netanyahu (left) and Chinese President Xi Jinping shake hands ahead of their talks at Diaoyutai State Guesthouse in Beijing last month. Photo by Etienne Oliveau/Reuters

David Ben-Gurion foresaw the future in 1959 when he told the Knesset plenary that the Soviet-American domination of the world was “transient” because China and India would replace the geopolitical duo.

Noting that ancient Israel’s foreign relations were first confined to the Fertile Crescent and then extended only as far as Persia and Rome, Ben-Gurion realized that the modern world was built entirely differently: Asia’s place within it would be dominant, and this prominence would materialize sooner rather than later. “Two decades,” he predicted in 1966 while fielding questions from youths in Tel Aviv.

It has taken longer for both Asian giants to develop into economic powers, and for Israel’s originally Western-oriented foreign relations to start pivoting East.

Ben-Gurion’s Asian vision was, to be sure, ahead of its time.

Recognizing Communist China as early as 1950, over Washington’s objections, Ben-Gurion persuaded China to announce in 1954 the imminent establishment of diplomatic ties with Israel, only to then see Mao Zedong change course and fully back Israel’s enemies.

China’s original, utilitarian policy — based on Mao’s concern for maintaining ties with the Arab world and the Nonaligned Bloc, co-founded by Egyptian President Gamal Abdel Nasser — morphed over the next decade into ideological zeal, as Israel was seen as part of Western nations’ opposition to the Cultural Revolution’s philosophies.

A similar pattern evolved with India, under its anti-Zionist first prime minister, Jawaharlal Nehru.

Considering demographic and economic trends, there is reason to believe that within about two generations most Israeli exports will head to Asian destinations.

After first refusing to recognize Israel, New Delhi finally did so in 1950 but took another three years for it to let Israel open a consulate in Mumbai (then called Bombay), while refusing to exchange ambassadors with the Jewish state.

The situation was better with Japan, which exchanged ambassadors with Israel in 1952, less than a month after the end of its occupation by the United States. Unlike China and India, Japan was now an American satellite, and as such lacked its fellow Asian powers’ urge to impress the Nonaligned Bloc.

However, Tokyo had economic reasons to keep Israel at arm’s length because its heavily industrialized economy depended for its existence on Middle Eastern oil. Japan’s leading businesses, including its major automakers — Mitsubishi, Toyota, Mazda and Honda — surrendered to the Arab League boycott. Therefore, Israel’s initial ties with Asia were subdued.

While altogether ostracized by the Muslim belt that stretches from Afghanistan through Bangladesh to Indonesia, not to mention the Arab lands on Asia’s western end, Jerusalem cozied up with relatively peripheral Thailand, Burma and the Philippines while patiently awaiting a breakthrough with the Asian powers.

Ironically, the only strategic partner Israel initially found in Asia was Iran, to which it sold arms and food and with which it built farms and neighborhoods while helping Iran’s oil deliveries to Europe through the Eilat-Ashkelon pipeline.

Israel’s ties with Iran were severed in the wake of Iran’s Islamic Revolution, which coincided with China’s abandonment of its own anti-Western fanaticism. But well before those developments, Israel-Asia relations began to transform, improbably and unnoticeably, in unassuming Singapore.

Surrounded by hostile Muslims while at odds with the Communist powers and unable to enlist Western governments’ military assistance, Singapore had an urgent need for an army — which Israel happily supplied.

Israel Defense Forces generals arrived in Singapore soon after its independence in 1965 and secretly built from scratch a powerful military that to this day is considered the best-equipped and trained army in its region. Israel, for its part, emerged with a strategic foothold in the Far East, forging a close alliance that flourishes to this day with what has since become one of the world’s richest and most stable countries.

The Singaporean saga was followed closely in Beijing, where the Soviet Union’s 1969 invasion of Afghanistan was viewed with alarm and Mao’s legacy was giving way to Deng Xiaoping’s economic U-turn.

Moscow’s unpredictability spurred Deng to order an inspection of the Chinese military’s hardware, after which he concluded that an upgrade was urgently needed. Realizing Israel’s success in Singapore, he began secretly buying Israeli arms.

Initially administered through the Israeli consulate in British-ruled Hong Kong, the Israeli-Chinese relationship would quietly mature while communism itself withered. The consequent disappearance of the Soviet Union and the Eastern Bloc, and America’s emergence as the sole superpower, paved the way to the great diplomatic breakthrough Israel had awaited since its inception.

Israel and China exchanged ambassadors in January 1992. The following week, India said it would open an embassy in Tel Aviv. The following year, Israel and Vietnam established full diplomatic relations and Israel reopened its embassy in Seoul, which it had closed in 1978 due to cutbacks.

The diplomatic path to Asia that Ben-Gurion had mapped had thus been paved. Now, with military traffic already bustling along this route, the stage was set for the commercial relationship that would soon grow at breakneck speed.

The Israeli economy’s Asian era was launched by Japan, whose cautious investors concluded by the early 1990s that their fear of the Arab League boycott had become anachronistic.

The turning points in this regard were the Gulf War, which, as seen by Tokyo, pitted Arabs against Arabs regardless of Israel, and the Madrid Peace Conference in 1991, which gave reason to believe that the intensity of the Arab-Israeli conflict was waning.

Consequently, Japan changed course.

Tokyo’s big investment houses began sending delegations to Tel Aviv, signaling that they now saw Israel as a diplomatically safe and financially lucrative destination for their clients. Asian capital began arriving to invest in Israel’s fast-maturing high-tech sector, while Japanese car models that Israelis had previously seen only in Europe and America now sparkled in Tel Aviv car dealerships and soon crowded Israeli highways.

Asia’s newly rising powers arrived on the heels of their Japanese role model.

With all diplomatic barriers collapsed, Asian-made clothes, toys, electronics and white goods swamped Israel’s newly proliferating shopping malls, while Israeli goods — from foodstuffs and computer software to military radars and avionics — flowed to the East.

By 2015, Israel saw its exports to Asia — which less than a quarter-century earlier were negligible — eclipse its exports to the U.S., comprising a quarter of overall Israeli exports and nearly equaling exports to Europe, which in 2015 stood at 28 percent.

Though Asia’s share of the Israel economy narrowed a bit in 2017 — thanks to renewed growth in Europe and the U.S. — the general trend is clear: Israeli exports are tilting to the East. Israel’s arms industry had $5.7 billion in sales in 2016, 40.1 percent of which were with Asian countries, well ahead of Europe’s 27.5 percent and North America’s 19.3 percent.

Considering demo-graphic and economic trends, there is reason to believe that within about two generations most Israeli exports will head to Asian destinations.

In terms of imports, in 2016 China sold more products and services to Israel than any other country, totaling 13.5 percent of Israel’s imports at $7.9 billion, ahead of U.S. imports at 12.3 percent and $7.2 billion.

Hardly a decade after China supplied a mere 0.6 percent of Israel’s imports, it seemed only natural in 2015 when Shanghai-based Bright Food bought a controlling share in Israel’s largest dairy food company, Tnuva, for an estimated $1.4 billion, while the Chinese investment group Fosun bought Israeli cosmetics giant Ahava for $27 million.

Israel’s trade with India, while smaller in quantity than with China — $1.15 billion in exports and $800 million in imports in 2016 — is more dramatic in its quality. The same Israel where India once would not even station an ambassador is now its second-largest arms supplier after Russia, having sold the subcontinent missiles, radars, artillery batteries, surveillance aircraft and other weapons.

A quarter-century’s worth of commercial commotion was underscored by a slew of high-profile diplomatic visits that in Israel’s first decades were unthinkable.

Chinese President Jiang Zemin’s five-day state visit to Israel in 2000 was followed by five visits to China by Israeli presidents and prime ministers, the last of whom were Benjamin Netanyahu in 2017 and the late Shimon Peres in 2014.

Netanyahu visited Japan in 2014 and Japanese Prime Minister Shinzo Abbe visited Israel in 2015; President Ezer Weizman and Prime Minister Ariel Sharon visited India in 1993 and 2003, respectively; India’s President Pranab Mukherjee visited Israel in 2015 and Prime Minister Narendra Modi visited Israel last July; and Netanyahu visited the subcontinent in January accompanied by 130 businessmen.

The gradual pivot to Asia is also expressed in the Israeli Foreign Ministry’s recasting of its outposts worldwide, having decided to close its consulates in Minsk, Marseilles, Philadelphia and San Salvador, and open new ones in Shanghai, Guangzhou and Bangalore.

Those moves also explain Israel’s decision to join, as a co-founder, the Asia Infrastructure Investment Bank, a Chinese-led version of the World Bank, despite American misgivings.

The relentless effort to create strategic partnerships with Asian powers registered one great failure, in 1999, when the Clinton administration torpedoed a signed deal to sell China American-made but Israeli-upgraded Phalcon spy planes.

The cancelation cost Israel a $350 million compensation fee to Beijing, and signaled a broad retreat from China’s defense deals with Jerusalem, although the two countries’ armies’ chiefs of  staff exchanged visits in 2011 and 2012.

Israel thus received a humbling reminder that its burgeoning Asia ties must be cultivated without compromising relations with its most important ally, the United States. Israel, therefore, sought a different kind of strategic relationship with China. Having found that formula within a few years, its implementation is now well underway.

Israel was not unique in buying toys, sweatshirts or dishwashers made in China. Similarly, what China bought in Israel, scores of other countries bought from the Jewish state, as well.

All this changed, however, when the two countries set out to help each other advance to the next phases in their very different economic histories, with Israel selling China educational goods and China selling Israel infrastructure projects.

Israel and China are forging a strategic partnership. … It is only a matter of time before this economic and educational hyperactivity impacts the Middle Eastern conflict.

Chinese public works giants have teamed up with Israeli companies in building the Carmel Tunnels under Haifa and the Acre-Karmiel railroad, and they are now involved in upgrading the Ashdod seaport and constructing Tel Aviv’s subway.

Most crucially for Israel, China wants, and is indeed poised, to build the planned Tel Aviv-Eilat railway, expected to be the greatest infrastructure project in the Jewish state’s history.

Israel, at the same time, set out to help China realize its next national aim: to shift part of its workforce from manufacturing to invention, and thus transition its economy of mass production to a post-industrial future.

Realizing Israel’s technological accomplishments, China’s Tsinghua University signed a deal in 2014 with Tel Aviv University to create a joint center for research of solar, hydrological and other environmental technologies.

In 2015, Haifa’s Technion-Israel Institute of Technology was hired to build a $130 million technological institute in Guangdong, China. And in April 2016, Jilin University signed an agreement with Ben-Gurion University to establish a center of entrepreneurship and innovation. East China Normal University followed up that agreement with an announcement that it would open, together with the Technion, a Chinese-funded program on the Technion campus that would specialize in neurobiology, biomedicine and other fields.

Thus, Israel and China are forging a strategic partnership, the likes of which Israel never previously experienced because no superpower ever used Israel to cultivate its own industrial development. It is only a matter of time before this economic and educational hyperactivity impacts the Middle Eastern conflict.

China, India and Japan can do wonders in this regard by imposing a peace deal on Israel’s enemies, while the U.S. imposes one on Israel. This will be particularly true for Iran, Saudi Arabia and the rest of the Gulf States, which vitally need China to buy their oil and gas. China’s leverage in Tehran as a major petroleum buyer also applies to Japan and India.

The day when Asia plays such a role in the Mideast conflict may seem a distant reality right now, but then again, it has only been one generation since Chinese and Indian ambassadors arrived in the Jewish state, and 40 years since Jerusalem’s lone strategic partner in Asia was Tehran.

Amotz Asa-El is The Jerusalem Post’s senior commentator. A version of this article originally appeared in the Post.

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