What does Iran’s pivot to China mean for Israel?

Tehran and Beijing have been reported to be planning broad economic and security deals that could pave the way for China’s multibillion-dollar investment in Iran’s energy and military sectors.

By Israel Kasnett, JNS

China and Iran are said to be currently working on a 25-year, $400 billion “strategic partnership” that would see massive Chinese investment in Iranian infrastructure in return for below-market-priced oil and massive regional influence.

Last week, The New York Times ran a report with leaked details of the agreement—an update of the one signed when Chinese President Xi Jinping visited Tehran in 2016. According to the report, Tehran and Beijing are planning broad economic and security cooperation that could pave the way for China’s multibillion-dollar investment in Iran’s energy and military sectors.

Carice Witte, executive director of SIGNAL, a think tank focused on China-Israel relations, told JNS that if the deal goes through, “it is very problematic for Israel because Iran uses whatever resources it can get its hands on mainly for advancing its external interests rather than investing in infrastructure and the domestic needs of the people.”

The deals would greatly broaden Beijing’s participation in Iran’s banking, telecommunications, ports, railways and dozens of other projects. The report added that China would also receive a special oil discount from Iran for 25 years in return for participation in economic and military projects.

According to the report, China and Iran would also engage in joint training and exercises, joint research, and the development of weapons and information-sharing between the two countries.

As China capitalizes on opportunities in the region, Israel is, of course, concerned about the deal, as it threatens to swell Iran’s coffers, adding to the regime’s ability to finance its terrorist proxies across the Middle East including in Yemen, Syria, Lebanon, Afghanistan and Iraq.

In 2016, the Obama administration gave Iran access to $150 billion with $1.8 billion in cash. That money, experts believe, was not solely used for altruistic purposes.

Fast-forward to 2020, and Israel is now concerned about Iran receiving another massive influx of cash as the U.S. sanctions effectively place high financial pressure on the Islamic regime.

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‘Concerns have been raised over dual-use technology’

According to Jonathan Schanzer, senior vice president of research at the Foundation for Defense of Democracies, the deal “is a clear sign that [China and Iran] have a strategic relationship, and it should be problematic for Israel.”

Schanzer suggested that Iran’s reasoning behind the deal is because Iran “is very isolated economically and diplomatically. The Iranian regime may be using this as an opportunity to message to their own people that they are not isolated.”

The deal, part of China’s Belt and Road initiative, the largest global infrastructure project in history, “comes at an important time for Israel as it comes under pressure from U.S. officials to decouple from China,” said Schanzer.

First, he said, the deal may prompt the Israelis “to rethink their economic ties with China.” Second, there have been concerns about certain technologies that Israel has allowed the Chinese access to.

U.S. Secretary of State Mike Pompeo visited Israel on a whirlwind trip in May in part to deliver a message that Israel must take care to avoid closing deals with China. Pompeo followed that up in June when he told the American Jewish Committee’s Virtual Global Forum that China is “a growing challenge to the United States, to Israel, indeed to all free people.”

Indeed, the Trump administration has increasingly soured on relations with China with the imposition of tariffs as part of an ongoing trade war, as well as concerns over China’s human-rights record, and aggressive regional and global strategy. The outbreak of the coronavirus and purposeful efforts to conceal information has also been a sticking point.

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Pompeo’s statements are part of the Trump administration’s overall push on allies such as Israel to distance from China.

In particular, America has expressed concern over Chinese control over investment in infrastructure and technology, such as 5G networks. Israel has taken heed of these warnings to some extent, recently denying China the opportunity to build Israel’s Sorek B desalination plant.

“Israel is careful about military technology, but concerns have been raised over dual-use technology,” said Schanzer. “This moment will be a clarifying one for Israel and may further restrict what Israel allows to go to China for fear of it ending up in the hands of the Iranians.”

“Now that the Israelis could be fearful that the code or tech could fall into the hands of Iran by way of China, you may see the Israelis begin to further restrict what they work on jointly with the Chinese,” he said.

Schanzer noted that China entering into a “formal strategic relationship” with Iran could spell further trouble for Israel. “Until now, China has been a frenemy with Israel,” he said, adding as an example that “they take sides with the Palestinians.”

Indeed, this past week China’s U.N. envoy Zhang Jun told the U.N. Security Council that “China is a sincere friend of the Palestinian people. The Palestinian people can always count on China’s support for their just cause and legitimate national rights.”

‘Israel must be more careful about dealings with China’

According to Witte of SIGNAL, “on many fronts, Israel needs to be concerned.”

“It is not China’s style to make such an enormous commitment unless there is a real added value,” she said.

“It is important for Israel to pay attention to the fact that China is very much in the Middle East, is very interested, and its investments have grown [there], whereas they have declined in most other regions,” she noted.

According to Witte, although this is not necessarily a done deal and is not even supposed to be signed until next March, “Israel must be more careful about its dealings with China.”

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“An important step for Israel is to very seriously explain to the U.S. how Israel is taking U.S. concerns into consideration,” she said.

Witte believes that Israel has not done enough in this arena and “has not fully conveyed its understanding of U.S. concerns in a way that the U.S. is comfortable enough.”

Interestingly, while China has recently adopted a new aggressive style of mediation called “Wolf Warrior” diplomacy, it has been very quiet about this deal, according to Witte. (“Wolf Warrior” is the title of a successful series of patriotic action films in China, featuring tough-guy protagonists who fight enemies at home and abroad to defend the nation’s interests.)

“China’s approach to international relations is extremely different from that of the West; it is based on seeking balance, but from China’s perspective,” she said. “ ‘Wolf Warrior’ diplomacy doesn’t suit that approach.”

Clearly, Schanzer and Witte believe that the deal could be dangerous for Israel, and that the development suggests a rising threat from two powerful countries.

However, in a recent article in The Wall Street Journal, undersecretary of state for economic growth, energy and the environment Keith J. Krach and U.S. special representative for Iran Brian Hook said reports of the deal are “overblown,” and that it’s “between two dishonest regimes that pride themselves on propaganda.”

“The scale and feasibility of the deal deserve healthy skepticism. … At best, this deal is a framework for cooperation,” they wrote.

Regardless of what the deal may be, Schanzer said it should be “sounding alarm bells at [Israel’s] Kirya [military base] and at the Prime Minister’s Office. “This should be a game-changer from Israel’s perspective,” he said. “This deal will change the calculus.”