Watch the Recording of Our Event on Israel’s Place Between the U.S. and China

A China expert, a veteran American diplomat, and a retired Israeli general walk into a Zoom to talk about Israel and where it fits into a new cold war.


Response
Oct. 6 2022
About the authors

Assaf Orion is a retired Israeli brigadier general and the head of the Diane and Guilford Glazer Foundation’s Israel-China Policy Center at Israel’s Institute for National Security Studies. He writes on Israel’s relations with China, its regional strategy, and more.

David Feith served as U.S. Deputy Assistant Secretary of State for East Asian and Pacific Affairs. Before that, he was an editorial writer for The Wall Street Journal in Hong Kong..

Elliott Abrams is a senior fellow for Middle Eastern studies at the Council on Foreign Relations and is the chairman of the Tikvah Fund.

Jonathan Schachter is a senior fellow with Hudson Institute’s Center for Peace and Security in the Middle East. He specializes in international security, strategy and diplomacy.

Last month, Mosaic published a debate-defining essay on Israel’s relationship with China by Assaf Orion, a retired Israeli general. In it, Orion contends that recent concerns that Israel  might be getting too close with China may once have been valid but aren’t any longer: Israel’s ties with China are loosening, and if a new cold war is in the offing, Jerusalem won’t be on Beijing’s side.

To challenge Orion’s ideas and expand on them, we convened a discussion on Tuesday, September 20 with Orion, the China expert David Feith, and the foreign-policy veteran and regular Mosaic writer Elliott Abrams. They were moderated by the Middle East expert Jonathan Schachter. Watch the recording and read the transcript below.

 

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Jonathan Schachter:

I think, Assaf, your article is a welcome and important contribution to the discussion on this subject. I say discussion charitably because often there’s less discussion and more screaming and handwringing than actual talking about it. It should go without saying, but unfortunately it doesn’t, that I was delighted by the end of the introduction to your piece where you talked about basic guidelines. You talked about minding the facts, the details, the timelines; about being wary of assumptions of linear continuity and doubting broad sweeping statements. This is exactly the kind of approach that I wish we had for all of the policy subjects that are being debated today, but for this one in particular.

The issue today of course is Israel’s relationship with China, in light of U.S.-Chinese relations. Just looking at some trendlines before we get started, the president gave an interview this weekend where he talked in unusually explicit terms about American willingness to use force in the event of a Chinese invasion of Taiwan. Just this year, the Pentagon put out its National Defense Strategy, which is clearly focused on China. It says that China is the United States’ most consequential strategic competitor. Everything else is second or even a distant third. A lot of us on the call today have looked at things like Iran. The Pentagon’s document says the department will remain capable of managing other persistent threats, including Iran, which is very different language from the language used about China.

In terms of the public, looking at the Gallup poll—Gallup every February or March asks Americans about their position on different countries around the world—one of the questions is, “What one country, anywhere in the world, you consider to be the United States’ greatest enemy?” And you have in 2015, ’16, ’18, China was the greatest enemy for 11 percent or 12 percent [of Americans], and today it’s 49 percent. This was done in February, so it was probably done before the Russian invasion of Ukraine, so it will be interesting to see what those numbers look like next year. But clearly there’s a trend here where China is receiving much more attention and focus in the United States.

At the same time, you have these questions about Israel’s relationship with China. Israel—as do most countries I think—sees China as both a tremendous marketplace for goods and services and also a source of investment income. And, Assaf, I think you’ve talked about that. So without further ado, Assaf, I’d like to turn to you. Present to us, share with our audience, the thrust of your argument. And there’s actually one thing I would like you to do for people who aren’t as deep in the weeds as you are. You speak in the article about illicit arm sales or efforts to make illicit arm sales to China. Could you share with the audience a little bit of the background about why arms sales to China are illicit? There’s some history there, which I think that people just getting into this for the first time may not be aware of. Assaf, please.

Assaf Orion:

Yes, I’ll touch that. So first of all, shalom from Jerusalem and thank you for inviting me. It’s great to be here among friends, and readers and listeners and viewers.

To speak to the beginning of what you said, Jonathan: this essay emanated from reading too many articles from America, more or less, shouting about Israel in a very emotional pitch, saying that Israel has to choose. That it’s growing too warm and close to China. That it’s falling into China’s orbit. And I wanted to say, “Okay, let’s go back to the facts,” because we need to manage both the emotional and the professional aspects in parallel.

The main problem with this genre of article about Israel-China is that mostly they use a wide brush looking at the whole arc of history as if it’s one line, whereas I think we can see periods. There was the cold war after 1979, when, with U.S. encouragement, Israel had defense exports to China because the U.S. was then busy trying to build up China against the Soviets and so on and so forth.

After the Third Taiwan Strait Crisis in 1996, Israel stumbled into two crises of its own with the U.S. about defense exports to China: the famous Falcon deal and then the Harpy deal. It ended up with an Israeli legislation on defense-exports oversight in 2007, the establishment of an export-control directorate in the Ministry of Defense, and the secession of all military and defense exports, including dual-use exports, to China. So we actually finished that period with no military exports at all.

Then you could say that there was almost a decade-and-a-half of a growth in Sino-Israeli relations, beginning with Prime Minister Olmert and then definitely with Benjamin Netanyahu, who was the champion of the Chinese opportunity for many reasons—especially the growth of BDS in Europe and the rise of Asia as an economic powerhouse. And there was a go-East trend, and this culminated in 2017 with Israel and China signing a comprehensive innovation partnership. This looked like a win-win. Our genius and innovation and their money and markets and production facilities and capabilities and Netanyahu, at that time, defined it as a marriage made in heaven.

But that same year, 2017, the Trump administration issued its first National Security Strategy, which basically said, “We’re now in a great-power competition. China is our number-one concern and competitor, not to say enemy.” That’s a polite euphemism maybe. And [that strategy was] putting technology at the heart of the competition, which is something that few in the world and in Israel listened to early on.

We need to now understand that we’re, I think, in a new period post-Netanyahu and post-2017 National Security Strategy. There’s now a recognition of the great-power competition as the main overarching theme of global dynamics. I think definitely by 2019 or 2020, and surely since the Bennett government came to office [in June 2021], and now in the caretaker government of Yair Lapid, the tide has turned. People now understand that China is not just opportunity. And the problem isn’t just the possibility of making America angry again. It’s really about serious concerns of national security for whoever is dealing with China—Including the US, UK, the other members of the Five Eyes consortium [Australia, New Zealand, and Canada], and so on and so forth.

We need to take care and attend to the data points cited in this genre of articles, the bashing articles, which usually start with a low starting point, in 1992. And then they say that bilateral trade went from $50 million in 1992 to $15 billion, or $18 billion, or $20 billion, and that’s supposed to show that Israel is falling into China’s orbit. In fact, when you spend some time on the data, you see that Chinese investment in Israel peaked in 2019 or 2018, and that the number of investment deals dropped—for Chinese reasons or for Israeli reasons or for other reasons, including that public opinion in Israel swayed quite sharply against China.

So we started, 2019, with 66-percent of Israelis having a positive opinion of China, and 26-percent a negative opinion. Now it’s 48-percent positive and 46-percent negative. That brought me to the conclusion that the honeymoon is over. This infatuated period in which everything looked rosy is behind us for the moment. Learning from other nations, including the U.S. experience, we understand the national-security threats posed by China, and the way it uses technology transfer, the leveraging of economic dependencies for political goals, various forms of influence—propaganda and elite capture and so on and so forth—and also espionage and cyber campaigns. This is, I would say, the short list of what China does when it engages in various relations with others.

In those years since the beginning of the Trump administration, the main messages from the U.S. for Israel is that we need to focus on the Haifa port, famous for many reasons, which is actually a container pier operated by a Chinese company for the next 25 years—the contract was signed in 2015, and inaugurated last September. There has been a big fuss about this since 2018, but [Israel’s] assessment is that risk there is, proportionate, controlled and so on. And we have had three port calls in Haifa by U.S. Navy ships. One, one month after its inauguration, one later in February, and one in the beginning of September.

The second issue was 5G. Don’t let a Chinese equipment into your telecommunication gear. But that was actually trying to knock on an open door because Israel doesn’t have Chinese components in its 3G or 4G networks at all, whereas Britain needs these clean up until 2027. The FBI says that China is still active in rural networks in the United States, compromising strategic command communications. Israel has not suffered from this problem.

The last was investment oversight. Basically, America wanted to see something like its own Committee on Foreign Investment in the United States (CFIUS) operating in Israel. Instead, it got a substitute which didn’t look too impressive. But in fact, if we look carefully at the U.S. demands, I find them, as a strategic planner, too close to the ground and too remote from the sky. In strategy, you need to arrange your ends, ways, and means. If our end is to safeguard America’s superiority in technology, and our main concern in Israel is tech transfer—that is, China getting its hands, legally or less-than-legally, on sensitive American or Israeli technology—we need to focus on how China transfers technology. And when speaking to our much-smarter experts in the U.S. on these issues—and we are cooperating with colleagues in Georgetown, the Center for Security of Emerging Technologies, and with Stanford’s Hoover Institute, people who work on and research security—we understand that there is a plethora of Chinese methods of transferring technology. And those three demands that America came to Israel with were not a good fit, either to how China operates, nor to how Israel is built. So we need to find our way of how to protect ourselves in one aspect and assuage the U.S. concerns on the other.

Up to this point, what Israel heard from America was primarily prohibitions. “Don’t do that. Don’t do this.” I at one point called this the Chastity Belt and Road approach. “Don’t look at China. Don’t do this with China. Why aren’t you breaking up with China already?” But nobody breaks up with China unless China breaks up with him. I don’t know of any nation that broke with China, not even Taiwan. What we advised was instead to create a constructive partnership and build trust and patiently adapt to the challenge because, being candid, no nation on earth has figured out at an air-tight, water-tight, foolproof defense against all of China’s different challenges.

Jonathan Schachter:

Assaf, just to be clear, are you talking about building trust with China or building trust with the United States about China?

Assaf Orion:

With the United States. When we speak about Israel and China, there are two issues at hand. One is Israel-China relations, and the second is Israel-U.S. relations. And this is a triangle very clearly affected by U.S.-China relations throughout history.

Our goal with China is to have fruitful and safe relations. I know it sounds like a slogan, but we need fruitful economic relations, while taking care of our national-security concerns, including direct issues of Israel’s national security and indirect ones that affect relations with America. When people say, “Well, you need to choose between Israel and China”—we don’t need to choose, we already chose long ago: we have one strategic ally [the United States], and an important economic partner [China]. I think that’s the framing through which we need to understand everything else. Since when do people choose between their family and their grocer? These are not either/or choices.

 

Our recommendation was to build trust [with the U.S. concerning our relations with China] and patiently build this partnership through a constructive approach. My recommendation in my first Mosaic piece was to strive for strategic innovation, for technological cooperation between the U.S. and Israel to achieve that. And I believe that this would take care of most of the concerns on both sides.

On July 13th, we saw the joint declarations by President Biden and Prime Minister Lapid, talking about the new strategic, high-level dialogue on advanced technologies. It never mentioned China, but it was very clear for all who knew that that’s what it was about. It was about China. On the constructive side, it spoke about Israeli-U.S. corporation on quantum computing, on pandemic responses, on climate, on AI, and on risk-mitigation. There was a clause about trusted technology ecosystems, which includes the full list of America’s concerns vis-à-vis China, that is the basic platform from which to hold a dialogue on how to manage risk together.

The bottom line, I think, is that Israel is listening to U.S. concerns, grappling with the best way to do it without stifling its high-tech environment or ecosystem. We are grappling with challenges not unlike America’s. We believe, by the way, that our exposure to China is lower than America’s. We’re also a lower-priority target for China, and we don’t have overseas Chinese in a serious role in Israel, and they are a serious vehicle for Chinese Communist Party (CCP) for both influence and tech transfer.

We now expect the American and Israel national security councils to pursue this work together, to hammer out the details. I hope this momentum survives our election and transition in government. I think we’ve made serious steps in recognizing the challenge, addressing it with our U.S. partners, doing serious work.

There is one caveat. Israel usually doesn’t do great-power humiliation in public. It’s not something that Israel likes to do. You don’t read much about Russian or Chinese spies being caught in Israel. You sometimes read about cyber-campaigns and cyber-attacks being exposed. But who publishes these reports? Private cybersecurity companies like FireEye or Cybereason. Both of them, by the way, published reports about Chinese-attributed industrial-espionage campaigns in Israel, and so on and so forth.

My last point is to your question from the beginning. About two years ago, there was an exposure of an illicit arms transfer, an arms deal by several veterans of our military or defense industries who decided in a covert way, in an indirect manner, to try to sell loitering munitions to China. For half a year, the Israeli military censor only allowed the press to say that the prospective buyer was a country in Asia, whose name mustn’t be mentioned. Yet only a half a year later it came out that it’s China, and this case is now being litigated and it’s now awaiting trial or going through the procedures. This is a rare case in which you suddenly see the iceberg. But most of the time, Israel fixes things quietly.

I’ll give you a last example and then I’ll finish. In the late 90s, Li Ka-Shing, [a Hong Kong-based billionaire investor and businessman] invested in Partner, one of our cellular operators. And then he sold his shares to Haim Saban, and in 2019 he got the shares back because of some financial reasons. Li Ka-Shing, and his company, the Hutchison Group, asked for an approval from our communication ministry to control the company. A cellular company. Guess what? They never got an answer. Neither no nor yes. They drew the right conclusions and they are selling the shares now.

Those of us who seek public broadsides in Israel against China—that’s not the Israeli way of doing things. Although we are very important in our eyes and we stand very close to the lamp so we cast a large shadow, we’re a small country. We’re not educating great powers in this sense, except our best friends. I think the realistic expectation should be that we will take our alliance from the era of the global war on terrorism, to the new era of Great Power competition. Going as an alliance, we’re at our best.

Our innovation, most of it goes West. Silicon Wadi flows to Silicon Valley and not Shenzhen, for the most part. And this is something that the CEOs have made so themselves: they vote with their feet or their money. I think as a tribute to the British Mandate, we need to keep calm and carry on, but smartly. With our eyes open in a partnership mode, discussing the issues, addressing what’s real, and not hyperventilating over things that aren’t, or are very old. We can still be very angry about the Falcon sale, but that was 22 years ago. And guess what? America also woke up after 40 years and said, “Hey, our China policy was wrong.” If it takes a few years for Israel to adjust, I would try to use the opportunity constructively to build on our alliance and not to undermine it with distrustful articles in this sense. I’ll stop here. Thank you.

Jonathan Schachter:

Thank you, Assaf. I think maybe a little later we’ll come back to some of the language and I think the tone that was used in some of those articles and that has characterized some of this discussion. I think there are some interesting things to say about that as well. Before I turn to Elliott for his response, I wanted to ask you about one specific thing. You mentioned the Committee on Foreign Investment in the United States (CFIUS), which was, I think, created by the Ford administration, to look at overseas investment in the United States. People talked about the Israeli mechanism as sort of the Israeli counterpart to this. As you said in the article, there’s been some criticism, you said some of it was justified. Even last week, President Biden issued an executive order [to the CFIUS], not changing the legal mandate because you can’t do that, but emphasizing and updating the security lens through which things are looked at by that body.

You finished by looking at some policy prescriptions. What role do you see the Israeli mechanism playing here moving forward?

Assaf Orion:

We need to zoom out to have the full landscape of a Chinese tech-transfer strategy. They have like 31 or 32 methods. Investment is only one. The most immaculate mechanism for investment oversight is about as good as a roadblock in the West Bank. If there’s no fence around it, everybody can go over the hills instead of passing through the gate.

Yes, we need investment oversight. Israel is a less formal country than America, and I understand that. But, lo and behold, since 2020, the Chinese participation in our infrastructure tenders dropped; their wins of tenders dropped. They lost the Sorek desalination tender. A group of Israeli and Chinese companies lost the green and purple line of the Tel Aviv Light Rail. They lost another power-plant facility. You could say, okay, that’s God’s hidden hand and the divine intervention. Or you can say, “Oh, the Israeli mechanism is working somehow in a way that’s just a bit different than the way they do things in America—but it’s working.”

The losers [i.e., the Israeli companies with Chinese partners] went to court claiming that their bids were unfairly excluded from the tenders—and lost. We now will see what happens with the appeal. I would withhold my judgment about how this works until we see it play out. But this is an important step. We need to do it right. But there are so many other issues at stake too. And as I’ve learned from my U.S. colleagues—my tutors on Chinese tech transfer—there is academia, there is joint research. There is a lot of work in investment, focusing on small under-the-radar sums in the very early stages [of a company’s formation]. And when it comes to technology you can’t depend on catching everything with artificial intelligence. Netflix and Amazon are also AI. We need to be much smarter than just coming at this problem with a hatchet and trying to cut everything down. We need to be smart, and I would say, cautiously. more empathetic.

Were America to start raging at Israel for not doing enough, I would respond that, objectively, all of America’s partners—as is American itself—are grappling with how to do things right. Not to break up with China, but to find solutions to real problem. To keep trading with China while protecting our intellectual property, technology, values, systems of government, and so on so forth. If you read the State Department’s wording of its policy, it’s never “let’s fight China.” It’s “compete, cooperate, counter” or “invest, align, compete.” It’s always a combination of several components. And Israel also needs to find the right mixture. Military? No. Data issues, even without a mechanism, we block several acquisitions without any fuss. And the rest is a work in progress like it is in the United States.

Jonathan Schachter:

Thank you, Assaf. Elliott, I’d like to turn to you now to hear your response. Assaf talked about a marriage made in heaven, a honeymoon that’s over, a divorce, and a chastity belt.

Assaf Orion:

I never said divorce, because the opposite of the honeymoon is not divorce.

Jonathan Schachter:

I didn’t say that you recommended divorce. Other people have said there needs to be a divorce, or breakup. But all of these terms came up. Elliott, as the relationship counselor now, how do you respond to Assaf’s analysis and his policy prescriptions?

Elliott Abrams:

Well, he said keep calm and carry on. I’ll use another line, which is trust, but verify. Another old one.

Assaf Orion:

Distrust and verify.

Elliott Abrams:

There was a real problem here, and it wasn’t just something that happened 22 years ago. I have in front of me something a law firm put out in 2018 advising that Israeli investors don’t incorporate in the U.S. because the controls are too heavy. They incorporate here in Israel where you can get away with much more with respect to China. This was a real problem.

Now why did Israel begin to move in the directions that Assaf has described? I think the answer is American pressure. Where would Israel be today? What would it be doing if the United States had simply said, “What you do with China is your business”? I think that’s an element of the situation that’s been absent from the conversation: American pressure. Assaf in his own writing has talked about shortcomings in the current Israeli statutory scheme and has said, “Well, that’s because we’re informal,” and has suggested that it all works. Well, maybe it does all work. But maybe it all works because there’s constant pressure from the United States. There are also things that I think are not being attended to well enough here in the U.S.—and that should not be an excuse for Israel. That is, Israel should not be in a position of saying, “Well, the Americans haven’t solved it, so don’t look at us.” For example, I gather there are about a thousand Chinese students in Israel. There are two Confucius Institutes in Israel.

 

Have we solved the problem of making sure that Chinese students in the U.S. do not have People’s Liberation Army contacts? No, we haven’t. Have we solved the problem of Confucius Institutes, which are actually a means of keeping Chinese students in line with the regime? No, we haven’t. But that’s not an excuse for Israel not to get ahead of us on those or any other parts of this enormous problem we all face of dealing with what I will call an enemy regime, which sees the United States clearly as an enemy.

Jonathan Schachter:

Assaf talked about working quietly with the administration. I think that public criticism is a form of pressure. You’re talking about U.S. pressure, but there are other ways to apply pressure besides publicly, and besides the sort of handwringing that we saw over the last several years. Would a quieter approach, to your mind, have been ineffective?

Elliott Abrams:

I think if you go back, I don’t know, five years, just to pick a number, the Israelis were not moving fast enough. There’s been a lot of progress. How much of that was public pressure or how much of it was private pressure I think is hard to say. I think I’d be hard-pressed to say that we would be where we are today with all of the changes that Assaf has talked about if there had never been a public aspect to it.

What’s the balance of public and private? Are we at a point now where there doesn’t need to be public pressure? I think those are difficult questions to answer unless you’re on the inside. That is if you’ve had those conversations privately with officials of the Prime Minister’s Office, National Security Council, Ministry of Defense, IDF. And if you’ve seen Israel adjusting to those pressures, that’s great. If you haven’t, then maybe you think they’re blowing us off until there is a little bit more pressure and maybe some public pressure. You’ve also got a new government that you’re dealing with. I mean, after Netanyahu left . . .

Jonathan Schachter:

That’s always true.

Elliott Abrams:

Well, it’s not always true. You had Bibi for an awfully long time.

Jonathan Schachter:

Lately.

Elliott Abrams:

Right, but will it change? Will anything change after the forthcoming election? Look, if you can do this all through absolutely private, even secret discussions, and they achieve what needs to be achieved, great. That would be better. But I’m not on the inside of those discussions, and therefore don’t know whether that’s actually correct.

Jonathan Schachter:

Assaf, what do you think? Do you think that the sort of public discussions and the kinds of articles you saw were an important driver of the changes in Israeli policy? Or do you think it could have been done otherwise?

Assaf Orion:

If we tried to move Israel’s government—I’m sure that when American officials appear and explain in an effective way, the government listens. As Elliott said, American pressure as such is probably among the catalysts of Israel steering into learning or adapting. At the same time, I would pay attention to the tone and to the undertones of such articles, because they don’t only steer Israel into action, but create a backlash and an echo effect inside America’s public opinion. Do you really need to say that Israel is so and so and so?

By the way, Elliott, I’m far from thinking that we are perfect. I opened by saying that things aren’t as bad as bad as some have claimed, but they aren’t necessarily as good as we think or say. Yes, we have a lot room for improvement and I don’t seek exemption for Israel because America has so much more to deal with. And by the way, you do. And I’m saying it in sympathy, not criticism.

At the same time when I’m saying, okay, there are 1,000 Chinese students in Israel against 400,000 in the U.S., 300,000 in Australia, 200,000 in the UK, and so on so forth, all I’m saying is let’s use this scale to react proportionately. I will say sadly, yes, I am sure that there is some technological contribution from Israel to China’s efforts. At the same time, I will say even more sadly that the greatest builders of Chinese power have been U.S. tech and money. And I’m not saying it to dismiss what we have to do. We do have to do this.

But keeping the scale in mind, we can keep calm and carry on. Not in the sense of carry on working with China like we did, but carry on the good work of getting better, doing it together, closing the gaps, learning from each other, best practices, expertise, imports. We need to train people, identify best practices; we need due diligence, awareness, and knowledge. All of these needs to be worked out in Israel. But we need to do it in a cooperative manner [with the Americans] based on trust. The fact that the first word in the most interesting paragraph in the joint declaration starts with “trusted technological ecosystems.” For me, it sounds more than symbolic.

Jonathan Schachter:

Thank you, both. David, we turn to you. You’ve heard the back and forth. How does it look from your perspective?

David Feith:

Thanks, Jonathan. And thanks to Mosaic for gathering us here and shining light on these issues. I think that is itself the starting point that comes to mind for me, which is the value of having these conversations, including agreements and disagreements; the value of writings, like Assaf’s; the importance of having new capabilities and new institutions built to focus on these extremely difficult China-related threats in the United States and among U.S. allies and partners. Reasons involved with the magnitude of the threat, the complexity of it, and in some ways the novelty of the threat, or perhaps especially the novelty of our growing awareness of the threat and its many components. The kind of institution-building that Assaf has done, the kind of new discussions of this kind and that Mosaic‘s published over the years is really in itself valuable and I think a useful guide for things that should be going on in Washington and among U.S. allies and friends around the world because of how extensive and threatening these issues are, how important it is that we do things separately and together to change how we’ve had policy set for a very long time.

A related piece of that is that this partly needs doing in our societies in general, including in think tanks, in the business world, in the academic world. And then obviously it needs doing perhaps most of all within government. Some of the discussion that we’ve had about the importance of the new dialogue, the working groups that have been established between the U.S. government and the Israeli government on this issue with a new high point just in the last few months, as Assaf mentioned with President Biden’s announcement when he visited Israel over the summer, is also really very important and is I think in no small part a credit to these sorts of discussions. And we’ll get pressure on these issues over the years and to Israeli policy progress on these issues over the years.

Now that there is this high-level platform between the U.S. and Israeli governments, which as Assaf said, focuses on trusted technology—everything from quantum to AI and pandemic-related measures are all very important. We’ve not had a circumstance like the one we face before, where we have in the United States a recognized primary national-security adversary as economically capable as China. It’s never been the case before that the U.S. had a primary strategic rival at 60 percent of U.S. GDP size, and China is effectively even with us today. That’s never happened before. It is also never happened that the primary U.S. strategic rival is as economically intertwined as China obviously is, and that’s of course the essence of our discussion here. It’s also not been the case that the rival has used that economic entanglement, frankly, as cleverly and effectively as the Chinese Communist Party has used it against the United States and other economically powerful, open societies such as Israel.

China has designed entire strategies, open and not secret strategies, like their so-called Military-Civil Fusion strategy that seek among other things to undermine completely the basis of technology controls in the West. Our entire system of technology control has relied for decades on doing so-called end-use verification—that if some sort of technology is to be controlled, it can be sent overseas to another country with a license on the basis that its end-use in that other country can be scrutinized and verified to be non-military. The entire Chinese strategy breaks that by saying that anything that touches the Chinese commercial economy needs to be maximally shared with the military and security state of China.

So these sorts of challenges are unlike anything we’ve faced before as individual countries or as a bilateral pairing. And so, establishing the kind of habits of study that Assaf mentioned, establishing the kinds of platforms in government is essential. And the need now for these platforms in government to be serious, to be authoritative in their respective capitals, is hugely important and will be a test of policymaking in both Washington and Jerusalem. There will be a test in the relationship with Israel of how priority within the U.S.-Israel relationship this issue will be given. The U.S.-Israel relationship obviously has a lot of hard problems and there’s a lot for the China issue to compete with—starting presumably with Iran. But this question of priority will be really very important.

The thing that Biden announced, what becomes of it after twelve or twenty-four months? Let’s say, as other things inevitably demand attention and frankly, where the alignment in tone between Israel and the United States might be cleaner than it is on the China issue. So quickly, just on that point, because it was also where I was going to take my remarks. Elliott, to his credit, got characteristically to the point, and I wanted to start in a roundabout fashion with some of the positives, but the positives are important. The quibbles though, are also really important. And I think that this discussion about tone and undertone, as Assaf nicely put it a moment ago, this discussion about how we have cooperation based on trust when there is also a need—or when some in the relationship feel there is a great need—for pressure and for uncomfortable conversations, in private and public, is really a very interesting issue.

 

And I think that it is notable, and I think it is lamentable that so much of this discussion seems to begin and end around disagreements in language, [rather than somewhat fundamental disagreements] about whether what we have here is a shared attitude and certain differences in policy, or whether fundamentally we have differences in attitude because Washington is panicking, which I think was used as a description for Washington three times in Assaf’s essay, or Washington is alarmist, as has also been said.

[Another important question is] whether those differences in judgment, which are natural and are going to happen, are the essence of what we should be discussing or a component that is secondary to an essential agreement in attitude and in threat perception. And I think this really is, as we’ve been discussing, quite important, because it’s important how policymakers relate to each other and how publics and voters understand each other. And obviously, the U.S.-Israel relationship is subject to these dynamics within policymaking circles and political circles.

To this point about reality vs. perception: we have fundamental differences as opposed to differences just on the details is really very important. So for example, there was mention made of some of the similarities and differences between Israel’s position on these issues and Britain’s. One that comes to mind, and this is mentioned in Assaf’s essay, were the statements made by the outgoing Mossad chief, about fifteen months ago, who stated publicly in his kind of outgoing valedictory address—I want to just get the quote right, so as to not misquote: “I do not understand what the Americans want from China. If anyone understands it, he should explain it to me. China is not opposed to us and is not our enemy.”

Now, Assaf pointed out that that latter point is consistent with Assaf’s view. I think it’s the former point especially that got a lot of attention in Washington, a view which, for what it’s worth, and whether it was intended or not, sounded rather harsh, dismissive, even belittling. In Britain, the directors of MI5 and MI6 have recently given arresting speeches on the China threat, on their awakening to it, on their work to reform their intelligence work and their law-enforcement work and other aspects of policy to account for the slumber that they had, which is a common slumber across the West, as we had it in Washington and elsewhere. And in one case, in fact, the MI5 director in July had a literally unprecedented joint address with his US counterpart, the FBI director, on this issue.

Now, again, I don’t mean to play gotcha with a kind of cutesy comparison between a noted and admired intel chief and the intel chiefs in London, but it happens to represent something important. Partly because, again, for example, we’ve been talking a lot about export controls, about CFIUS, and an Israeli version of CFIUS—Assaf, you mentioned, I think, in a very sort of pregnant fashion that there was an issue over dual-use technology and controls were successfully tightened in Israel twenty years ago—but that was, as you put it, only according to the old definitions of dual use. I think your implication here is very compelling, because the fact is technology has changed so much in the last twenty years that we have to update dramatically former definitions of dual use so that we’re able to feel confident about the difference between commercial technology and military technology. [Our old understanding of this has] been exploded by technology, and our policy regimes have to be updated and they haven’t been.

It’s notable that when Prime Minister Netanyahu was in office, he stated on the subject in 2016, while extolling the strengths of Israel’s cyber industry to a U.S. audience, that, as he put it, “I sure as hell am not going to let regulation interfere with that. I actually prevented regulation now on the cyber industry and we’re taking the risk.” These questions about what are appropriate technology restrictions for the national-security threats that we face in common are critical, and as Assaf mentioned, are often questions of the appropriate tailoring. We don’t want to impose restrictions on high-tech that strangle high-tech in Israel or in the U.S. But these sorts of interesting distinctions are either details that at a minimum need to be worked out, or important policy disagreements.

 

I think it’s notable that after about five years of this being a public discussion, there are still some real open question about whether these are disagreements of detail within the context of fundamental agreement, or if, when we talk to each other and when we talk in public, we begin and end with the disagreements and the quibbles and kind of the fights over language that give the impression that we don’t have, despite being so close as partners, alignment on this issue at the very time when this issue is becoming the focus, as Jonathan noted at the top, of American national-security concern in Washington. I think the idea that the U.S. and Israel would be potentially fundamentally out of step, as opposed to just quibbling over some details on what is the major focus going forward of American national-security policy, is a challenge for U.S. national security, for Israeli security it would appear, and for our relationship and for its standing going forward.

Jonathan Schachter:

So, Assaf, obviously I’d like you to respond to that, but I want to make it more difficult if I may. I think a lot of this discussion is focusing on, David, what you called quibbles or U.S. criticism of Israeli policy vis-à-vis China. But I think it’s important to point out that Israel has its own quibbles and concerns about U.S. policy towards China. For more than a decade now, the U.S. has been talking about—it’s gone by different names—this pivot to Asia and the move away from the Middle East. The move away from the Middle East—I think we could spend a couple hours talking about what that means or doesn’t mean in practical terms—but there is definitely a sense across the region, certainly in the Gulf, and I think in Israel as well, that the U.S., while it’s focusing on the Indo-Pacific and Asia and the Chinese threat, is moving away from the Middle East and actually creating a vacuum there where China and Russia are posing greater threats to Israel and to the other countries.

And so, you have this sort of mixed message. In some ways, it reminds me—I wrote about this a few weeks ago—you have the United States that’s talking about providing greater cooperative missile defense across the Middle East at the same time that they’re trying to push to get back into the JCPOA, which will of course lift the missile embargo on Iran next year. So you have these competing trends coming out of U.S. policy, and you have Israel and the countries in the region left having sort of to deal with these conflicting pressures.

And so, I think that’s part of the discussion. Assaf, I’d like to hear what you have to say about it. Part of what troubles me in reading some of these articles on the subject is I think—David, you’re focusing on American-China policy and Israeli/China policy—the tone of a lot of the articles. Focusing on U.S.-Israel relations, and what you had found here was [the issue of Israel and China] was being treated as sort of a gotcha moment. It was another example where you have the Jewish state getting scrutiny and attention for being an imperfect ally in a way that I think other states would not.

It raises, I think, some difficult questions about the nature of the discussion. Obviously, things are evolving in Europe, but until recently anyway, the EU was certainly not on the same page as the United States in terms of how it saw the threat from China. But I don’t remember seeing the same kind of discourse about EU policy the way I saw it about Israeli policy, and I think that’s curious as well. So Assaf, I’d like you to respond and also give our audience a chance to ask some questions as well.

Assaf Orion:

Well, I’ll try to be brief. Let’s start with your last point and to David’s. We’re talking about trust or distrust or mistrust. Now let’s look at AUKUS—the Australia, UK, and the U.S. alliance—providing the crown jewels of nuclear submarine propulsion to Australia. Now between us, who do you think is more compromised by China: Australia or Israel? Now there are too many books on the Chinese silent invasion to Australia and how their political system was compromised and how their secret services grapple with it and the level of influence on the political system and academia and what have you. Australia has a serious China issue, only [now has it] woken up and it’s trying to release itself from this grip. But look now after the change of government, it’s looking for the right way. So we need to understand how come or in what ways did Australia win this trust, allowing it to enjoy the crown jewels of nuclear propulsion, whereas Israel, [which is] much less compromised, with much a lesser China problem (if we want to call it that), still finds it difficult to gain trust and move forward in this?

When America is convening the highly technological democracies, is Israel invited? When we are looking at the chip coalitions, when Israel is not an owner of chip-fabrication facilities (except for Intel in Kiryat Gat), but a great designer of chips. We have quite a knack for R&D on semiconductors. Are we seen as a natural partner or as a leftover for later?

And I think it all boils down to trust. On threat perceptions, I had this meeting last week with a group of American think-tankers and former officials. When we discussed the emotional tone of America’s opinions on Israel with China, one of the participants said, “You know, you get this emotional tone when we discuss Iran and you don’t like our answers.” So we need to understand that the number-one threats, the things that we see as very, very serious, are not the same.

So you can say, “Okay, there’s a dead-end and so on. We can’t resolve it.” I actually think, to the contrary, that this is the moment to take our number-one threats and work together on China and Iran, which are actually growing closer together. I would add Israel into a bin. We are usually stuck in the Middle East bin. Actually, their geography started moving into the Indo-Pacific. If you saw the I2U2—Israel, India, United Arab Emirates, and the United States—that’s actually a grouping looking at Israel in the Indo-Pacific, but we don’t talk about it this way.

Jonathan Schachter:

So now that Israel is in CENTCOM, you want to move it to PACOM?

Assaf Orion:

Not move it, but as we drilled all the way through the partitions to get from EUCOM to CENTCOM, we need a dialogue on China and Iran, with INDOPACOM and CENTCOM and Israel, and it will be the weapons technologies that will connect us. So I’m trying to seek constructive ways of going forward. What David said about the chief of Mossad–well, it was quite a shock, but we also need to take note of the words of the Shabak (or Shin Bet), Israel’s internal security agency, which said, “China is a threat.” And in Israel’s pecking order, domestic issues are the domain of Shabak and not Mossad. So the internal agency said, “Yes, we have a problem.” And the Mossad director said what he said.

Basically speaking, I think we need to discuss our differences. Yes, we don’t feel the same about China. Israel has enough direct military defense threats to be very worried about only the top of the list. And China is not on the top of our threat list. It is a security risk. Now, how do you get that into a very crammed priority list? One of them is yes, U.S. pressure. But let’s not use the pressure to break things down, but to make them and build them.

I think there’s the question of, “How do you maintain pressure in a constructive manner, in the positive side of the vessel and not by blowing [things] up?” With leadership and change in their work, you always need some impetus for change; otherwise, you stay where it’s comfortable. To move out of the comfort zone, you need some heat. And I think we see some heat, but you don’t want to scorch it and you don’t want to blow it up. We have a relationship to maintain.

Jonathan Schachter:

Okay. Thank you, Assaf. And Lanita, maybe will add some heat from our audience with their questions.

Lanita Warner:

Fantastic. I just want to recall or remind everyone that if you would like to ask a question, you can just put in your question in the Q&A chat box, which is at the bottom of the screen. Elliott, I actually want to ask you a question first. One of our questioners asks whether China’s human-rights abuses have a role to play in the US/China Israel relations.

Elliott Abrams:

Interesting question, probably not a very large one. Traditionally, the Israeli view has been, and maybe it’ll change, but has been, “We’re pretty isolated in the world. We are not surrounded like the United States by democratic countries. We’ve got Egypt; we’ve got Jordan; we’ve got Syria. We now have new alliances in the Gulf that are very valuable, none of which is a democracy.” So this has not been something that the Israelis have felt they had the luxury of indulging. And I think that when it comes to questions like human rights inside China or the treatment of the Uyghurs or the treatment of religion—I think those are unlikely to be parts of that conversation. Just trying to be realistic.

Lanita Warner:

Assaf, would you make that same claim?

Assaf Orion:

That’s the realpolitik version. But when we look at Israel’s voting pattern in the United Nations Council on Human Rights, we saw Israel joining several times on declarations or statements against China. Several times we deferred and several times we were against China. I think Israel is trying to use it as a signaling channel to China, showing our disgruntlement about their approach against Israel on Palestinian affairs, on human-rights affairs—we are usually the scapegoat in those fora. So I think, as Elliott said, we do this very sparingly and we don’t have illusions that we can change China or gain a significant effect by joining where our hearts are in the political sense. When you look at concentration camps, well, it resonates. How much does it feed politics? Well, it depends.

Lanita Warner:

Okay. This is a question for Assaf and whoever else may wish to join in. One of our questioners asks about espionage and the issue of Chinese students being present at various different universities throughout Israel. I understand, when I was reading the Jerusalem Post, that prior to the pandemic, there were around a thousand students who were participating in programs in Israel. And since then, there have been a few hundred because of COVID. Are there any concerns regarding that?

Then I’d like to add to that the question regarding tourism. I understand also that the tourism minister of Israel has spoken with the Chinese ambassador and is interested in raising Chinese tourism to, I think he said 10 million by 2030. I’d like to hear your thoughts regarding the concerns of espionage, and others also have asked this same question.

Assaf Orion:

On tourism, I’ll be brief. Our peak number was 170,000 Chinese per year out of 3 million in total. If 10 million Chinese come here, I think it’ll be an invasion. Where will we put them? I think, well, ministers sometimes like to say things. We had other statements by ministers about China, which are not less, well, dubious.

On espionage, I need to recommend a piece that we wrote at the INSS Glazer Center a few months ago. We built on research done in the Center for Strategic and International Studies (CSIS) on Rhode Island Avenue in DC, about patterns of Chinese espionage in the U.S., and inferring what is relevant for Israel. As I mentioned, there are at least two campaigns in cyber, reported by two cybersecurity companies, attributed to China.

On students, I would say the general tension is between universities wanting academic freedoms and wanting the income. I mentioned the numbers of hundreds of thousands in the U.S., UK, Australia, and so on and so forth. Yes, several hundred are clearly in Israel. I guess some of them are learning Jewish studies, Middle East studies. Some of them go to the technology parts. I want to think that the highly classified projects are out of reach. That’s mostly the responsibility of the defense establishment, which is better guarded. On emerging technologies and so on, I think we’re on the quality side just as exposed as the U.S., on the quantity side much less exposed than you.

We need to find the best practices. How do you persuade the academic leadership to do the hard work of vetting, due diligence, finding out [who these students are]? Know your student, not only know your customer. Know your PhD, know your research partner. Because otherwise you may be dealing with people, well, you don’t have a clue where this knowledge is going, from Xinjiang to the Chinese military. And there’s very good research in the U.S., which we’re studying, from both the Hoover Institution and Georgetown University, and it teaches us a lot about what we need to look for in Israel. To tell you that, “Oh, don’t worry. There’s nothing to see here,” I don’t think that’s the situation in any country, including Israel.

David Feith:

I was just going to take the chance on the espionage question to go back a little bit. Assaf mentioned a few moments ago, a reference that he also very helpfully included in his essay, to the speech in 2019, by the Israeli internal-security Shabak chief, which is really very interesting, and I think makes a key point about major policy areas in need of attention in both of our systems, especially around data.

And so Assaf mentioned in his essay that the Shabak chief’s public remarks called for the tightening of Israeli legislation around data and sovereignty. And this happens also to have been a theme of what those British intelligence chiefs have been speaking about publicly, and a theme that we’ve heard a lot about in Washington. And I would just observe, I think, consistent with things that we’ve all said, that this is certainly not an area where the United States has this thing figured out.

In fact, there’s a real question about how to structure policy to scrutinize and then restrict [data] on national-security grounds. Understanding the flow of data to China are something that is only beginning to take shape. It’s frankly rather immature right now in Washington. That’s true in other capitals and it points to espionage problems, commercial and military, and other strategic problems. There’s a huge area where the inside-of-government and outside-of-government cooperative mechanisms that we’re talking about here between the U.S. and Israel can do an enormous amount of work together that relates directly to things espionage. But also just much more broadly across our economies when it comes to personal data, biotechnology, personal genomic data, the data involving autonomous technologies, and cars and trucks and our roads and our drones. It’s really an endless, vast area. And I think it just speaks to a lot of what we’ve been talking about here and what Assaf is focused on in Israel.

Lanita Warner:

Thank you both. So David Allerhand is on the call today, and he’s currently writing a paper on the U.S.-China relationship and its impact on Israel. And Assaf, he says that he just met with you recently with Gedaliah Afterman. So I just mentioned that on his behalf, but his question for you is, how do we deter China while Israel relies on China? And we’re seeing various different ways in that they’re pulling back. How do we ensure that Israel doesn’t continue to invest in Chinese products and various things that are coming out of their government?

Assaf Orion:

I’m not aware of serious Israeli investment in China. I don’t think we’re sizable enough. The growing piece of our relations is actually imports from China to Israel. Like the U.S., our exports to China are flat for several years now. Actually I think there was a peak in 2016 or ’17, and since then, we’re stuck. And that’s only with regard to trade in goods, which is about half of our international trade. But if you compare Israel’s trade or exports of services to China, and you compare it with what we export to Europe and America—to Europe, we export about 7 billion (that’s 2020 data), to America about 17 billion, and China about 170 million—it’s a sliver.

We don’t really successfully break into the Chinese market as people dreamed we would. Although the Chinese talking point is always that China is Israel’s second-largest trading partner, that’s only if you discount the European Union, which is our number-one trading partner, and you compare something like $40 billion [in trade] with Europe and now $18 billion, if you include Hong Kong, with [China].

But the overall view is that our trade with China is about 11 percent of our trade. So the level of dependence—and we need to analyze dependencies in the macro sense—is low. In the micro sense, like everybody on specific supply chains, we just read that one piece of the F-35 came from Chinese sources, which is not something to be very happy about. And there are issues in that it’s very difficult to move around the world today without relying on Chinese supplies, in Israel as elsewhere. Because China has placed itself [in a position of] dominating critical resources and assets in a ways that detoxification or cleaning up from this reliance will take time. We see something similar now with Russian gas in Europe: they need to build an alternative. There needs to be diversity. The rare-earth elements—well they’re in many places in the world, but only China got them to an exploitation level, which is very economic. So it’s now almost a monopoly. It will take the world time to adjust, and I would say, to move from economic efficiencies to national-security aspects or national security that takes economics into account, where you are both prosperous and safe. And that’s a movement from two poles.

I read a very interesting speech by Germany’s foreign minister. She said, “The age of business-first is over.” I think that’s a key understanding of why you need to move. Yes, it will cost us more. It’ll be more expensive. It’ll take more time. It’ll be less expedient, but it will be safer. We will be less reliant on others in this sense. And that’s part of growing out, I would say, of the illusion of globalization as the be all and end all of our economics.

David Feith:

If I could just jump in there to pick up a little bit on where Assaf landed with the Germans, partly because it ties back to Jonathan’s very good question from a moment ago about whether Israel is getting disproportionate or undo attention and pressure with respect to China policy.

I would note that I think that there’s actually been a lot of consistency across the U.S. approach toward close allies and partners with respect to China over the last several years. You saw in the British case, since we keep going back to that, a real knockdown, drag-out fight over Huawei and Telecom in particular, and it was a matter of discussion across government and at the highest levels that was known to be candid, as they say in diplomacy. I would note, for example, with the broader European Union, one of the first acts taken by the new Biden administration in foreign policy, period, was actually taken before they were in office. Right around Christmas Day 2020, when the European Union, led by Germany, was rushing to conclude a comprehensive agreement on investment between the European Union and China. They wanted to conclude it by the 31st of December when Germany’s leadership of the European Union was going to lapse, and so they accelerated these negotiations that were hung up for years, right at the time when the Biden administration had just been elected and was preparing to come into office. And Jake Sullivan, as the incoming national security advisor, tweeted publicly a request to consult with the Europeans before they go and do this.

I think that speaks to how this has been, in fact, a substantial and rising area in U.S. diplomacy with a serious list of important allies and partners. That would include the Brits; it would include the Europeans; it would certainly include Israel. And so I think that there is generally more consistency here than exception.

Lanita Warner:

Speaking of allies and partners, what would our gentlemen here say regarding the UAE relationship with China? Has China its relationship with Israel ever come up in the Abraham Accords dialogue? Its own version, of course, it would need to be. But has that ever come up within politics?

Assaf Orion:

I think that the UAE has a different view as to China from what Israel sees. And it was mentioned here that the UAE was quite shaken by this pivot, and they were shot at by the Houthis in Yemen, but also with Saudi Arabia being attacked by Iran. The thing that was shaken was America’s reputation as a security guard on duty.

China never stepped in. They never presumed to stop Iran, a comprehensive strategic partner of China, from hitting Saudi Arabia, a comprehensive strategic partner of China. As usual, they said they called all sides to conduct things calmly. But by what we read, I think it was in the Wall Street Journal, about a secret military installation in Port Khalifa [in Abu Dhabi], built by China, exposed by the U.S., and then leaked probably to the Wall Street Journal, it means that the UAE saw positively a Chinese military foothold in the Emirates. With Israel it was never an option, and all those who said that the Haifa Bayport would be an entry point for the Chinese navy, never looked at the fine details of what this company is entitled to do.

We [in Israel] have a different approach. I think that the Emirates are trying to walk the the tightrope of being a strategic partner to both China and the U.S., and I think the rope was torn when America said, “Either it’s my way or the Huawei. Either you want F-35 or you leave Huawei in your cellular networks.” So the Emirates reversed course and said, “Okay.” And then they went to buy a Chinese trainer of planes, which was a bit of a thumb in your [America’s] eye, and then some French files, which is consistent with their diversification policy.

There are definitely U.S .expectations that we will explain to the Emirates the limits of this game. It’s a long walk to walk, but I would also look at President Biden’s concluding remarks or the statements in the White House website of his visit to Saudi Arabia. There was a clause speaking about corporation in 5G and 6G development and deployment. Again, not mentioning China, but it’s very evident that America is trying to bring the Kingdom of Saudi Arabia back home through this very problematic channel of advanced communication. So I would say the Gulf states are hedging on the strategic aspects. Israel is not hedging. It’s just trying to find the balance between a strategic alliance and economic ties. I think it’s different in essence, in the actual nature.

Jonathan Schachter:

I would agree with that. And I would say we see this hedging across the Gulf with China, certainly. But the last year you’ve seen outreach among states of the region, conversations that weren’t taking place for years. So the Saudis and the Emiratis are talking with the Syrians, and they’re talking with the Turks, and they’re even talking with the Iranians. And all of this, I think, relates both to the pivot that we talked about and the focus on the Far East and the question mark about where the U.S. is, but also about the perceived strengthening of Iran, because of the nuclear deal and where the U.S. is with that as well. To Assaf’s point, I think those countries have options to hedge that Israel does not. And Israel, in that sense, has to be much more reliant on the United States and much more reliant on itself.

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More about: China, Israel & Zionism, Israel-China relations