by Galia Lavi and Assaf Orion
An opportunity for Chinese espionage, a platform for cyberattacks, and a move that damages relations with the United States: many charges have been leveled against the new Haifa Bayport Terminal, which opened on September 1 after years of construction. The primary opposition centers on the new port’s operation by a Chinese state-owned company, but are these concerns justified?
September
1, 2021, marked the official start of operations at Haifa Bayport by
SIPG Bayport Terminal, registered in Israel and owned by the Chinese
company Shanghai International Port Group (SIPG). The occasion, described
by the CEO of the Israel Port Authority as “a historic event unmatched
in several decades,” was celebrated with a modest ceremony under
COVID-19 restrictions. In recent years, the port has become a symbol of
American displeasure and concern to some in Israel over Chinese
investments in the country. Supporters of the venture highlight its
contribution to the Israeli economy, while opponents emphasize the
security risks inherent in a port operated by a company from China,
claiming that the security authorities have not examined these risks in
depth. The official opening of the port is an opportunity to re-visit
the issue.
The report by the Trajtenberg Committee on the cost of living and competition in Israel (2011) stated that the productivity of work teams at Israeli ports handling containers was 15-25 percent lower than that of their competitors elsewhere in the Mediterranean, and that this inefficiency imposes on foreign traders, and subsequently on the Israeli consumer, unnecessary annual costs of hundreds of millions of shekels. The report also stated that the main failure in the industry was the lack of competition, as labor unions had a decisive impact on the ports’ operations. In December 2011, the Israeli government adopted the Committee’s conclusions and instructed various ministries to accelerate the ports reform that was announced back in 2005. Its goals: open Israeli ports to competition, increase government revenues, and reduce the cost of living.
The Importance of the New Ports
In response to these problems, the
Israeli government decided to construct two new ports, near Haifa and
Ashdod, or more specifically, two new private container terminals, each
800 meters long and 17.3 meters deep, able to receive the huge 400-meter
long container ships carrying up to 24,000 TEU. These terminals, named
Bayport and Southport, will operate alongside the two existing
government ports. As part of the development plan, the quays in the
existing ports will also be upgraded to enable them to compete with the
new sites. The reform’s expected results will be extension of the
container quays in Israel, significant upgrade of loading and unloading
capacity of the seaports, and conversion from transshipment-dependent
ports to ports that can themselves transship for other Mediterranean
ports. In addition to reducing Israel’s dependence on foreign ports, the
new construction can yield additional direct revenue as well as savings
in time and costs for the entry of goods.
In economic terms, the operation of the
two new ports is essential for solving the problems at Israel’s ports.
It will increase competition in the industry, reduce the need for
container transshipment, save costs, and encourage greater efficiency in
the existing ports.
National Security Considerations
Beyond the economic benefits, the media
and various forums have raised concerns about Bayport’s management by a
Chinese state-owned company. First, the company is subject to an
authoritarian regime, which uses “debt traps” and takes control over
assets, such as Hambantota Port in Sri Lanka and Piraeus Port in Greece.
Second, the Chinese company could allow China’s military vessels to
anchor in Israel as part of its “Military-Civil Fusion” strategy. Third,
SIPG might disrupt the Port’s activity in times of emergency or
leverage its economic power for China’s political influence over Israel.
Fourth, the port might be used for espionage and cyber operations,
including against US Navy ships. Finally, it is argued that even if the
port does not embody special risks or create significant Israeli
dependency on China, in the eyes of the United States, and certainly in
Pentagon and US Navy circles, it has become a provocative symbol of
treacherous cooperation by a close ally, Israel, with America’s
arch-rival, China, and therefore also a threat to the special
relationship between the United States and Israel.
The severe arguments and their recurring
resonances mandate confirmation of the facts. SIPG is indeed a Chinese
government-controlled company, yet contrary to the allegations about
Piraeus and Hambantota (some of which are contested),
the Bayport is not controlled or owned by SIPG, and no debt is
involved, since it did not lend money to Israel. The port operator is a
private Israeli company, indeed owned by a Chinese company, yet most of
its employees are Israelis, apart from a few Chinese management staff.
As for the concerns about disruption to port activity during emergencies
or exertion of pressure on the Israeli government, the probability and
severity of these risks appear to be limited: Bayport will not be owned
by its operator; it is subject to Israeli law; and in emergencies must
operate according to the instructions of the Israeli security
authorities, just like Israel’s other ports. If the operator does not
comply with these terms, it risks committing a breach of contract and
the Government of Israel will be fully entitled to replace it,
admittedly in spite of the challenge involved when dealing with a large
company from a global power. In addition, the increased competition
between the new and upgraded ports is likely to limit the pressure on
the government from both strong unions and any foreign company, while
also reducing Israel’s dependence on foreign ports in Turkey and Egypt
for transshipment needs.
As for espionage risks:
for purposes of line-of-sight observation and reception, the Bayport
Terminal is no nearer to the Israeli naval base than many civilian
buildings in Haifa, yet its location on the water line does indeed offer
the potential for gathering acoustic intelligence (signatures of
vessels and especially submarines), a potential that exists in principle
in transiting commercial vessels as well. The port’s eight cranes, made
by the Chinese company ZPMC, are technology-rich machines equipped with
sensors and communications, raising concerns that they could be used
for espionage. According to the ZPMC website,
the company manufactures 70 percent of the STS (ship to shore) cranes
in the world, including those in the Middle East, Europe, and the United
States, and this year, for example, the company’s cranes were purchased
by ports in San Francisco and South Carolina. On this matter Israel’s
security authorities should learn from other countries’ experience in
risk management, starting with the United States.
Bayport, like any strategic
infrastructure close to Israel’s critical security assets, requires full
and professional risk management. Limiting exposure to potential risks
in the areas of security, espionage, and cyber stemming from the
operation of ports by foreign companies is the responsibility of the
relevant security entities: the Israel Security Agency (Shin Bet), the
National Cyber Directorate, the Ministry of Defense, and the Ministry of
Transport’s Security Department, each in its own field. The National
Security Staff should integrate all agencies involved and ensure a full
and seamless long-term security response for all the relevant
facilities.
Relations with the United States
Under the reasonable assumption that the
direct risks potentially arising from Bayport’s operation can be handled
prudently and responsibly by Israel’s security authorities, the most
significant challenge still remains, namely, the implications for
relations with the United States. On his recent visit to Israel, CIA
Director William Burns reportedly shared with Prime Minister Naftali
Bennett US concerns over Chinese penetration of the Israeli economy,
particularly in areas of hi-tech and large infrastructure projects.
Before the Prime Minister’s visit to the United States, senior Israeli
officials said that
Bennett would present to President Joe Biden and other senior members of
the US administration a new Israeli policy, defining relations with
China as an issue of national security while paying closer attention to
American concerns than during Netanyahu’s term. According to reports,
the subject of China never came up in meetings between President Biden
and Prime Minister Bennett, but lower ranks are engaged on the issue.
The visit in general aimed to “reset” relations, building trust and
working on tensions and disputes between the governments through quiet
communication rather than in the media. It is therefore correct that the
subject of Bayport and its associated concerns be handled as planned
in a similar professional format and in this spirit, by the National
Security Staff in the Prime Minister’s Office and in the National
Security Council in the White House. Mutually coordinated risk
management and updates will help restore the subject to its proper
dimensions, and hopefully to media coverage that is factual,
professional, and proportionate.
Conclusion
Haifa's Bayport is a clear example of the
emerging challenges in Israel’s changing strategic environment. What
began with clear national needs was answered by maximizing opportunities
in the global economy and the advantages of international corporations,
including from China. Since the contract for the Bayport terminal was
signed in 2015, a strategic “climate change” has unfolded, with
Washington’s official declaration in 2017 of the era of Great Power
Competition, centering on economic, technological, and strategic rivalry
with Beijing.
While the port operation begins when the new era is already well underway, a considerable part of the criticism derives from judging past decisions according to present conditions, and from echoing unexamined claims. Prudent policy should learn from past lessons, but must focus not on hindsight but on the present and the future, and on the quality of decisions affecting projects currently on the agenda, finding the correct balance between economic needs and security needs. Israel must continue to work on strengthening its special strategic relations with the United States, while at the same time promoting fruitful and safe economic relations with China.
Galia Lavi and Assaf Orion
Source: https://www.inss.org.il/publication/haifa-new-port/
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