Israel could make or break America’s trade plans to rival China

Vice President Joe Biden visit to Israel March 2016
(File photo: Jordan News)
Vice President Joe Biden visit to Israel March 2016

Joseph Dana, Syndication Bureau

The writer is the former senior editor of Exponential View, a weekly newsletter about technology and its impact on society. He was also the editor-in-chief of emerge85, a lab exploring change in emerging markets and its global impact. Syndication Bureau.

In the summer of 2011, I was aboard a ship bound from Athens for the Gaza Strip. I was covering the second Gaza flotilla for The Nation. A year before, Palestinian solidarity activists sent several aid ships to Gaza to highlight Israel’s maritime blockade of the Palestinian territory. The Israeli navy intercepted the ships, commandos boarded the vessels, and several activists were killed by soldiers. Given the international outcry, activists arranged another flotilla in 2011, but the boats never left port. اضافة اعلان

Before the boats entered the open ocean, the Greek navy intercepted the ships. According to activists and sources inside the Greek government, Israeli officials threatened to derail talks concerning prospective gas pipelines between the two countries if Greece failed to prevent the activists from setting sail. Israel didn’t want a repeat of the first flotilla and had no problem threatening a significant economic deal with Greece, even though the Greek economy was in free fall at the time.

This story highlights the complex nature of regional economic deals with Israel. Since the discovery of massive natural gas fields off Israel’s northern coast, there have been myriad efforts to export that gas to Europe. Greece, Cyprus, Turkey, and Lebanon have tried to hammer out some infrastructure to benefit all parties involved. Yet, politics has always found a way to intrude.

Israel’s willingness to put political interests ahead of trade should be top of mind for American officials punting a new economic corridor linking India with Europe through the Middle East. US President Joe Biden unveiled the plan at the recent G20 summit in India. If implemented, the project will be a serious challenge to China’s ascendant trade and investment strategy, which has brought several countries into the Chinese sphere of influence over the past decade. 

Under the Belt and Road Initiative, the Chinese have invested heavily in regional trade infrastructure with the goal of making economic inroads that led to Beijing. Through various state-owned companies, the Chinese have also lent substantial money to countries in Asia, the Middle East, and Africa in a further bid to create a new Chinese-led global economy.

While China has sought deeper influence in global affairs for years, smaller countries increasingly seek non-Western alliances to serve their political and economic futures. The recent expansion of the BRICS grouping of nations to include vital American allies like Saudi Arabia and the United Arab Emirates exemplifies how geopolitical and economic cooperation among emerging countries is shifting away from the American-led model of the past five decades.

Yet, the Chinese economy is in a prolonged slump, and the US appears to sense an opportunity to play China’s game by creating its own trade project. Connecting India with Europe through the Middle East is a logical place for America to lean on its partnerships and exercise soft power. The US desperately needs to underline its position as the world’s superpower through fresh economic initiatives that remind nations of the value of working with Washington. The India-Europe economic corridor is one such initiative. Yet, the plan is fraught with hazards primarily due to America’s key allies in the project.

Cooperation among these allies in the Middle East will be at the heart of this trade plan. The Abraham Accords, which normalized relations between the UAE and Israel, were a significant step in creating a new economic bloc in the Middle East that could enable a trade corridor to take shape. The prospect of a Saudi Arabia-Israel normalization agreement is equally vital to enabling new trade infrastructure conditions. Yet, this agreement is proving to be elusive.

Given that Saudi Arabia and Israel are America’s most important allies in the region, the failure of a normalization deal would be a significant blow to America’s prestige and power. Saudi Arabia and Israel both have growing relations with China and, at least in the case of Israel, a track record of ignoring Washington’s direct requests. America has a lot to lose if this trade deal falls apart.

Israeli trade deals don’t generally unfold due to sound economic interests alone. Instead, Israel leans on its financial clout to advance geopolitical objectives. This was evident in its behavior with Greece around the Gaza flotilla and Israel's record of economic partnerships with some of the world’s most authoritarian regimes.

Consider Israel’s growing relationship with China. Since establishing relations with Israel in 1992, China has sought to entrench its ties with Tel Aviv in technology and innovation. This helps the Chinese knowledge economy and adds an essential node to China’s ongoing competition with the US. In recent years, China has directly invested in Israeli infrastructure, including major port facilities in Haifa, which would likely be a vital part of America’s India-Europe economic corridor proposal. China could seek to torpedo America’s trade corridor plan through its investments in Israel.

The balance of power is slowly shifting away from the West towards countries in the emerging world. Smaller countries like Israel and the UAE are discovering that they have much more to gain by keeping their geopolitical and economic options open in this new landscape of geopolitics. If the US wants to remain the world’s sole superpower, it needs to hammer out substantial trade deals and remind its key allies that Washington can be relied upon.

Joseph Dana is a writer based in South Africa and the Middle East. He has reported from Jerusalem, Ramallah, Cairo, Istanbul, and Abu Dhabi. He was formerly editor-in-chief of emerge85, a media project based in Abu Dhabi exploring change in emerging markets. X: @ibnezra

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