Wed 06 September 2017
By Xiaomeng Qu
Background
In its unique geopolitical and economic circumstances, Israel has traditionally viewed the US and the EU as its chief international economic partners. After the establishment of One Belt, One Road project (OBOR), how should Israel -one of the OECD's smallest members - reconsider its global economic strategies as centers of economic and political gravity are shifting to the east? Prof. Broude shared his views from three aspects.
OBOR
OBOR was first announced in 2013 and then set out as PRC’s 13th 5-year plan. It involves land and maritime infrastructure development in 65 countries supported by an unprecedented scale of project finance. AIIB and the Silk Road Fund pledged by PRC, provide financial support for OBOR. Generally, OBOR serves as a geopolitical strategy, economic development program, as well as a legal/institutional framework. Prof. Broude spoke about the goals of OBOR from a political and economic perspective. The main political goals are to rearrange the Eurasian order and create a Chinese sphere of influence to the gates of Europe through ‘soft’ economic, cultural, political and security influence. Primarily the economic goals include creating access to markets and consumption capacity in the central Eurasian bloc, and solving the overproduction problems in specific industries in China. OBOR rely mainly on commercial law, thus raising concerns about transparency. As currently there is no FTA program, there is still much left that needs to be discussed, such as dispute settlement and adjustment of domestic laws.
China-Israel Relations
China and Israel established diplomatic relations in 1992 and have had economic relations since 1979, based on the Chinese need for advanced military technology. Pragmatically it has now shifted to non-military trade such as agri-tech, medicine and IT. Since 2010 (pre-OBOR), China has had an increased interest in Israel, mainly in innovation and technology, and has s become its 3rd largest trade partner., However, the legal framework between China and Israel is not going well. Investment is regulated by an old agreement, and the negotiations for FTA have made slow progress. As for OBOR, Israel is not formally on the map, but construction and infrastructure demonstrate China’s modus operandi. Prof. Broude argued that China consider Israeli projects such as Red-Med train and New Ashdod Port as selling points in other OECD countries.
Israel’s Strategic Dilemmas regarding OBOR
Prof. Broude believes Israel’s dilemmas have been a result of China’s attitude. China does not define the relationship with Israel as a ‘comparative strategic partnership’ (like Egypt and Iran), but rather a ‘comprehensive innovation partnership’. Israel does not know the China’s intentions and fears that one day it will have to choose between a US-India axis and a China-Russia one. Prof. Broude concluded that the Israeli case-study has unique dimensions, and exemplifies some of the dilemmas faced by more developed states along the new Silk Road. As the complicated political relationships involves China, the US, India and Israeli enemy states, Israel will need to proceed more carefully and slowly than other OBOR states in the process.