The Belt and Road – Part 09: Peace and Dollars in the Middle East

By Prof. Samitha Hettige | Published: 2:00 AM Sep 19 2020
FT The Belt and Road – Part 09: Peace and Dollars in the Middle East

By Prof. Samitha Hettige 

Israeli Prime Minister Benjamin Netanyahu and a few of his top officials were in Washington to sign peace deals referred by some as normalisation deals with Middle East’s long time western allies United Arab Emirates (UAE) and Bahrain. The Israeli leader was expecting the agreements to earn peace and billions of dollars into his country’s economy. 

They are also expecting to achieve peace deals with many other states. It is good for world peace and global economic growth. Being aware that peace should be established between Israel and many other states is a very positive sign and if properly established, with good intensions it will bring in so much financial gain to Israel, not only from the UAE and Bahrain but also from all other countries that they refer to as it is known fact that Israel has been involved in violent conflicts with many of its neighbours. When these peace agreements were signed in Washington, President Trump was also a witness. 

He is running for another term in November 2020 and all Americans who wish to see peace in the Middle East may vote for President Trump because of this effort alone. It is a noble deed to make peace than conflict. The world has seen many US Presidents initiating peace processes in the Middle East. Since the end of World War II there had been many conflicts among Israel and its neighbours and on most occasions the United States of America (USA) has supported Israel in various ways. 

At the same time on certain sensitive issues in the region some US leaders have taken the middle path as well. President Eisenhower’s approach during the Suez crisis is one example (Ref UNDPKO).  

BRI in the Middle East

The Belt and Road Initiative (BRI) is creating synergy and wealth in the Middle East as never before. During the ancient Silk Road Chinese Admiral Zheng Ho was also focusing on the Middle Eastern region as one gateway to Europe. The newly developed ports in UAE and the Industrial Zones attached to the ports are recording rapid growth as per UAE statistics. Oman is working on renewable energy projects to reduce the use of fossil fuel with loans obtained from the Beijing based Asian Infrastructure Investment Bank (AIIB). 

Egypt is building a new city to face the trade growth down the Suez Canal which is an integral part of the BRI. Saudi Arabia is working closely with the Peoples Republic of China (PRC) on various investment initiatives which is not limited to the kingdom but it also expands to the Gwadar Port in Pakistan which is part of the China Pakistan Economic Corridor (CPEC). Most states in the region have attracted economic development and billions of dollars by working with the BRI. Israel is also a leading partner of the BRI in the region (Ref. BRI sources). 

PRC–Israel relations

Strengthening China-Israel cooperation adds great value to the development of both economies (PRC and Israel) and it also indirectly but strategically contributes to enhancing the strategic security in the region. Peace and Security in the region is vital for the Middle Eastern states for their own sustainable development and equally it is important for the PRC to increase BRI related trade activities. China negotiating to develop the infrastructure in return for peace with the Taliban in Afghanistan is one good example. 

China-Israel economic relations are becoming increasingly close and bilateral trade continues to strengthen. Strong relations between the two countries from highest level downwards enhanced bilateral political mutual trust and promoted cooperation between the two nuclear powers to achieve more human-friendly results (Ref. BRI sources). 

China’s total exports to Israel have grown steadily in recent years and saw high achievements in 2018. This was after a short down fall in 2016. PRC’s total imports from Israel have been increasing annually since 2013. It showed very high growth between 2016 and 2018. Overall, PRC’s exports to Israel were more than its imports and resulted in a trade surplus at one point (Ref. PRC trade statistics). 

Total imports from China to Israel has grown annually from 2015 to 2018. From a marketing point of view the demand for Chinese products in the Israel market is getting bigger (Ref. Israeli trade sources). 2019 data from the PRC state agencies indicate that PRC-Israel bilateral trade as a whole has grown in recent years. In 2018, PRC-Israel bilateral trade was approx 14 billion USD. PRC’s exports to Israel recorded at approx 10 billion USD, PRC’s imports from Israel recorded at approx 5 billion USD (Ref. WTO)

Strategic cooperation

In the 1930s, a notable Jewish leader in Palestine, Ben-Gurion, predicted that China would be a great world power in the future. The PRC was not diplomatically recognised for few years by many countries including Israel and recognised Republic of China or Taiwan instead of PRC. However, in 1947, the Republic of China or Taiwan abstained from voting in the United Nation’s partition plan for Palestine. 

Until the 1980s, the PRC did not grant visas to Israel nationals unless they held dual citizenships, however in the post-China USSR split and the PRC establishing diplomatic relations in 1979 with the USA, the PRC developed many undercover links with Israel. PRC and Israel had military ties in the 1980s during the USSR occupation of Afghanistan and both parties supplied weapons to the Afghan Mujahedeen. The weapons were routed through Pakistan. 

PRC and Israel also started exchanging academics, experts, businessmen and industrialists. PRC allowed Israeli nationals to enter PRC and Israel reciprocated by re opening its consulate in Hong Kong which was still under British. 

In 1987 Israel set up its first company to foster commercial activities between companies in PRC and Israel. In early 1990s Israel and PRC established representative offices in their countries to function as de facto embassies. About a decade later Prime Minister Olmert of Israel visited PRC. According to Israeli records his father was raised in the northern Chinese city of Harbin where a Jewish community has lived since the 19th century (Ref. UNDPKO).

PRC is one of Israel's closes economic allies in the Far East and both countries are giving high priority in maintaining the strategic economic bond. PRC is Israel's second highest export destination after the USA and its third largest trading partner and export market after the USA and the European Union. 

Israel depends on PRC’s global influence while PRC depends on Israel's technology to increase its trade competitiveness especially to add value to BRI trade. Since the 2010s, PRC and Israel enhanced bilateral economic ties and it is contributing to win-win growth. 

The peace deals signed in Washington will certainly add more to the peace and economics in the region, as expected by the Israeli leaders but the Belt and Road seems to be machining it a reality without the spotlight. 

(The writer is an Academic and a Broadcaster. Views expressed are personal and may not necessarily be the views of his affiliations.)

By Prof. Samitha Hettige | Published: 2:00 AM Sep 19 2020

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