December 15, 2020 | Defending Forward Monograph
Strengthen the Alliance with Israel to Contain China
December 15, 2020 | Defending Forward Monograph
Strengthen the Alliance with Israel to Contain China
Forward-deployed U.S. military forces will be effective only if they are wielding world class military technology and capability. To win the intense military-technology competition of the 21st century, Washington must strengthen and secure its economic and military cooperative research and development (R&D) relationships with America’s key tech-savvy democratic allies, such as Israel.
In recent decades, Beijing has staked out investments in Israel in high-tech and critical infrastructure. Beijing’s goal has been to extract from the Jewish State, as well as from other tech-savvy countries, including the United States, expertise in machine learning, artificial intelligence, quantum computing, edge computing, and other cutting-edge technologies – all in an effort to accelerate China’s aggressive efforts to modernize its military.1 Increasingly, Israeli leaders understand the importance of decoupling from Beijing, and they are taking steps to do so. But the United States must work with Jerusalem to arrive at the desired outcome: constraining CCP influence in the Levant and maintaining Israel as America’s tech partner and strategically located land-based aircraft carrier.
The U.S.-Israel alliance is already deep and broad, based on shared values, common interests, and a mutual desire to preserve the U.S.-led world order. As the Senior Director of FDD’s Center on Military and Political Power, Bradley Bowman, has noted, “Israel uses billions in annual U.S. military aid to purchase American weapons—strengthening America’s defense innovation base, creating U.S. jobs, and building vital U.S.-Israel military interoperability. U.S. and Israeli service members train together, conduct combined exercises, and share best practices.”2 There is also valuable U.S.-Israel cooperation on tunnel detection,3 countering unmanned aerial systems,4 armored vehicle and tank protection,5 and missile defense.6 These technologies save American lives.7
This relationship still has room to grow. Following the introduction of bipartisan bills in both the Senate and House of Representatives, the Senate Armed Services Committee voted 27-0 to require the establishment of a U.S.-Israel Operations-Technology Working Group.8 A similar provision was included in the National Defense Authorization Act for Fiscal Year 2021 Conference Report.9 The initiative should strengthen systematic early military R&D cooperation10 between the United States and Israel to prevent dangerous capability gaps – rather than addressing them belatedly. The working group would help ensure, as the sponsoring senators wrote, that U.S. “warfighters never encounter a more technologically advanced foe.”11 This working group could also serve as a forum to address concerns related to China that might impact U.S.-Israel military research and development.
In his book The Kill Chain, former staff director for the Senate Armed Services Committee Chris Brose highlights the stakes of the competition with China. Over the last decade, the United States has lost war games against China “almost every single time.” The lesson: The Pentagon must urgently field modern military technologies, capabilities, and networks to reduce the time required to detect threats, determine the best course of action, and deliver the necessary military effect.12
Strengthened early cooperative R&D with the “Startup Nation” can help. Israel is among America’s most technologically advanced allies. Israel’s high-tech sector produces cutting-edge technologies at a pace only rivaled by California’s Silicon Valley and Boston’s Route 128. Israel is a “global leader in many of the technologies important to Department of Defense modernization efforts,” as the aforementioned legislation notes. Neither the United States nor Israel can permit the CCP to steal military technology to leapfrog American technology or further erode U.S. military supremacy.
Beijing has been stymied before. In the 1990s and 2000s, the People’s Republic of China sought military technologies from Israel, including a $1 billion deal in 2000 for the Phalcon airborne tracking system and a 2004 deal for Israeli enhancements to the Harpy aerial anti-radar system. In both cases, Washington raised objections.13 Jerusalem responded to U.S. concerns and canceled the sales.
To be sure, China has leverage with Israel. Beijing accounts for roughly 10 to 15 percent of Israel’s economy. In fact, China is Israel’s second-largest trading partner and source of foreign investment by country, after the United States. Sino-Israeli trade stood at almost $15.3 billion in 2018,14 an over 4,200 percent increase in real dollar terms since 1995.15
While the extent of China’s investment in sensitive technologies is still not public, there are indications that Chinese companies are investing in Israeli companies specializing in the technology, agriculture, and biomedical sectors. They aim to acquire technology in artificial intelligence, robotics, edge-based computing, autonomous vehicles, and cybersecurity. These are largely the areas that the Pentagon identified as top modernization priorities. China is also establishing partnerships with leading Israeli universities, such as the Technion-Israel Institute of Technology, to “foster knowledge transfer between China and Israel.”16
Israeli high-tech start-ups raised $325 million from Chinese investors in the first three quarters of 2018, up from $76 million in 2013.17 While these numbers are concerning, there are signs that Chinese high-tech investment in Israel has declined in the last year or two. Some of Beijing’s smaller investments are strategic, reflecting an effort “to drain the brain” of Israeli innovation, as one Israeli venture capitalist put it.18
Beijing’s strategy of military-civil fusion, as well as its longstanding history of technology and intellectual property theft, raise further concerns about its investments in Israel. Beijing seeks to undermine U.S. military supremacy while proliferating weapons to Israel’s enemies. And the CCP has a well-documented desire to topple the U.S.-led world order on which Israeli security and prosperity depend.19 A stake in Israeli critical infrastructure could further provide Beijing with leverage over Israel. It could also facilitate Chinese espionage and force the United States to curtail military-military cooperation and intelligence sharing with Israel as concerns mount.20 That would hurt Israel and potentially divide the Jewish State from its most important ally.21
In a positive step, Israel has established a foreign investment review body, but the mechanism should do more to fully screen and block problematic investments. It must screen high-tech investments in sensitive areas, conduct a retroactive review of past investments, and scrutinize tenders prior to awarding a foreign bid, particularly those associated with advanced technology. A list of forbidden business areas might also be an idea worth pursuing.
Washington should encourage Israel to strengthen its legal and bureaucratic defenses against China’s malign activity, including by limiting former senior Israeli officials from working for Chinese state-owned enterprises or private Chinese companies that pose security risks. Israel also needs to review regulations governing the designation of Chinese and other foreign state-run media as foreign agents. Additionally, Israel should mandate counterintelligence training and support for Israeli companies working in China. The United States can help to encourage such steps by sharing relevant intelligence on Chinese intentions in Israel.
One important additional step for Washington would be to help Israel identify investment alternatives. American firms are already stepping up (belatedly) to supplant China in the construction of Israeli infrastructure.22 Other U.S. allies and partners, such as Japan, Canada, India, Australia, South Korea, and Taiwan, which already invest in Israel, may also be eager to help. New opportunities now abound after the historic UAE-Israel peace agreement, thanks to growing investment and technology ties between the Israeli and Emirati private sectors as well as the establishment of The Abraham Fund, with its “more than $3 billion in private sector-led investment and development initiatives to promote regional economic cooperation and prosperity in the Middle East and beyond.”23
Congress can be helpful by legislating and funding the establishment of trilateral foundations between Israel, the United States, and these allies. These foundations could be modeled on the Binational Industrial Research and Development Foundation, which helped kickstart U.S.-Israeli high-tech cooperation in the 1970s.24 Adding private venture capital firms to these foundations, which would contribute capital in exchange for the right of first refusal on deals, could increase both dollars and expertise.
Finally, most Israeli officials clearly understand that the sale of military technologies to China is a red line that must not be crossed. They appreciate that China is a serial proliferator that will send those technologies to Israel’s enemies, such as Iran. Jerusalem understands that an American ally should never be arming an American adversary. But some Israeli business leaders believe they are held to higher standards than other U.S. allies, particularly when it comes to civilian technology cooperation with China. Of course, some civilian technology can have military applications. This is exactly why America and Israel should establish a bilateral mechanism to refine a common approach toward the China challenge.25
U.S. military strength is the ultimate guarantor of a rules-based international order not dominated by the CCP. Strengthened U.S.-Israel military cooperation can give American (and Israeli) warfighters the tools they need to prevail on future battlefields. To bolster this vital military partnership, the United States and tech-savvy Israel must together guard against the theft of their military technology and ensure they remain on the same side in the great power competition with China.
That means Israel must be more discerning about blocking the CCP from acquiring sensitive Israeli technologies and investing in critical infrastructure. Washington, for its part, can help by identifying alternative sources of investment in Israel to supplant Chinese funding, establish a regular strategic dialogue on all aspects of the U.S.-China-Israel issue, and work to help Jerusalem decouple from China. Washington should appreciate that such Israeli steps away from Beijing must be taken without public fanfare. Surrounded by enemies devoted to Israel’s destruction, including the Islamic Republic of Iran, Jerusalem wants to avoid turning the Middle Kingdom into an enemy.
No bilateral relationship is without its challenges. The United States and Israel continue to build a strong alliance despite occasional policy disagreements and counterintelligence concerns. If the United States and Israel take these additional steps together, the two countries will further strengthen and secure their alliance. This relationship could then be replicated with other American allies as Washington challenges China in domains and regions worldwide.
Defending Forward: The Path Forward
- Bradley Bowman and Andrew Gabel, “Chinese Military Parade Highlights Erosion of U.S. Military Supremacy,” Foundation for Defense of Democracies, October 3, 2019. (https://www.fdd.org/analysis/2019/10/03/chinese-military-parade-highlights-erosion-of-us-military-supremacy/); see also: Yossi Melman, “China Is Spying On Israel to Steal U.S. Secrets,” Foreign Policy, March 24, 2019. (https://foreignpolicy.com/2019/03/24/china-and-russia-are-spying-on-israel-to-steal-u-s-secrets-putin-netanyahu-xi-haifa-ashdod-iai-elbit/)
- Bradley Bowman and Andrew Gabel, “Deeper Partnership With Israel Can Help U.S. Solve Defense Dilemma,” Real Clear Defense, November 7, 2019. (https://www.realcleardefense.com/articles/2019/11/07/deeper_partnership_with_israel_can_help_us_solve_defense_dilemma_114835.html)
- Yardena Schwartz, “Israel Is Building a Secret Tunnel-Destroying Weapon,” Foreign Policy, March 10, 2016. (https://foreignpolicy.com/2016/03/10/israel-is-building-a-secret-tunnel-destroying-weapon-hamas-us-gaza/)
- Seth J. Frantzman, “New defense budget bill foresees US-Israel counter-drone cooperation,” Defense News, August 13, 2018. (https://www.defensenews.com/unmanned/2018/08/13/new-defense-budget-bill-foresees-us-israel-counter-drone-cooperation/)
- Bradley Bowman and Andrew Gabel, “U.S. Army Receives First Delivery of Israeli-Made Active Protection System,” Foundation for Defense of Democracies, October 17, 2019. (https://www.fdd.org/uncategorized/2019/10/17/us-army-receives-first-delivery-of-israeli-made-active-protection-system/)
- Bradley Bowman and Andrew Gabel, “U.S. Deploys THAAD Anti-Ballistic Missile System to Israel,” Foundation for Defense of Democracies, March 6, 2019. (https://www.fdd.org/analysis/2019/03/06/u-s-deploys-thaad-anti-ballistic-missile-system-to-israel/)
- Jacob Nagel and John Hannah, “COVID-19 and the Need for Enhanced U.S.-Israel Technology Cooperation,” Foundation for Defense of Democracies, April 17, 2020. (https://www.fdd.org/analysis/2020/04/17/covid-19-and-the-need-for-enhanced-us-israel-technology-cooperation/)
- The annual defense bill subsequently approved by the full senate also included the provision. Bradley Bowman, “Congressional Momentum Builds to Establish U.S.-Israel Working Group,” Foundation for Defense of Democracies, June 25, 2020. (https://www.fdd.org/analysis/2020/06/25/momentum-builds-for-us-israel-working-group/)
- William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Conference Report to Accompany H.R.6395, 116th Congress (2020), Section 1299M. (https://docs.house.gov/billsthisweek/20201207/CRPT-116hrpt617.pdf)
- Bradley Bowman, “Securing technological superiority requires a joint US-Israel effort,” Defense News, May 22, 2020. (https://www.defensenews.com/opinion/commentary/2020/05/22/securing-technological-superiority-requires-a-joint-us-israel-effort/)
- Bradley Bowman, “Senators Call for U.S.-Israel Operations-Technology Working Group,” Foundation for Defense of Democracies, March 3, 2020. (https://www.fdd.org/analysis/2020/03/03/senators-call-for-u-s-israel-operations-technology-working-group/)
- Christian Brose, The Kill Chain: Defending America in the Future of High-Tech Warfare (New York City: Hachette Books, 2020).
- Arthur Herman, “Israel and China Take a Leap Forward—but to Where?” Hudson Institute, November 5, 2018. (https://www.hudson.org/research/14663-israel-and-china-take-a-leap-forward-but-to-where)
- World Bank, World Integrated Trade Solution, “Israel trade balance, exports and imports by country and region 2018,” accessed December 2, 2020. (https://wits.worldbank.org/CountryProfile/en/Country/ISR/Year/2018/TradeFlow/EXPIMP)
- World Bank, World Integrated Trade Solution, “Israel trade balance, exports and imports by country and region 1995,” accessed December 2, 2020. (https://wits.worldbank.org/CountryProfile/en/Country/ISR/Year/1995/TradeFlow/EXPIMP)
- Shira Efron, Howard J. Shatz, Arthur Chan, Emily Haskel, Lyle J. Morris, and Andrew Scobell, “The Evolving Israel-China Relationship,” RAND Corporation, 2019. (https://www.rand.org/pubs/research_reports/RR2641.html)
- “Israeli High-Tech – Chinese Investments,” IVC, accessed December 2, 2020. (https://www.ivc-online.com/Portals/0/RC/POSTS/Chinese%20Investors%202013-Q3-2018.pdf?timestamp=1542560691892)
- “Still Waiting for Lift Off,” IVC, February 15, 2018. (https://web.archive.org/web/20200622030323/https://www.ivc-online.com/News-PR/News-Archive/nid/a4c22133-2e12-e811-80e4-00155d0b832c)
- “China’s Got a New Plan to Overtake the U.S. in Tech,” Bloomberg News, May 20, 2020. (https://www.bloomberg.com/news/articles/2020-05-20/china-has-a-new-1-4-trillion-plan-to-overtake-the-u-s-in-tech?sref=LGSlKKkN)
- Shira Efron, Karen Schwindt, and Emily Haskel, “Chinese Investment in Israeli Technology and Infrastructure Security Implications for Israel and the United States,” RAND Corporation, 2020. (https://www.rand.org/pubs/research_reports/RR3176.html)
- Jacob Nagel and Mark Dubowitz, “With a Potential Iran-China Deal, Time for Israel to Reassess Its Policy,” Newsweek, July 26, 2020. (https://www.newsweek.com/potential-iran-china-deal-time-israel-reassess-its-policy-opinion-1520422)
- Ivan Livingston, “U.S. Firms Interested in Israel Port After Passing Last Time,” Bloomberg News, October 29, 2020. (https://www.bloomberg.com/news/articles/2020-10-29/american-firms-bid-for-israel-port-after-staying-away-last-round?sref=eP3WAQGC)
- U.S. Embassy in Israel, Press Release, “US, Israel, UAE announce establishment of Abraham Fund following Accords commitment,” October 20, 2020. (https://il.usembassy.gov/us-israel-uae-announce-establishment-of-abraham-fund-following-accords-commitment/)
- Israel-U.S. Binational Industrial Research and Development Foundation, “What is BIRD?” accessed December 2, 2020. (https://www.birdf.com/What-is-BIRD/)
- This should include decision makers in the economic, security, and trade bureaucracies. It could emulate the regular dialogue held between Washington and Jerusalem on the Iranian threat. Another model is the U.S.-Israel Strategic Dialogue, convened in 2014 at the Department of State. At the time, it was the highest-level regular diplomatic meeting between the two countries. A Track II dialogue of former U.S. and Israeli government officials and think tank experts could strengthen these efforts.