Lovekesh Rawat asked: What was Israel’s objective in allowing China to operate parts of the Haifa Port despite the US pressure against it?

S. Samuel C. Rajiv replies: The Shanghai International Port Group (SIPG), a Chinese company, won a tender in 2018 to build and operate a new terminal at the Haifa Port. The new container terminal was operationalised in 2021. Some concerns have been raised by the US about the security implications of allowing a Chinese company to operate a terminal at a port which has both military and civilian usage. US warships routinely visit the Haifa Port, where the Israeli Navy is also based. Reports in February 2021 noted that Israel rejected a US Coast Guard request to inspect the new terminal being built at the Haifa Port.

For Israel, the port at Haifa is its largest. 98 per cent of Israel’s trade passes through its ports. The Haifa Port handles half of all cargo traffic coming into Israel and is also the principal port handling passenger and cruise ship traffic. The Haifa Port authority notes that there is a doubling of Israel’s maritime trade every five years.

The modernisation of its ports infrastructure is, therefore, a critical necessity for Israel’s economic well-being. Reports, for instance, noted that the cost of goods like clothing and consumer electronic items, among others, increased for Israeli consumers, as shipping costs—especially of items being imported from China, increased due to the restrictions imposed during the pandemic.

Privatisation of Israeli ports is an ongoing process, with a consortium consisting of the Indian company Adani Ports and Special Economic Zone Limited (APSEZ) and the Israeli company Gadot Group winning a $1.8 billion bid in July 2022 to acquire the shares of the Haifa Port Company, with the concession period extending up to 2054. Adani Ports intends to expand its Mediterranean footprint and foray into the European market. Israel’s second biggest commercial port in Ashdod is also being modernised by a Chinese company, China Harbour Engineering Company Limited.  

Posted on 24 August 2022

Views expressed are of the expert and do not necessarily reflect the views of the Manohar Parrikar IDSA or the Government of India.