August 2018

The worsening of relations between China and the United States is increasingly becoming an important factor in influencing the relations between the countries of the Mediterranean region, especially those in the Middle East, and China. This is particularly evident in countries, such as Israel and Turkey, that have had close relations with the United States.

Regarding Israel, the business newspaper Calcalist published two articles illustrating the difficulties faced by the country between balancing its strong political and security relations with Washington and Beijing’s lucrative economic market. To begin with, Chinese Vice President Wang Qishan, who is one of Xi Jinping’s closest allies, is rumored to be visiting Israel later this year as chief representative of the Chinese delegation to the fourth meeting of the China-Israel Joint Committee on Innovation Cooperation.[1] Since Wang will replace Liu Yandong, former Vice Premier of the State Council, his visit is indicative of the growing importance paid by China to its relationship with Israel. He will be the highest-ranked Chinese official to visit Israel in at least a decade. As made evident by Xi Jinping himself, reducing the reliance on American technologies is a priority for China, and this push from the top is likely to be the main reason behind selecting Wang to head talks with Israel to strengthen technological cooperation, which has always been the main pillar of the relations between the two countries. Chinese Minister of Science and Technology, Wang Zhigang, flew to Israel in August to prepare for Wang’s visit and to meet with both Israel’s Minister of Economy Eli Cohen and with Erel Margalit, a former Israeli politician and founder of the venture capital firm Jerusalem Venture Partners. However, the centrality of the United States in Israeli diplomacy should not be underestimated in setting limits to the warming of Sino-Israeli relations. While in 2004, the American government directly intervened to block the upgrade of Harpy UAVs that Israel sold to China in 1994, there is no evidence that the US would directly intervene to stop a similar deal today. However, people in Israel are voicing concern against strengthening cooperation on military issues with China, as such a move could damage Israel’s relations with Washington. Indeed, Hezi Sternlicht wrote that Aeronautics Defense Systems, an Israeli company specializing in the manufacturing of UAVs, has signed a USD 27 million deal to sell Dominator aircrafts to the Thai government. The Dominator is based on a passenger aircraft produced by Diamond Aircraft Industries, an Austrian aviation aircraft manufacturer, which has been under Chinese ownership since December 2017. The article reported that Alon Wallach, a former Israeli military officer and the current CEO of Wireless Avionics, lodged a complaint with the Israeli Ministry of Defense warning against the risks of Israeli companies working so closely with Chinese companies over the production of military equipment. At the same time, the Chinese telecommunications giant Huawei is also facing pushback in Israel. By contrast, however, Huawei’s problems do not stem from security-related concerns by the government, but instead result from a lawsuit filed against the company over the alleged unauthorized use of patented technology by Israel-based smart energy company SolarEdge Technologies.

Meanwhile, many in the region are questioning what will happen after the 4th of November, the deadline set by the United States for countries around the world to either stop buying Iranian oil or be ready to be cut out from the American market. For example, the Lebanon-based Al Mayadeen published an article arguing that Iran’s renewed economic isolation is going to further strengthen China’s influence on the country. Despite attempts by the US to contain China, the journalist wrote, the Asian country is “tightening its grip on the vast area comprised between Southeast Asia and the Middle East.”[2] Karim Traboulsi, an editor and writer for The New Arab, wrote a piece for Al Jazeera putting forward a similar argument: sanctions are not a new factor within the Sino-Iranian relationship, and the withdrawal of Western competitors will benefit Chinese companies.[3] Chinese imports of Iranian oil reached 874,000 barrels per day, an increase from 767,000 barrels in July and  660,000 barrels in June. Chinese companies are clearly aware of the risks, and the Chinese government is providing them support in planning for the post-November 4 deadline. The official Islamic Republic News Agency reported that, while both Chinese and Iranian tankers were used to ship the oil to China in June, the seventeen shipments of Iranian oil were all carried out by National Iranian Tanker Company in July.[4] As noted by Reuters, this is likely to be among the first measures adopted by Chinese energy companies to continue their business relations with Iran.

The situation in China’s western province of Xinjiang was reported on by regional media, but the coverage remains rather superficial. For example, Donia Al-Watan simply reported on statements made by members of the United Nations Committee on the Elimination of Racial Discrimination regarding the treatment of Uighurs.[5] Al Jazeera published a longer report, but the author did not mention any potential implications for the relations between Muslim countries in the region and China.[6] Arslan Bulut, a controversial right-wing figure in the Turkish media offered a much clearer and more controversial commentary on this issue with Oda TV.[7] Bulut stated that the United States is leveraging on Turkish nationalism and a traditional positive attitude towards the Uighur minority to undermine the blooming Sino-Turkish relations. According to him, Ankara must first improve its ties with Beijing if it really wants to help the Uighurs, and the United States should not intervene in this issue. In any case, Bulut concluded, the Turkish government is surely facing some tough decisions between the economic benefits that stronger economic cooperation with China can provide and the traditional ties with Turkic ethnic groups around the world.

Finally, on the southern shores of the Mediterranean Sea, Greece and Italy moved to significantly strengthen their relations with China. While Greece signed a Memorandum of Understanding (MoU) on the Belt and Road Initiative, the Italian government, specifically Vice Prime Minister Luigi Di Maio, approved the creation of a “China Task Force” to support the visits of the Finance Minister Giovanni Tria and Undersecretary of State to the Ministry of Economic Michele Geraci in August. More broadly, the Task Force’s main objectives are “strengthening the relationship between China and Italy (in the fields of trade, finance, investment, R&D and co-operation in third countries), and that of guaranteeing Italy a position of leadership in Europe vis-à-vis China’s Belt and Road and Made in China 2025 initiatives.” Tria’s meetings with Chinese officials led to the signing of numerous agreements, including those between Fincantieri and China State Shipbuilding Corporation, Cassa Depositi e Prestiti and Bank of China, and Snam and State Grid International Development, to strengthen economic cooperation. The Italian Central Bank also approved the creation of an investment portfolio in renminbi as part of its foreign reserves management. According to the Italian media, the sustainability of Italy’s national debt was an important topic of discussion. However, Tria stated that convincing the Chinese government to buy part of it was not his mission.[8] Geraci’s visit, rather than simply focusing on creating economic opportunities for Italian companies in China, had a broader goal: expanding the partnership between China and Italy to include cooperation in developing countries, especially those in Africa. A first step in that direction was taken with the signing of a MoU between Italy’s Ministry of Economic Development and China’s National Development and Reform Commission, an institution that plays a crucial role in the implementation of policies related to the Belt and Road Initiative.[9] Luciano Bozzo, an Associate Professor at the University of Florence, noted that this kind of closer cooperation with China is worth discussing more in depth, and the government should clarify the implications for Italy’s traditional ties with the United States.[10]

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