Israel opens Chinese-run terminal at Haifa port

Israel opened a new terminal run by a Chinese firm at the port of Haifa on Thursday, in a move expected to boost Israel’s economy and open new opportunities for trade with Gulf countries.

The inauguration comes as Israel seeks to increase the flow of goods into its ports and increase competition by lowering prices. Israel relies on its ports — chief among them Haifa — for some 90% of the country’s goods.

The 5.5 billion Israeli shekel ($1.7 billion) terminal is to be managed by China’s state-owned Shanghai International Port Group (SIPG).

The 25-year management agreement raised security concerns in Washington. The US Navy frequently makes stops at Haifa, while the Israeli navy also maintains its largest base adjacent to the port.

CIA Director Bill Burns raised concerns over Chinese investment in Israel during a meeting with Prime Minister Naftali Bennett in Israel last month, Axios reported.

Chinese infrastructure investment in Israel developed into an increasingly uncomfortable subject between the two allies during the Donald Trump administration.

The Trump administration pushed Israeli counterparts to avoid further encroachment by Chinese companies, particularly in telecommunications, and warned that deeper Chinese involvement could hurt US-Israel security ties.

Former Israeli Prime Minister Benjamin Netanyahu’s government continued to develop infrastructure partnerships while offering assurances on limits of the reach of Chinese firms.

Burns’ discussion with Bennett last month marked the highest-level talks between the two new governments on the subject so far.

In February, Haaretz reported that Israeli officials had last year rejected a US request to inspect the port for Chinese surveillance material.

A US Navy spokesperson told Al-Monitor at the time that there was no change to routine military operations with Israel. “Our partnership with Israel remains steadfast,” Cmdr. Kyle Raines, of the US Navy’s Sixth Fleet, wrote via email.

That response came after the Navy warned it may have to change its operations at Haifa due to potential security risks.

Israel’s port of Ashdod is also undergoing major construction under the direction of state-owned China Harbor Engineering Company. It will be managed by the Switzerland-based Terminal Investment Limited.