Narendra Modi leaves for Israel: Netanyahu's balancing act with India, China is a boon for Tel Aviv's interests

While it can be argued that China is virtually threatening India with a war on the mouth of the Chumbi valley, by reminding of the "1962" war, Prime Minister Narendra Modi has left for a state visit to Israel, which incidentally, had "married" China in March.

A marriage between China and Israel?

Before ridiculing the idea, let us recall how Israeli prime minister Benjamin Netanyahu had described his vision of the "marriage" between Israel and China during his three-day trip to China this March.

"There is an extraordinary capacity for China to assume its rightful place, as it's doing, on the world stage. We are your perfect junior partner for that effort," the Israeli prime minister said, adding, "We are eager to work with you… I believe this is a marriage made in heaven."

On the other hand, Netanyahu has always described Modi as "my friend". In a cabinet meeting in late June, he had said, "Modi, my friend, will come to Israel... This is a historic visit, no Indian PM has come to Israel in 70 years."

File image of Israel prime minister Benjamin Netanyahu with Indian prime minister Narendra Modi. PTI

File image of Israel prime minister Benjamin Netanyahu with Indian prime minister Narendra Modi. PTI

During Modi's three-day visit, Netanyahu will escort him for almost all of his engagements – an unprecedented honour extended to a visiting dignitary in Israel – showing the importance attached to the Indian prime minister.

In other words, Netanyahu is now confronted with a situation in which his spouse (China) and friend (India) are in a war-like situation. Who will he side with? No doubt, it is a difficult choice for the Israeli prime minister, who wants both the relationships to flourish. This was evident from his decision early this year to create two separate bureaus for India and China at the Israeli foreign ministry.

There are some interesting facts surrounding Israel's relations with India and China. Both established diplomatic relations with Israel in 1992. In other words, 2017 marks 25 years since Israel normalised relations with the two Asian giants. If Netanyahu undertook a three-day visit to China in March, Modi is embarking on a three-day visit to Israel in July.

All these years, both India and China have tried to benefit from Israel's expertise not only in manufacturing arms and ammunitions but also in cutting-edge civilian technologies in agriculture, irrigation, satellites, satellite imagery, rockets and so on. Israel is not a country to look for big investments in huge infrastructures. But these limitations are more than compensated by Israeli technologies and expertise in setting up start-ups, the ultimate engines of a nation's development and wealth.

As of today, with an annual trade volume of over US $11 billion, China is Israel's largest trading partner in Asia and third largest in the world. China has surpassed even the United States as the top funder of joint ventures in Israel involving foreign companies, including Israel's famed hi-tech startup companies. Chinese investment into Israel jumped more than tenfold to a record $16.5 billion last year, with money flooding into the country's buzzing internet, cyber-security and medical device start-ups.

In contrast, India's annual trade with Israel is still around $5 billion ($ 4.5 billion in 2016), though this figure excludes the defence sector. With regard to investments, while foreign direct investment from Israel to India does not flow directly but through the United States, Europe and Singapore in pharmaceuticals, energy, renewable energy, telecom, real estate, and  water technologies; India’s investments in Israel is almost nil – the only data that is available shows 100 percent acquisition of Israeli drip-irrigation company Naandan by Jain Irrigation, controlling stake in Taro Pharmaceuticals by Sun Pharma and Triveni Engineering Industries' investment in Israeli waste-water treatment company Aqwise.

In other words, China is way ahead of India in utilising the Israeli-connection in trade and investment. This explains why Modi's visit is being seen in terms of closer collaborations with Israel in the areas of agriculture, nonconventional energy (particularly solar and wind power) and water-management in areas of water scarcity, cyber technologies and automotive technologies such as navigation and self-navigation. As it is, Israel has already helped India build over 15 'centres of excellence' for the rapid transfer of technology to farmers in states such as Maharashtra, Gujarat, Rajasthan and Haryana.

However, where India scores over China with regard to the Israeli connection is in the area of defence. As pointed out above, the India-Israel trade figure that the officials cite does not include those pertaining to defence.

It is not that Israel does not sell arms and ammunitions to China. In fact, not long ago, Israel was China's second biggest foreign supplier of military equipment. But the problem now is that since most of the defence companies in Israel have American shares and collaborations, on the matter of technology transfer or sophisticated arms, Israel needs the clearance of the United States before exporting them to China. And that is not forthcoming. So much so, that in 2000, the US forced the Israeli government to cancel a $1 billion deal to sell China four Phalcon airborne early warning and surveillance systems. In fact, Israel had to return the Chinese advance money for the deal.

Since then, China-Israel relations have undergone a decisive non-military economic shift, based on Israeli high-tech. Of course, some analysts see some military dimensions in the Israel Aerospace Industries (IAI) deciding last year to set up in China a branch to double the number of China’s civilian fleet and add about 60 airports within that country in the next two decades – but technically, it is a civilian set up.

In contrast, the Americans have been far more liberal with Israel entering the defence market in India. In fact, Israel delivered $1.3 billion worth of arms and defence equipment to India between 2012 and 2016, according to the Stockholm International Peace Research Institute.

India is now Israel’s largest arms client, while Israel is India’s third-largest weapons provider after Russia and the United States. This April, India and Israel signed a weapons deal worth of nearly $2 billion in what’s being described as the "largest defence contract" ever signed in Israel’s defence industries’ history.

The "mega" deal will provide India with an advanced defence system of medium-range surface-to-air missiles, launchers and communications technology.

Importantly, Israel is willing to cooperate under the "Make in India" framework, which commits overseas manufacturers to channel at least 30 percent of contract value into the Indian defence industry. For instance, firearms manufacturer Israel Weapon Industries and India-based private sector firm Punj Lloyd have begun to jointly produce a variety of small arms from the Israeli company's product line, of which some are pegged for use by Indian armed forces and some for exports. This is the first such collaboration between Israel and an Indian private firm.

It may be noted here that in essence, Israel's military collaborations in India are in small arms and various missile and anti-missile systems that are to be used by all three forces – army, air force and navy – with their separate characteristics. And herein lies the catch. Most of these systems are such that they do not represent an immediate danger to China.

For example, anti-missile systems with Israeli components or elements may not be that effective in blocking multiple rockets that are likely to come from the Chinese side in any future eventuality, but these are pretty efficient to counter possible threats from Pakistan. So is the case with Israeli missiles, that are of optimum strike-range; they may prove lethal for Pakistan but not so for China.

This, perhaps, is the trick that Netanyahu is playing to keep Israel’s marriage with China and friendship with India stable and enduring. Simultaneously.


Published Date: Jul 04, 2017 01:35 pm | Updated Date: Jul 04, 2017 01:37 pm


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