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Israel's Options
Israel Moves to Strengthen Ties With China

Israel and China have begun discussing a possible bilateral free trade agreement, according to Reuters:

Israeli Prime Minister Benjamin Netanyahu announced the talks after he met visiting Chinese Vice Premier Liu Yandong. The countries, whose current trade is worth about $8 billion, have held exploratory discussions of the deal since May 2013.

“Cooperation between Israel and China can produce massive results, and we believe that Israel can be the perfect partner,” Netanyahu said, according to a statement from his office.

It quoted Liu as saying Israel was “world-renowned for its innovation” and that China would embark on “great joint projects” with it.

Netanyahu wants to diversify Israel’s commercial ties abroad, in partly due to what he has said is a need to reduce the country’s dependence on its biggest trading partner, Europe.

The article says that Netanyahu is worried about the effect of Europe’s new labeling system, which will mark all products grown or manufactured in occupied territory. But it’s not clear what the effect of such labeling will be, and we wouldn’t read this pivot to China as a bet against trade with Europe. Israel had been looking to increase trade with China before its relationship with Europe soured.

Israel has a history of maneuvering between great powers. At first, Ben Gurion allied himself with the Soviets. In the 1950s and 1960s, Israel shared intelligence with and bought arms from France. It wasn’t until the 1970s that the United States became Israel’s primary great power benefactor. In recent years, Israel has improved ties not only with China, but with India too. Developing new relationships with multiple great powers has been a successful strategy for Israel. It makes sense that Netanyahu would continue to pursue it.

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