Updated May 2, 2020 - World

Scoop: U.S. asked Israel to clarify Chinese-controlled company's role in $1.5B desalination plant bid

Canning Fok (L), group co-managing director of CK Hutchison, the parent company of Hutchinson Israel. The Trump administration is asking Israel for clarification on a Hutchinson Israel bid to build a $1.5 billion desalination plant. Photo: Zhang Wei/China News Service/Visual China Group via Getty Images

The Trump administration asked Israel to clarify the role of a Chinese-controlled company that bid on a $1.5 billion desalination plant, Israeli officials said.

Why it matters: The Trump administration sees China as its main adversary around the world. Israeli officials are concerned the bid could put Israel in the middle of the U.S.-China tensions.

Details: The project, called “Sorek B,” is expected to be the biggest desalination plant in the world and to produce 200 million cubic meters of water annually — a quarter of the water Israel uses annually. The company that wins the bid would build the plant and operate it for 25 year.

How it works: “Hutchison Israel,” which is controlled by the Chinese company Hutchison in Hong Kong, is among the entities that have reached the final stages of the bid process, and Israeli officials say it has a good chance of winning the tender.

  • Several Trump administration officials including the U.S. Ambassador David Friedman raised the issue with the Israeli Prime Minister’s office and the Foreign Ministry, Israeli officials said.

Background: Six month ago the Israeli cabinet formed a government committee to monitor foreign investments in Israel, following intense pressure from the Trump administration to limit Chinese investments.

  • One of the questions the Trump administration raised was why the Hutchinson Israel bid for such a large project didn’t go through the monitoring committee, Israeli officials said.
  • The Israelis told their U.S. counterparts that the bid was issued a year before the committee was formed and did not fall under its mandate.
  • The Trump administration is concerned because the project is near an Israeli military base that hosts U.S. troops and because of the size of the project, Israeli officials said.

What they're saying: "The Americans are speaking to us about this very politely but it is clear they would like us to review the Chinese participation in the [bid],” Israeli officials said.

  • “We are not going to comment on specific projects but, as with all of our allies and friends around the world, we remain engaged in dialogue with Israel about the best way to review potential foreign investment and economic activities with a view on their impact on national security,“ a U.S Embassy official said.:
  • The Israeli Prime Minister’s office and Foreign Ministry refused to comment.
  • The White House and the National Security Council declined to comment.

What’s next: The Israeli ministry of finance is expected to announce the winner in the tender on May 24th. It is unclear whether the U.S. intervention could lead to a postponement.  

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Editor's note: Updates with the White House and National Security Council declining to comment.

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