Israel is vowing to take tough measures to prevent China from using a second port facility in Haifa as a basis for surveillance, as a headache caused by a 2014 deal to modernize Israeli shipping continues to grow.
Earlier this month, Israeli regulators decided to allow a Chinese state-owned firm, Shanghai International Port Group (SIPG) Bayport Terminal Co. Ltd., to expand its facility from one to two platforms.
That has led to criticism, including from Indian rival Adani Ports And Economic Zone (Adani), which operates an older port facility in Haifa. Another port, at the southern city of Ashdod, is run by the state.
Israeli Prime Minister Benjamin Netanyahu was not involved in the decision to expand the Chinese presence, according to multiple sources. But there is concern that it could complicate relations with the U.S. and India.
The controversy dates back over a decade, when Israel — like many other countries, including the U.S. — sought deals with Chinese companies to expand and modernize the country’s infrastructure.
Israel had a port system that was slow, outdated, state-run, and heavily unionized, raising costs and hurting Israel’s participation in regional trade. Israel wanted to use the Chinese deal as a spur to reform in its shipping industry.
Under a 2014 deal, Chinese companies would operate a new, Israeli-built container port terminal, the Haifa Bayport, and construct a railway connecting the Mediterranean coast with the port of Eilat on the Red Sea — an early version of the India-Middle East-Europe-Economic Corridor (IMEC) that President Donald Trump has embraced as the key to peace and prosperity in the region under the Abraham Accords deal.
SIPG won a bidding process to operate the Haifa Bayport, but the deal raised security concerns, as the Times of Israel noted in 2021:
China’s state-owned Shanghai International Port Group (SIPG) won the tender in 2015 to operate the commercial shipping facility for 25 years, an arrangement that stoked controversy in Israel and abroad. The project’s proximity to Israel’s submarines, among other issues, raised security concerns, especially after reports revealed that neither the cabinet nor the National Security Council had any input on the deal. The project also raised the ire of the US, which sometimes docks military vessels in Haifa.
SIPG used new technology and bypassed old union rules that made rival operations more expensive. The facility came to dominate the Israeli transshipment market for moving goods between container ships.
Over time, however, it became clear that China was using its operations at ports worldwide to expand its geopolitical power, and that Chinese technology posed a risk by allowing the Chinese government to conduct spy operations. The railway from Eilat to the Mediterranean was never built, and China’s role in Israeli infrastructure was limited.
The port deal also came under scrutiny during the first Trump administration.
Israel later struck a deal with India’s Adani shipping company in 2023, selling it an older port facility in Haifa. Adani also reportedly agreed to work with Israel’s unions.
However, according to an Israeli official, the original deal with SIPG allowed it to expand to two platforms by 2027. The recent decision to allow an expansion in 2025 came after Houthi rebels in Yemen damaged shipping to Eilat by firing on international vessels entering the Red Sea — whether destined for Eilat in Israel or the Suez Canal in Egypt.
Israel took that decision despite the fact that Chinese shipping companies had avoided Israel during the recent war.
An Israeli official told Breitbart News that Israel had adopted “draconian” measures at the Chinese facility in Haifa to ensure that China could not spy on either the Israeli navy or the U.S. Navy, both of which dock warships nearby.
The official added that Israel had made it “uncomfortable” for China to operate the terminal as it might have liked, and that the Chinese company did not operate any of the infrastructure beyond the port facility at Haifa itself.
There are, however, concerns in Israel that SIPG’s expansion could crowd Adani out of the market and allow the Chinese company a monopoly. An Israeli official said the country has committed to pay compensation to Adani for the damage done to its business by the Chinese expansion, but a representative for Adani said no compensation had been offered.
Israel is eager to work with the Trump administration on containing Chinese influence, expanding the Abraham Accords, and working with India to facilitate trade through the Middle East to Europe.
But it finds itself bound by past contractual obligations that were undertaken before many countries realized the Chinese threat, the official said.
Joel B. Pollak is Senior Editor-at-Large at Breitbart News and the host of Breitbart News Sunday on Sirius XM Patriot on Sunday evenings from 7 p.m. to 10 p.m. ET (4 p.m. to 7 p.m. PT). He is the author of The Agenda: What Trump Should Do in His First 100 Days, available for pre-order on Amazon. He is also the author of The Trumpian Virtues: The Lessons and Legacy of Donald Trump’s Presidency, now available on Audible. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter at @joelpollak.
