Chinese companies lose bids for Israeli tram

The NTA metropolitan transit system, owned by the Israeli government, on January 13 published the results of a tender for the construction of two of the five transit lines – the “Green Line” and the “Line purple” in Israel’s largest metropolitan area. Under the terms of the tender, the winning companies will finance, plan, build and maintain the light rail system over a period of 25 years, with an estimated construction time of about five years.

It was a call for tenders in public-private partnership. The two new rail lines will join the “Red Line”, which is expected to begin commercial operation at the end of this year. They will eventually become part of a mass transit system, which carries more than 200 million passengers a year.

The big surprise of this call for tenders was that none of the Chinese companies this bid in partnership with other companies actually won. The criteria used to select the winning companies – and not to select others – have not yet been published.

A statement from the NTA Metropolitan Mass Transit System simply said that after the hearing process took place, it decided to disqualify a proposal submitted by a group, which included the China Railway Construction Corporation (CRCC), owned by the Chinese government. The reason for this was the particularly low price he was offering and the problems he was having with bidding and business relations in other countries. Apparently, his proposal was 1 billion Israeli shekels ($313,000) less than the Transit System’s estimate for the cost of the project. However, since the company’s subsidiaries are already involved in the construction of the “Red Line” project, in cooperation with Israeli companies, his disqualification surprised many.

According to a senior Israeli source involved in the process, one of the reasons for the decision was that the United States had pressured Israel to avoid doing business with Chinese companies on infrastructure projects. .

Much has already been published in Al-Monitor about growing US pressure on Israel regarding its trade and technology ties with China. While the government of Prime Minister Naftali Bennett and Foreign Minister Yair Lapid has introduced some shift in policy towards China (less enthusiastic than former Prime Minister Benjamin Netanyahu), it is unclear if these are at the pace and scale of Americans. requiring.

The question of relations with China has been raised during all recent meetings between senior Israeli officials and their American counterparts.

It was raised during Bennett’s visit to Washington and his meeting with President Joe Biden last August, and again during Lapid’s visit to the United States last October. The issue has also been raised in every discussion National Security Adviser Eyal Hulta and Foreign Ministry Director General Alon Ushpiz have had with their American counterparts, whether in meetings in the United States or in Israel. . The same thing happened during recent visits to Israel by Secretary of State Antony Blinken and National Security Advisor Jake Sullivan.

One of the concerns raised by the Americans, but also by some senior security officials in Israel, was that the construction of one of the transit lines would include excavations and maintenance of the electrical cables, which run to near the headquarters of the Israel Defense Forces. in central Tel Aviv and other defense installations in the Tel Aviv metropolitan area. Given this proximity, it would apparently be easy to implant sensitive listening, tracking and recording devices along the line.

Return to the Metropolitan Mass Transit System audience. In June 2021, the United States expanded its 2018 blacklist of Chinese companies, which threaten American security. This included a ban on US citizens investing in the CRCC, due to the company’s ties to the Chinese military, its involvement in Chinese military industries and its building of Chinese intelligence capabilities. Clearly, the US ban has put the transit system in an awkward position.

That being said, the transit system hearing and further investigation revealed more troubling details. The Chinese company is suspected of numerous cases of corruption, counterfeiting, failure to meet security concerns and failure to meet deadlines in projects around the world. No less important is the fact that the CRCC has a long history of tendering bids allegedly based on “dumping”, i.e. submitting a bid significantly cheaper than those of competitors in order to make sure she wins.

Experts claim that “dumping” is part of the policy put forward by the Chinese government, which is the main shareholder of the CRCC. It is intended to exert influence on world markets in general and to control the world railway market in particular. According to company information, the Chinese government provides funding up to 85% of the cost of each project. This allows the CRCC to offer particularly interesting offers, especially compared to other companies.

It is yet another component of Chinese efforts to expand the country’s influence by taking strategic control of a chain of seaports and other modes of transport stretching from the Far East to Europe. To do this, it competes and wins tenders for the construction and operation of ports, such as the new port of Haifa. Due to this policy, it is feared that the CRCC will submit tenders for projects around the world at a loss, just to crush its competitors and win.

There are also suspicions of corruption involving major projects in Mexico, Australia, South Africa and other countries around the world. In 2019, the world Bank imposed sanctions on the company and its subsidiaries following what was described as “fraud” in a railroad tender in Georgia. The company also submitted surprisingly cheap offers in the United States, which raised suspicions. This included a tender to supply 284 train cars for two lines in Boston. The offer was hundreds of millions of dollars cheaper than competing offers.

The bottom line in this case is that the US administration won the bid, with an offer that was also surprisingly cheap. This was apparently done to prevent Chinese companies from expanding their involvement in Israeli infrastructure projects. The current Israeli government’s increased willingness to be more responsive to US demands and to investigate Chinese offers more thoroughly – all of which were reported by Al-Monitor – also contributed to the final decision.

Jose P. Rogers