U.S. pressuring PM Bennett to ban Chinese company from light-rail project

The announcement of the winners of the purple-line and green-line of the Tel Aviv metropolitan light rail tenders is currently delayed, and in the meantime messages from senior U.S. administration officials have been communicated to Prime Minister Naftali Bennett regarding the project.

Washington does not want the Chinese company CRCC, which submitted a bid in the tender together with China’s CRRC and Israel’s Shikun & Binui and Egged, to win the tender for the light rail lines.

This U.S. stand under the Joe Biden administration is a continuation of the Trump administration’s foreign policy, which has worked against the involvement of Chinese companies in various projects and countries around the world. In recent weeks, senior U.S. State Department officials have spoken out against Chinese companies' involvement in Middle Eastern economies, saying it could hurt these countries' relations with the U.S.

According to information obtained by Calcalist, in a meeting between Prime Minister Naftali Bennett and the head of the CIA, William Burns, which took place two weeks ago, the issue of Chinese investments in Israeli infrastructure projects arose. Specifically, one of the issues that came up in the conversation was the upper mentioned tender.

The Prime Minister has no authority

The U.S. administration does not want CRCC, which President Biden issued an executive order banning them from receiving U.S. investment a few months ago, to win the tender. The order, which was signed by Biden in June as an extension of an order that former President Trump signed, prohibits investment in 59 Chinese companies that according to the U.S. administration are directly or indirectly linked to the Chinese army and intelligence.

The U.S. administration would like to see Bennett actively work so that the CRCC does not win the tender, and the issue is expected to come up again in the Prime Minister’s meeting with President Biden this week in Washington.

On the face of it, Prime Minister Bennett has no legal authority to interfere in the tender process, which is managed by NTA - the government company responsible for the design and construction of the mass transit system for the Tel Aviv metropolis. The tender does not have a clause allowing the government to disqualify a company for “national security” reasons, however, governmental sources told Calcalist that recently, "flaws were found" in CRCC’s proposal.

Whom to confront?

At this stage, it seems that Israel has three options. The first, which at this stage seems less realistic, is to launch a new tender due to the Americans’ demands, which would ban foreign companies that could pose a security threat of one kind or another. This step will mean a two-year delay in the light rail projects and the possibility of a diplomatic confrontation with the Chinese government.

The second option is to ignore the American concerns while allowing the CRCC to win the tender. In this case, Israel and Bennett will find themselves in a direct confrontation with the Biden administration. The third option, implied by government officials, is to disqualify CRCC on the grounds of flaws in the proposal.

The winners were supposed to be declared already three months ago but the announcement was postponed due to the failure to evict the Kfar Shalem neighborhood. The evacuation, which was previously delayed by former Transport Minister Miri Regev, is expected to go through due to the recent change in government. Some government officials link the delay in evacuation to the American pressure, claiming that not evacuating the community provides the government with more time and allows Bennett to delay his decision. However, according to the Ministry of Finance, delays in the project are costing about NIS 100 million per month (about $30 million).

Launching at the end of 2027

Five groups are competing in the Green and Purple Line tenders, three of which include Chinese companies. The list of groups competing for the construction of the two new lines in the tenders includes Spanish CAF in collaboration with Shapir Engineering; Chinese CRRC and CRCC with Shikun & Binui and Egged; Alstom in collaboration with Electra and Dan; Chinese CREC in collaboration with the Canadian company Bombardier, Excellence, Noy Fund and Phoenix, and the fifth group, which includes China Harbor, in collaboration with Minrav, Allied and Clal.

The winners of the tender are responsible, among other things, for the construction and maintenance of the electrical systems, signaling systems, and the supply of the carriages. It is estimated that the two lines will launch by the end of 2027 at an estimated cost of NIS 30 billion (about $9.3 billion). The two lines are expected to connect to the red line (Petah Tikva-Bat Yam) which is currently under construction and is expected to open in about a year.

The office of Prime Minister Bennett did not deny the report. NTA stated that it had not received "any request from any party regarding CRCC's participation in the purple and green tenders, and the winners will be announced soon." The Ministry of Finance did not respond.