Israel on Tuesday chose local company IDE Technologies over a Chinese-linked rival to build the country’s largest desalination plant to help battle water shortages that could arise from climate change.
The new desalination plant will be added to five facilities already in operation in Israel.
The project, to be financed by a consortium of banks including Bank Leumi, Germany’s KfW and the European Investment Bank, will increase Israel‘s desalination capacity by 35% and lower water costs, the government said in a statement.
IDE had competed for the tender against Hutchison Water, whose main investor is Hong Kong’s CK Hutchison Holdings.
Israel‘s main ally, the United States, which is uneasy with Chinese involvement in Israeli critical infrastructure, had expressed its misgivings about Hutchison’s bid.
According to reports, the Chinese were rejected after U.S. Secretary of State Mike Pompeo expressed to Prime Minister Binyamin Netanyahu America’s concerns about Chinese involvement in the bid to establish the world’s largest water desalination plant. The U.S. fears Chinese investments around the world, which create a dependency on China’s corporations – to the detriment of U.S. foreign policy.
But by avoiding a crisis in its relationship with the US, the Israeli decision may have invited a similar crisis with the Chinese government.
The seawater desalination bids committee, which announces the winner, is jointly run by the Finance and Energy Ministries, the Water Authority, and Inbal, an insurance company belonging to the Finance Ministry which will likely insure the project.
When Pompeo was in Israel two weeks ago, it was in the midst of discussions regarding Israeli annexation of Yehudah and Shomron. But, according to reports, the main purpose of the visit was to warn Netanyahu that he must reduce China’s involvement in Israeli infrastructure tenders. State Department officials traveling with Pompeo told reporters at the time: “We have not flown half the world to talk about annexation.”