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P 131741Z DEC 07
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC PRIORITY 4585
INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 0823
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 1015
RUEHJA/AMEMBASSY JAKARTA PRIORITY 0072
RUEHKL/AMEMBASSY KUALA LUMPUR PRIORITY 0051
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0357
RHEFDIA/DIA WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUKAINT/CDRUSAREUR DCSINT HEIDELBERG GE
RUEPGBA/CDR USEUCOM INTEL VAIHINGEN GE//ECJ2/HSE//

C O N F I D E N T I A L TEL AVIV 003517 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 12/13/2017 
TAGS: PREL PGOV EAID PARM MASS CH IN ID MY PK IS

SUBJECT: ISRAEL PLEASED WITH PROGRESS IN RELATIONS WITH INDIA AND CHINA 
 
REF: JAKARTA 3291 
 
Classified By: Political Counselor Marc Sievers, reason 1.4 (b) and (d) 
 
¶1. (C) SUMMARY: On December 4, PolCouns and PolOff met with newly-appointed Deputy Director General for Asia and the Pacific (A/S EAP and SCA equivalent) Ruth Kahanoff to discuss Israel's relations with India and China. . . . 
 
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China Has Great Respect for Israel 
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¶2. (C) Kahanoff said that relations with China had now completely recovered from several cold years following the “Falcon crisis” when Israel canceled a military contract with China at the insistence of the United States. She said that military cooperation with China is now very minor and tightly controlled, with full transparency with the U.S. As a result of this incident, Kahanoff explained, Israel enacted new legislation on technology transfers which created a special committee in the MoD to review technology transfers and required the MFA to review these transfers, with the right to veto them. She noted that before the Falcon crisis, the MFA had no role in the transfer of military technology. She also added that all Israeli contacts with China take into account Israel's special relationship with the United States. 
 
¶3. (C) She said China has tremendous respect for Israel and the Jews (which they often see as interchangeable), even if they do not always vote with Israel at the UN. The Chinese also see Israel as a laboratory of modern economic development, but are also interested in the kibbutzim as an example of “true socialism.” On Taiwan, Israel fully supports the one-China policy, although Israel maintains trade relations and political contacts with Taiwan and has hosted several high-level Taiwanese visits from Taiwan without problems from China. She described the relationship with China as expanding, reaching USD 4 billion in annual trade, and Israel will soon open a new consulate in Guangzhou. . . .

¶5. (C) Kahanoff emphasized that Iran has been the focus of political discussions with China, including the recent visit to Beijing by FM Livni. She believes Israel has had some success by arguing that Iran jeopardizes regional stability, which Kahanoff termed a key interest for China. Furthermore, because China wants to avoid a military strike on Iran, Israel has been emphasizing that tougher sanctions make a military strike less likely. Kahanoff believes China is moving on this issue, citing a Reuters report that Chinese banks have started to make credit letters very difficult for investments in Iran. 
 
¶6. (C) On the Middle East peace process, Kahanoff thinks the Chinese want to get involved, but not too involved. China is sometimes critical of Israeli policy, but increasingly understands Israeli concerns. She said China's Middle East chiefs of mission were meeting in Amman over the weekend to discuss regional strategy. She pointed out that the Chinese recently appointed a special envoy, but he is an Arabic-speaking retired professional diplomat who does not speak English and carries little weight. Kahanoff theorized that having such a low profile envoy allows China to show commitment without risking alienating the Muslim world. 
 
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India: Its Trade and Defense 
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¶7. (C) Kahanoff explained that the current relationship with India is dominated by defense cooperation and other trade. She noted that initially 95 percent of the trade between Israel and India was diamonds, but diamonds are now down to 70 percent, and there is significant investment in real estate and businesses on both sides as both countries' economies continue to liberalize. The Bank of India has just opened a branch in Israel to support its investors. Trade is now at USD 2.7 billion per year with a goal to reach USD 5 billion in two years. . . . 
 
¶8. (C) Despite these positive aspects, Israel is concerned about the lack of high-level visits and other exchanges with India. The last visit by an Indian Foreign Minister was in 2000, with a November 2007 visit called off at the last minute. Sharon was the last Israeli Prime Minister to visit India, in 2003, and no Indian Prime Minister has ever come to Israel. Giora Becher, MFA Director for South East Asia who also attended the meeting, added that visits were actually better under the Bharatiya Janata Party (BJP) government. 
 
¶9. (C) Kahanoff believes India is restrained in the relationship by its large Muslim population, their concern about relations with the Arab world, and lingering elements of the Non-Aligned Movement/Nehru ideology.  . . . She also said the Muslim Vice President of India recently gave a speech attacking Israel, which she sees as a sign that India is still trying to find its place in the world. 
 
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Indonesia: Opportunity for More? 
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¶10. (C) Kahanoff then brought up Indonesia, emphasizing that as the world's largest Muslim nation, it was an important country for Israel. That is why the MFA sent their Israeli Ambassador to Singapore to meet with Ambassador Hume in Jakarta last month (reftel). She described Indonesia as moderate, and definitely not hostile to Israel. However, Indonesia has made it clear they cannot go further with relations because of internal political dynamics. There have been several people-to-people exchanges, including a group of journalists the MFA sent to Indonesia, and a visit by a group of Indonesian Islamic leaders, which was happening that week.

¶11. (C) Israel would like to open a trade mission or other unofficial office in Jakarta, but the Indonesians indicated that the moment is not right as the Palestinian issue is important to large parts of their population. . . .

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Pakistan and Malaysia: No Progress 
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¶12. (C) Israel has also been reaching out to Pakistan and Malaysia. Kahanoff was pleased that Pakistan openly admitted to a recent meeting between their Foreign Minister and FM Livni in Istanbul. However, she lamented that it turned out to be an isolated incident with little enthusiasm from Pakistan for any follow-up, even low-key people-to-people exchanges. India is also concerned about Pakistan/Israeli contacts, so Israel has adopted a “no surprises” policy of keeping India informed if anything happens with Pakistan. 
 
¶13. (C) Malaysia, she said, is a lot more complicated. While Malaysia has accepted providing visas to Israeli participants in conferences, Kahanoff described the process as very tough. Beyond this, Malaysia has resisted any other contact. . . .
 
JONES