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Israel Accused of Suppressing Terror Evidence to Help Out New Pal China

Israel is a country desperate for friends. Isolated in the Middle East and hated in large parts of the Arab world, it struggles to make alliances. The few it has, it guards fiercely. So it should perhaps come as no surprise that for years Israel has been courting China, inking trade deals and fêting one another over champagne. But that process now finds Israel in an awkward bind, one that may lead the country to compromise on its core anti-terror policies.

According to a report in Haaretz, the Israeli government is currently under enormous pressure from Beijing to suppress evidence that the Bank of China laundered money for Islamic Jihad. In 2006, a Jewish-American teenager, Daniel Wultz, was killed in a suicide bombing carried out by Islamic Jihad at a Tel Aviv shawarma restaurant. His parents have now sued for damages -- at the initial encouragement of Israel -- and allege that the Bank of China laundered funds for the terror group, effectively bankrolling the operation that killed their son. Prior to filing the case, according to Haaretz, Israeli officials told the parents, Yekutiel and Sheryl Wultz, that they would support their case and provide evidence implicating the Bank of China. Now, at Beijing's urging, they're having second thoughts. So far, Israel has declined to provide the expert testimony they promised and are currently deliberating over whether to make Uzi Shaya, a former intelligence official, available to a New York City court.

That's right, under Chinese pressure, Israel may prevent the victims of a Tel Aviv terrorist attack from extracting damages from the people who bankrolled an operation that killed their son. Chalk it up to the cost of a new friendship.

If the burgeoning alliance between Israel and China sounds unlikely, bear in mind that it's a relationship forged in political and economic calculation. Israel was one of the first countries to recognize China following its Communist revolution, and while it took over 40 years for to China establish diplomatic relations with Israel, the two countries have something off an oddball history of military cooperation. Awash in seized Soviet weapons following the Six Day War in 1967, Israel quietly worked to upgrade China's military arsenal. That relationship continued into the 1990s when President Bill Clinton furiously vetoed the proposed sale from Israel to China of an advanced radar system.

Now, the relationship between the two countries has become primarily economic, though geopolitical concerns still hover in the background. Trade between the two countries stood at $8 billion in 2012, and when Israeli Prime Minister Benjamin Netanyahu visited Beijing in May he was accompanied by a retinue of Israeli businessmen who hope to push that figure above $10 billion over the next five years. While there, Netanyahu signed a series of bilateral agreements and shared a champagne toast with Chinese Premier Li Keqiang. And in January of last year, the two countries inked a $300 million line of credit designed to bring Israeli investments to China. Now, a free trade pact is under consideration.

But even as Israel and China draw closer to one another economically, awkward geopolitical concerns threaten to poison their relationship. China habitually obstructs efforts to crack down on Iran's nuclear program and is all too happy to undermine Western and Israeli interests in the region at times. But for this reason, Israel has little to lose -- and a lot to gain -- by moving closer to China. "We do hope that if we are able to improve economic ties and connections between Israel and China, it will help us also to explain our positions with regard to the Iranian nuclear threat, with regard to the events in Syria," then-Israeli Finance Minister Yuval Steinetz said in an interview with Bloomberg prior to signing the $300 million line of credit. Steinetz currently serves as the intelligence minister, and the calculation at play is an obvious one: Through its trade ties Israel hopes to win influence with China and alter its positions on issues critical for Israel.

But that calculation runs both ways, as Israel is currently learning in a New York courtroom. In arguments last Friday, lawyers for the Bank of China tried to convince the judge that Israel's reluctance to make its intelligence expert available signaled that the Israeli government no longer backed his conclusions about the bank's involvement with Islamic Jihad. But the judge, Shira Sheindlin, did not buy it. "It's hard for me to accept that assumption," she said.

KIM KYUNG-HOON/AFP/Getty Images

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