Israel snubs Beijing to give mega desalination project to local firm days after Pompeo warned about Chinese money

Washington may celebrate a win in its tug-of-war with Beijing after the Israeli government awarded a huge contract, to build a massive facility for making saltwater drinkable, to a local company rather than to a Chinese bidder.

A government panel selected IDE Technologies to build a large desalination plant about 15 km south of Tel Aviv. The Israeli company’s bid was chosen over that of Hutchison Water, a water treatment subsidiary of a Hong Kong-based multinational conglomerate. The win comes less than two weeks after US Secretary of State Mike Pompeo visited Israel and voiced concern about Chinese investment in local infrastructure.

The new facility will be built next to the existing Sorek Desalination Plant and is expected to be commissioned in 2023. Dubbed “Sorek B,” it will produce up to 548,000 cubic meters of fresh water per day. Combined with the first plant’s 624,000 cubic meters-per-day capacity, the site would become one of world’s biggest desalination operations.

The contract was awarded by a joint committee of several Israeli ministries, which cited an unprecedentedly low cost of the final product that the IDE project would offer, Haaretz reported. The fresh water will sell at about 41 US cents per cubic meter and promises to save the country almost a billion dollars over the plant’s planned 25-year lifetime.

The selection of IDE over Hutchison, however, may have had a geostrategic angle. Less than two weeks before the final decision came, Israel was visited by US Secretary of State Mike Pompeo, who used the occasion to pressure the country over its cozy economic ties with Washington’s arch rival China.

“When they arrive in a way that has a political dimension to it, when it is a state-owned enterprise, or it is an entity that has a nefarious mission, we want to make sure that our friendly partners all around the world understand that risk,” Pompeo told Israeli Public Broadcasting.

The location of the Sorek desalination project is near the Palmachim air base and the Soreq Nuclear Research Center, two sensitive Israeli facilities. US officials have accused China of using commercial projects to collect intelligence on behalf of the Chinese government. Pompeo has discussed the issue with both Prime Minister Benjamin Netanyahu and Speaker Benny Gantz, the PM’s partner in the ruling coalition.

The $1.5 billion Sorek B project and the bid from Hutchison Water was the subject of intensive pressure by Washington, according to Axios. “The Americans are speaking to us about this very politely but it is clear they would like us to review the Chinese participation in the [bid],” Israeli officials told the outlet.

Washington was reportedly unhappy that the desalination project had not been reviewed by a new body, established by Israel last October under US pressure to monitor foreign investments. The Israeli side had argued that the bidding process started before the new watchdog was created and thus didn’t fall under its mandate.

Ironically, Sorek A, the existing plant that was launched in 2013, was a joint project of IDE Technologies and Hutchison Water. That operation was dragged into a massive scandal when it was revealed that its top management had been falsifying quality reports. The fraud covered up the fact that its product had a level of chloride exceeding specification by up to four times. Last year an Israeli court even called on the bidding committee to reconsider allowing the two firms to compete for the new project.

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