Indian Group Outbids Chinese Players for Stake in Haifa Port
China already owns two ports in Israel; selling ports and national infrastructure to foreign companies always comes with a security risk, national security expert says
A partnership led by India’s Adani Group has completed the purchase of the original Port of Haifa on the Mediterranean Sea, Israel’s Ministry of Finance announced on Tuesday. The deal reportedly was closed for 4.1 billion shekels, which is close to $1.2 billion, according to the Israeli business daily Calcalist. The move is a win-win situation for both Israel and India, which will see great benefits from the sale, experts say.
The Adani Group outbid Chinese and Turkish companies for the right to purchase the port.
The port will continue to operate alongside a privately owned port in the Haifa Bay built by China’s Shanghai International Port Group, which has a 25-year management contract. The group’s Haifa Bayport Terminal began operating in September 2021. A Chinese company also operates a cargo terminal in the Ashdod Port, which is not as active as the terminals in Haifa.
US President Joe Biden reportedly urged the Israeli government not to sell the Haifa Port to a Chinese company during his visit to the country in July. However, it is not known whether Israel chose the Indian group because it was pressured not to sell to a Chinese company or if the Adani Group simply outbid the Chinese offer and won the tender.
Kobbi Shoshani, Israel’s consul general to Mumbai and Midwest India, told The Media Line that the purchase is very strategic for India as the Haifa Port will become the first Indian port located on the Mediterranean Sea. This will help India reach the West more easily.
“The purchase has behind it strategic thought, which is to connect India to Europe and afterward to the United States. The Port of Haifa is a strategic point that will help them open a route to Europe passing through Saudi Arabia and the United Arab Emirates,” he said.
Shoshani notes that it is extremely important for India to ship goods and equipment to the West either by sea or, sometimes, on land, and an additional route is crucial, especially these days due to the traffic in the Suez Canal.
Israel is the perfect choice in the eyes of the Indians since it is a stable country in the Middle East with a sound trading ecosystem, and lies in a perfect location, he explained.
It will bring some income to the state of Israel, but in war – this is the main issue – the control over this asset is very important
For Israel, the purchase will pave the way for additional substantial business opportunities coming from India, according to Shoshani, who notes that the Adani Group’s solid history of performance in managing ports will help facilitate that.
“When you see the quality of the Adani Group in managing ports, having them in charge of the port of Haifa will open the gate for other Indian companies, huge companies, to come to invest and to boost cooperation between the two states,” he said, adding that the deal shows the mutual confidence that Israel and India have in each other’s markets.
The business between the two states and the more goods and services exchanged will pave the way for both countries “to open the additional gates that right now are still closed,” he added.
Oren Ravid, an entrepreneur and strategic business advisor in India/ Israel, told The Media Line that this deal represents huge income for Israel.
To begin with, he explained, “the price that was offered is far from being realistic and, in the beginning, there was even doubt that any buyer would agree to such a price tag.”
Nevertheless, the Indian Adani Group has “the financial ability to finance such a deal even if the price tag was high, and the Indian government will not miss such an opportunity to stick their finger into the Chinese eyes,” he added.
Gautam Adani, owner of the Adani Group, was ranked in 2022 as the richest person in Asia and is the third richest person in the world as of Tuesday with a net worth of $124.7 billion, according to Forbes.
Shoshani told The Media Line that Israel is leaving the Haifa Port in capable hands. He notes that the Adani Group controls most of the ports in India as well as many others in the world, and it has always done an excellent job.
“I see the potential and I see the quality of Adani and I think it’s a very good decision,” he said, adding that he knows members of the company personally and cited them as telling him that their goal is to contribute and cooperate with Israeli society and not to change the way things work, nor the management or the employees of the port.
From a strategic perspective, Ravid says that based on the warm relationship between Israel and India, India was the best choice for such a deal, rather than the other competitors for the bid – Chinese and Turkish companies.
China and Turkey “are not the best choice for the long-run strategy, and also not a good choice while looking at the political aspect,” said Ravid.
He points out that Chinese companies already run cargo terminals in Haifa and Ashdod ports. “It would totally be a mistake to provide them with too much power which might be also a strategic risk in the future,” he said, adding that India, which has closer relations with Israel, is not considered as risky as China.
From the security perspective, according to Dr. Eyal Pinko, a retired Israeli naval commander and an expert in intelligence, cybersecurity and national security, despite the great economic deal, selling ports and national infrastructure to foreign companies always comes with a security risk.
“Once you will need them in time of war, and the operator can say ‘I’m closing everything,’ and you have no control over that,” he told The Media Line.
Pinko explains that a large part of Israel’s economy lies in the sea and in seaports, making the Haifa Port a crucial asset for Israel’s economy. The deal announced this week “is business and it will bring some income to the state of Israel, but in war – this is the main issue – the control over this asset is very important,” he added.