Chinese Government pledges to provide financing for the construction of the "Red-Med" Railway

On July 3, 2012, China's Ministry of Transport and Israel's Ministry of Transport, National Infrastructure and Road Safety signed a Memorandum of Understanding (MoU) to build a railway linking Israel’s Mediterranean ports of Ashdod and Haifa to the Port of Eilat on the Red Sea. The proposed "Red-Med" railway would link Israel’s Mediterranean ports with a cargo track, as well as its population centers such as Tel Aviv and Beersheba with a passenger track. Israeli media reported that railway would run 150 kilometers and connect Arava Valley and Nahal Zinn, with plans to extend the route to Jordan’s Port Aqaba. The Begin-Sadat Center for Strategic Studies wrote that the railway was planned to be 350 kilometers long and included 63 bridges over 4.5 kilometers of track and five tunnels over 9.5 kilometers of track. The trains on the line were expected to travel at 250-300 kilometers per hour, and that it would begin operation five years after the start of construction. The estimated budget for the project ranged from ₪25 billion NIS ($6.5 billion USD) to ₪50 billion ($13 billion USD). Many observers noted the potential strategic value of the Red-Med Railway as an overland alternative to the Suez Canal and as a trade link between Europe and China via the Mediterranean Sea. The desire for an alternative to the Suez Canal on the part of China was attributed, in part, to political uncertainty and instability in Egypt as a result of the Arab Spring, including lawlessness in the Sinai Peninsula, as exemplified by a rocket-propelled-grenade attack in August 2013 on a Chinese-owned container ship At the signing of the MoU in July 2012, the Chinese Government proposed that China Development Bank (CDB) provide partial financing for the project. However, it appears the Chinese Government shifted its proposal to a vaguer promise of "attractive" financing from its government banks. As of May 2014 it had not presented a formal financing plan. The Cabinet of Israel approved the project in March 2014. The Israeli Government considered contracting the project to Chinese construction firms. In 2014, the Israeli Government was in active discussions with China Communications Construction Company (CCCC) to implement the project. But by the same year, it became clear that the project was stalling as the Israeli Government considered matters of high cost, potential environmental damage, and political concerns. Israel's Ministry of Transport, National Infrastructure and Road Safety planned to release an international tender for the project by the end of 2016. No contractor was selected. In fact, in August 2019, Israeli media source Calcalist reported that the Israeli Government had never allocated a budget to the project. As of June 2021, no further progress has been made on the proposed railway. However, discussions about reviving the project reemerged amidst the fallout of the 2021 Suez Canal obstruction, but concerns over the costs (estimated to be $10 billion USD to $12 billion USD), the economic feasibility, the environmental impact, and the role of China remained. In July 2022, it is still not certain that Chinese companies will take part in the project or whether the railway will be constructed at all, as the project has yet to receive final approval or any secure funding.

Additional details

China Development Bank and Unspecified Chinese Government Institution have been coded as the financiers as the Chinese Government planned to use multiple of its government banks to finance this project; CDB is the only specified bank, so Unspecified Chinese Government Institution captures the role of any other Chinese Government institution.

Number of official sources

1

Number of total sources

13