Israel in middle of legal tussle between U.S. and China

JERUSALEM – A new diplomatic spat is emerging between the United States and Israel, and it has nothing to do with Iran or Palestinians for a change.

Americans are angry that Israel has apparently bowed to Chinese pressure and agreed to prevent senior Israeli security officials from testifying in a private terrorism lawsuit, filed in the U.S., against the Bank of China, according to Israel’s leading daily newspaper, Yedioth Aharonot.

The lawsuit was brought in New York by Sheryl and Yekutiel Wultz of Florida, whose son Daniel was killed in 2006 in a terror attack in Tel Aviv at the age of 16.

The suit alleges that the Bank of China aided terrorism by allowing representatives of Islamic Jihad and Hamas to use the bank to wire funds that eventually ended up in the hands of terror cells responsible for attacks like the one that killed Wultz.

They also allege that Bank of China officials ignored repeated warnings from Israel and the U.S. that terrorist groups were using its accounts.

China has been eager to kill the lawsuit and, according to the newspaper report, it threatened to cancel Israeli Prime Minister Benjamin Netanyahu’s May state visit to China until he promised to prevent Israeli officials from testifying about the alleged links between terror groups and the Bank of China.

U.S. officials are now threatening to subpoena Israeli officials if they refuse to testify, Yedioth said. Israeli groups were among those who originally encouraged the family to file the lawsuit.

“It is inconceivable that the state of Israel forsake the victims of terror,” attorney Nitsana Darshan-Leitner, who is representing several other families suing the bank, told Israel Radio on Monday.

Netanyahu’s office has declined to comment.

Israeli Ambassador Michael Oren returned home over the weekend to relay U.S. concern about Netanyahu’s apparent concession to China and to strategize over how Israel can navigate between the two powerful nations.

“Ties with China are very important, and of course our key ally is the U.S.,’’ Transport Minister Yisrael Katz said Monday. “I am convinced this can be resolved.”

[For the record, 10:15 a.m. on July 15: An early version of this post incorrectly stated that Nitsana Darshan-Leitner is representing the Wultz family. Darshan-Leitner is representing several other families suing the Bank of China.]

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