LAST DAYS OF THE BOYCOTT - 01-Feb-94

LAST DAYS OF THE BOYCOTT

(Commentary by Motti Besok, 'Davar', 1.2.94, (p.9)

The Arab boycott of Israel is disintegrating, said American Secretary of State Warren Christopher to a group of American Jewish leaders. Morocco and Tunisia no longer adhere to the instructions of the Arab League on the boycott. Soon, additional Arab states will follow suit, led by Qatar and Kuwait. Recently, at a press conference in Cairo, U.S. Secretary of Commerce Ron Brown said that several Arab states will shortly announce the cessation of the economic boycott against Israel. The press conference took place after Brown met with Egyptian President Husni Mubarak. The Commerce Secretary noted that the United States opposes the Arab League's boycott policy and that the boycott also harms Palestinians in the territories. He mentioned that Egypt has not boycotted Israel since the two countries signed a peace agreement in 1979.

Statements about the death of the boycott have recently been made in various places around the world, including by Arab leaders. King Hussein of Jordan spoke last week about a warm peace with Israel and Qatar's foreign minister (after speaking with Shimon Peres and Moshe Shahal in London last week about a Qatar-Israel natural gas deal) said in Washington that several Arab countries are prepared to act to abolish the boycott. It should be noted that the Boycott Office, located in Damascus, was to have met not long ago for a routine working meeting. Hafez Assad, on the eve of his meeting with Bill Clinton, acted to cancel the meeting.

According to an assessment by economists at the Israel Federation of Chambers of Commerce, the boycott has caused about $44 billion in damage to the Israeli economy since the country's establishment. One could argue about the amount, but there is no doubt that the boycott has harmed Israel's economy. Peace, then, may well bring a double or triple benefit to the country's economy, leading to both open borders and the boycott's abolition, with all its implications.

The boycott was imposed on Israel even before the establishment of the state. In 1946, the Arab League decided to boycott products of the Jewish residents of Palestine. In 1948, a short time after Israel was established, the Arab League decided to prohibit all Arab countries from purchasing Israeli products (the primary boycott), maintaining commercial ties with international companies doing business with Israel (the secondary boycott), or dealing with subsidiaries of these companies. Later, Muslim countries such as Indonesia, Malaysia, Pakistan and others joined the boycott. At first, the Boycott Office's central bureau was located in Cairo, with branch offices in each Arab state. Now, the central bureau is in Damascus. The Arab League's 'black list' included the names of thousands of companies from around the world, which traded with Israel or whose owners were Jews. Arab states are prohibited from doing business with them.

The boycott list is updated every few months. For example, at a meeting held about eight months ago, 13 companies were added to the list. Over the years, Israel has tried to lessen the importance of the boycott. The facts and figures prove that the boycott has had an effect on the country. For example, of the 500 largest corporations in the world, only seven have openly invested in Israel. When Coca Cola decided to enter the Israeli market, its directors knew that it would lose the entire Arab market, many times larger. Pepsi Cola entered the Israeli market only a few years ago, since its directors preferred, until then, to submit to the Arab boycott.

How did Israel contend with the boycott? It bought Coca Cola instead of Pepsi, and Subarus instead of Mitsubishi. When no quality substitutes were available, Israel bought the original products from companies which submitted to the boycott, via middlemen and dummy companies. Because of this, Israeli consumers bought products at a premium.

Israel contended with the boycott in exports as well. The policy of open bridges across the Jordan River enabled local industry and agriculture to export its products to Jordan, and from there to the Gulf states and occasionally even to other Muslim countries. Peace with Egypt opened an additional channel to Arab states for the Israeli economy, mainly to the Gulf emirates. Dummy companies in Cyprus, Greece and western Europe enabled local industry to export pharmaceuticals, irrigation equipment, electronics, chemicals, seeds and other products to Arab countries, even the most hostile to Israel among them.

Over the years, Israel attempted to fight the Arab boycott. There were years that the struggle was more intensive than others. The struggle was conducted along two main channels an attempt to convince countries to enact laws against the boycott and an attempt to convince large companies to trade with Israel. Success on both channels was very limited.

In the United States, an anti-boycott law was passed in 1977, which facilitated the prosecution of companies and directors who adhered to the boycott; but it was a law of questionable effectiveness. France acted hypocritically. On the one hand, it also enacted legislation in 1977 prohibiting compliance with the economic boycott. On the other hand, only six weeks after the law was approved the then prime minister, Raymond Barre, issued an ordinance determining that the law was valid regarding the entire world, except for the Middle East. The ordinance was rescinded only in 1980, after it was found to be illegal. With or without a law, the large French companies continued to skip Israel, frequently with exasperating cynicism such as in the L'Oreal affair in 1991. Four other European Community countries also passed anti-boycott laws Germany, Belgium, Luxembourg and the Netherlands but it quickly became apparent that when the law did not jive with the desire of the government or of the large industrial concerns, the written law was nothing but a dead letter. All of Israel's efforts to convince the European Community to legislate against the boycott were fruitless.

Japan, which freely complied with the boycott for decades, changed its line in 1991, after the Gulf War, though not out of any love for Israel. It appears that ongoing American pressure, together with effective pressure from the large American Jewish organizations, the approaching economic crisis in Japan and the assessment that the Arab Boycott Office's power was waning, convinced the authorities in Tokyo to begin to smile in Israel's direction as well. In the United States, two laws were passed in 1991 which determined that foreign companies which complied with the boycott would not be able to participate in Pentagon and State Department tenders. On 18 November 1991, the Saudi ambassador to the United Nations declared that if Israel stopped building new settlements [in the territories] the Arab countries would cease the boycott.

On 8 June 1993, Kuwait's foreign minister officially announced that his country was halting the secondary boycott of Israel. According to him, the decision 'would aid Kuwait's national interest,' and 'other Arab countries have also lifted the boycott.' Leaders of the Gulf states met on 21 December 1993 in Riyadh, Saudi Arabia to discuss easing the boycott of Israel. In a television interview, Oman's foreign minister said that 'the lifting of the boycott may act to our benefit.'