By: David M. Weinberg
Apr 29, 1993
Published in The Jerusalem Post, April 29, 1993.
By Harry Wall, director, and David Weinberg, assistant director, of the Anti-Defamation League’s Israel Office.
THE Arab economic boycott of Israel, long neglected, is now receiving the critical attention it deserves. Many Western leaders have made declarations about the need to outlaw boycott compliance, and even Arab officials have talked about a possible, partial suspension of the boycott. Our government, too, has awoken from its decades-old slumber. The boycott is a priority on Jerusalem’s agenda today.
Rhetoric notwithstanding, the boycott remains in force and a potent weapon. That Toyota, Mazda, Pepsi-Cola, McDonalds and others are all selling their products in Israel is surely important. But the threat of Arab economic retaliation still has a chilling effect on the willingness of many international companies to make purchases from Israeli firms or to invest in them.
There is manifold evidence that one can trade with Israel without losing business in the Arab world. General Motors, Hilton Hotels, Coca Cola, IBM and now Toyota are obvious examples. However, many big companies have been cowed into voluntary compliance with Arab preferences, or have bent over backwards to appease Arab authorities. Just last month, US authorities slapped Baxter International, a hospital-supply giant, with $6.5 million in civil and criminal fines for agreeing to ship deeply discounted hospital supplies to Syria as a bribe to get off the Arab blacklist.
The boycott has taken its toll. The Federation of Israeli Chambers of Commerce estimates that because of the boycott, Israel’s annual exports are 10 percent smaller than might otherwise be expected; and that foreign investment in Israel is similarly stunted by at least 10 percent. By this standard, Israel has lost some $40 billion in exports and foreign investment over the past 45 years. The boycott also results in a significant mark-up in the price of goods to the Israeli consumer, since many companies will sell to Israel only through third parties.
So where does the anti-boycott effort stand? Here’s a checklist of activity for gauging the depth of Western commitment to bringing about the boycott’s denouement:
Germany: Landmark legislation outlawing some forms of compliance with the Arab boycott is scheduled to take effect on May 1, almost a year after its passage and following a lengthy delay insisted upon by German businessmen. A critical unknown is just how Bonn intends to monitor and enforce implementation of the new regulations, which are not as comprehensive as US anti-boycott law.
Japan: Late last year, the Japanese foreign minister offered a sweeping and categorical denunciation of the Arab boycott during a meeting with American Jews. He called upon Japanese firms to stop complying with the boycott. Japanese ambassadors even led a diplomatic “demarche” to Arab governments with a request that boycott blacklisting be ended. But it is unclear whether Tokyo has actually done much to encourage an end to widespread boycott compliance among Japanese businessmen.
Israel is awash with Japanese consumer products, but the Japanese have shown little interest in purchasing from, or investing in, the Israeli science and high-technology sector. The Japanese External Trade Relations Organization (JETRO), with branches in 65 countries, has still not opened an office in Israel. And Japanese banks have been slow in granting supply and purchase credits to Israeli firms, making Israeli purchases of Japanese equipment difficult.
Fortuitously, a group of businessmen and officials from the powerful Keindenran, Japan’s Histadrut-like business and trade-union conglomerate, is now visiting the country. This presents Tokyo with an opportunity to reverse years of unspoken discrimination against Israel.
European Community: Progress here has been virtually nil. While paying lip service to the concept of EC-wide anti-boycott legislation, European politicians have backed away from concrete action.
Last December, one European Parliament committee report actually recommended that EC foreign ministers devise a common policy of economic sanctions against the boycott. The report also suggested that strict non-discrimination clauses be inserted into the free trade agreement currently being negotiated between the EC and Gulf states. But European Parliament leadership has chosen to bury the matter in yet another committee. Unless EC heads of state communicate a determination to see action taken, the prospects for an EC-wide anti-boycott statute are meager.
United States: The Clinton administration gets high marks for its early anti-boycott efforts. Secretary of State Christopher forcefully raised the boycott with the leaders of Kuwait and Saudi Arabia on his recent swing through the region. He stressed the need for specific Arab actions such as ceasing demands for boycott-related information from foreign firms and removing all references to the boycott in Arab legal and commercial language.
The Congress has also placed new anti-boycott tools at the administration’s disposal. Last year’s “Gore Amendment” (named after its primary sponsor, then-Senator Al Gore) forbids the award of any US defense contract to a foreign firm unless it certifies that it is not complying with the Arab boycott.
G-7: Finally, an important opportunity to generate momentum in international pressure on the Arabs will present itself at the upcoming summit of the seven major industrial powers (the G-7) in July.
At their September 1991 meeting, the G-7 let the Arabs off the hook by linking a call for boycott suspension to a demand that Israel halt settlement activity in the territories. Since then, the Rabin government has sharply curtailed settlement activity, yet neither the Arab League nor any single Arab country has reciprocated.
The G-7 ought now to issue an unequivocal call for immediate and formal Arab suspension of blacklist activities, without linkage to Middle East peace talks or any specific Israeli action.
Scorecard: More has been heard about the boycott in the last 12 months than in the preceding four decades. The US, as ever, remains the moral and diplomatic leader in this effort. But other than half-hearted initiatives in Bonn and Tokyo, the international community has failed to move forcefully against the boycott.
The Arab blacklist not only violates international standards of free trade, it is an obstacle to Mideast peace. It’s time to ban the boycott once and for all.