Israel shrugs off boycott effort
By Tobias Buck in Jerusalem
Published: November 19 2009 16:19 | Last updated: November 19 2009 16:19
Norwegian finance ministers do not normally have the tools or the temperament to provoke fury among Israeli leaders and jubilation among Palestinian activists.
Yet those were the reactions when Kristin Halvorsen announced in September that her country’s giant pension fund had excluded an Israeli defence company from its portfolio for “ethical reasons”. The fund, she added, had sold its holding in Elbit Systems because of the company’s role in supplying surveillance equipment to Israel’s controversial West Bank barrier. “We do not wish to fund companies that so directly contribute to violations of international humanitarian law,” Ms Halvorsen said at the time.
In purely financial terms, the decision was of little significance. What is more, it remains for the moment an isolated event. But the Norwegian move caught attention because it marked a rare but significant high point in a campaign that is followed attentively, and with some concern, in Israel: the attempt to drag the decades-old conflict between Israelis and Palestinians into the economic sphere, and target Israeli companies in pursuit of political goals.
Applying economic pressure to Israel is, of course, not a new idea. The majority of Arab countries have long refused to trade with the Jewish state, while others such as China only opened economic and political relations with Israel in the early 1990s, around the time of the Oslo peace process.
This relative isolation did not stop Israel from joining the ranks of developed economies, with annual growth rates over the past decade that frequently exceeded 5 per cent. Thanks to its stable banking system and conservative borrowing habits, the country has also managed to escape the worst of the recent financial crisis and, after a brief recession, returned to growth earlier than others, in the second quarter of 2009.
Yet, despite Israel’s proven resilience, the strategy of targeting the country’s economic welfare in order to raise political pressure on the country is again gaining momentum. Pro-Palestinian campaigners say the so-called “boycott, divestment and sanctions” movement has gathered support above all because of Israel’s January invasion of the Gaza Strip, which left about 1,400 Palestinians dead and sparked condemnation of Israel round the world.
“People are looking for ways to show their disapproval,” says Betty Hunter, general secretary of the Palestine Solidarity Campaign in the UK.
Her group is in talks with British supermarket chains Tesco and J Sainsbury to persuade them to stop selling products from Jewish settlements in the occupied Palestinian territories. But she concedes that the movement has few concrete results to show for its efforts so far.
That perception is shared on the Israeli side, where economists and business leaders say they have yet to register an impact on exports, growth and investment. Even Israel’s fruit growers and exporters, by far the most visible target for consumers outside the country, say they have not noticed any drop in demand for political reasons.
“In my experience, this is a marginal phenomenon at best,” says Ilan Eshel, the chief executive of the Israeli Fruit Growers’ Association. “It is simply a question of supply and demand: if avocados and mangos are missing in Europe, they take our avocados and mangos.”
Activists such as Ms Hunter stress that applying economic pressure to Israel was never expected to yield results in the short term. “Our model is [the campaign against apartheid-era] South Africa. But people forget that the boycott campaign didn’t happen overnight. It took time.”
On the face of it, the make-up of the Israeli economy should indeed render it acutely vulnerable to boycotts and divestment campaigns. More than most other countries, Israel relies on exports – which account for about 40 per cent of gross domestic product – to fuel economic growth and jobs. The country’s much-admired technology and software industry, meanwhile, is heavily dependent on venture capital funding from abroad, in particular the US.
Yet experts argue that looking at Israel’s reliance on foreign buyers, suppliers and financiers alone is not enough. “Yes, you can boycott Israeli oranges and dates. But what Israel is really good at is providing inputs into other products. That means if you want to boycott Israeli goods, you have to boycott computers and cellphones altogether,” says Dan Catarivas, the director of foreign trade at the Israeli Manufacturers’ Association.
That view is shared by Leonardo Leiderman, an economics professor and the chief economist at Bank Hapoalim, Israel’s biggest lender: “People are not really paying that much attention [to political criticism]. The number of delegations coming here from abroad, whether related to high-tech or the stock market or financial services, is quite amazing.”
Perhaps most importantly, and despite the recent wave of criticism, Israel remains far from isolated internationally. Unlike apartheid-era South Africa during the late 1980s, the Jewish state continues to enjoy strong economic and political ties with the US and the countries of the European Union – its two biggest trading partners. Israeli business leaders, in any case, hope that these links will ultimately prove more important than the repeated condemnation of Israeli policies at the United Nations.
As Prof Leiderman says: “With all due respect, the UN does not move the market.”
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