Israel, Politics

The Economics of the Growing Boycott Movement

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Around the world, there is a growing willingness to boycott Israeli companies that operate and provide services to the West Bank Settlements, which are considered illegal under international law.
Last year the European Union set a ban on funds going to projects operating in the settlements and there has also been a recent wave of boycott and divestment announcements from European companies. Danske, Denmark’s largest bank announced that it will begin boycotting Bank Hapoalim, Israel’s largest bank, and news soon followed that a key Swedish Bank may follow suit.

Last week Norway’s finance ministry reissued a 2010 ban instructing its oil fund worth $810 Billion to divest from two Israeli firms as well as one Indian firm citing ethical reasons. Meanwhile, in the Netherlands, Vitens, the national water carrier, cut ties with their Israeli counterpart, Mekorot because of the latter’s operations in occupied territory. As well, PGGM, which represents the pensions of 2.5 million people divested from 5 major Israeli banks.
Dutch Journalist, Jan Franke, explained that “According to PGGM, according to people I’ve interviewed, they’ve been debating about their investments in 5 major Israeli banks since 2009 with the Israeli banks themselves and the Israeli banks have been telling them, ‘Listen we are not violating Israeli law.’”
Franke clarified that the Dutch fund is not a part of the ‘Boycott Divestment Sanctions’ (BDS) movement, which is calling for a total boycott economic, cultural and academic boycott of Israel, “In the case of PGGM, its interesting, they still have more than 100 million Euro invested in Israel in private equity funds. In Israel proper, in the Israel that they agree is Israel. They don’t boycott Israel, it’s nothing to do with that, but the settlement issue is a no-no for them.”
This economic pressure is not only coming from the EU. For example, U.S. pension fund, TIAA-CREF withdrew over $1.2 million of shares from French firm Veolia citing the firm’s involvement in building Israeli settlement infrastructure. In South Africa, products coming from settlements must be labelled accordingly.
Israel relies heavily on exports. According to a government report $250 million in annual exports come from areas that are considered occupied by the international community including the West Bank, East Jerusalem and the Golan Heights.
The Israeli ministry of finance estimates that a drop of just 20% of exports to the EU, which they say is likely given the climate, could cost the Israeli economy  $5.7 Billion in annual exports and 9,800 jobs would be lost instantly. Currently, one third of Israel’s exports go to Europe.
Still, some settlers operating businesses in the West Bank don’t seem too worried. Yaacov Berg, co-owner of the Psagot Winery not far from Ramallah told Israel’s Channel 2 News, “The boycott is nothing to get excited about. People have been boycotting Jews for 2,000 years. If you ask me, in the last 2,000 years, our situation today is the best it’s ever been.”
But others see the growing international pressure coupled with the Israeli government’s policy of support for settlement growth, as a recipe for disaster that poses a significant risk to the Israeli economy.
“This is not going to be a problem limited just to companies that are operating in the occupied West Bank and East Jerusalem. What’s going to happen is that it is going to spread to all Israeli companies and to all sectors… Even in the high tech industry which thus far has not been very affected by the conflict,” said Melanie Robbins, Director of International Relations at ‘Peace Now’, an Israeli peace organization.
According to a recent report from Molad, an Israeli think tank, $10-12 million have been annually allotted to the Yesha Council, a private settler organization, over the last four years. The Israeli government is itself invested in growing the settlements, the very thing the international community is pressuring Israel to stop.
According to Robbins, “There’s more money given to construction in the West Bank and East Jerusalem and when it comes down it that’s going to be at the expense of Israelis living inside the ‘Green Line.’”
In Israel there is growing concern: In 2011 a law was passed by the Knesset that bans people in Israel from calling for boycotts, the strategic affairs ministry has asked for 28.5 million dollars for a PR campaign to counter the growing specter, and the foreign ministry is calling international criticism of the occupation “delegitimization.”
For Deputy Foreign Minister, Ze’ev Elkin, who sat down with Channel 2, the problem is rooted in Israel’s image. He posited, “When you google Brazil, you see beaches, nice looking girls. You see a rosy picture. If you go there you see middle class people with bodyguards. When you google Israel you see conflict, soldiers, the army and Palestinians. If you go to Tel Aviv you can walk free in the streets. Because of that it’s always an enormous surprise.”
Indeed, economic pressure is growing. The uproar over Scarlett Johansson’s involvement with SodaStream, a company with a factory in the West Bank settlement of Mishor Adumim Industrial Zone, has brought the issue to the forefront of the media. All of this attention is helping to raise the profile of the BDS movement.
Last week Israeli Prime Minister Netanyahu called for a meeting with government ministers to address the boycott issue, but it was postponed until next week. During Sunday’s cabinet meeting, the PM rejected the notion that the growing boycott movement poses a credible threat.
A. Daniel Roth is an educator and journalist living in South Tel Aviv. You can find more of his writing and photography at, and follow him on twitter @adanielroth.

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