Israelis warn of snowball of boycotts that could harm economic stability.
Maale Adumim, West Bank — Just a few weeks after signing on actress Scarlett Johansson as its brand ambassador, Israeli fizzy-drink maker SodaStream has become a lightning rod in the debate about efforts to impose an economic boycott against Israel.
Efforts by anti-poverty charity Oxfam to pressure Johansson to break ties with SodaStream backfired: she broke with the group and instead doubled down on her support for SodaStream as an example of “coexistence” where Israelis and Palestinians work together in harmony.
Outside the company’s plant in an industrial zone just down the hill from one of the biggest settlements in the West Bank — suburban Maale Adumim — the Palestinian employees are only vaguely aware of Johansson or why boycott activists want to block all dealings with their employer.
“Why not? Lots of people are coming here. Not just Arabs,” said Mohammed Lahali, who works a packing machine. “Everyone just wants to work; what’s the problem with that?”
But for Israelis, the international uproar over SodaStream reflects what has become a burning concern for the government: how to grapple with rising efforts to boycott the Jewish state should peace talks fail.
SodaStream’s chief executive, Daniel Birnbaum, told reporters that Oxfam’s “political” pursuit of a boycott against his company is “hypocrisy” that was “exposed” by the spotlight of Johansson. “[SodaStream] is a beacon of light toward cooperation and peace in the region,” he said.
However, the SodaStream victory is just one battle in an intensifying war. Amid the controversy swirling around the beverage maker, policy makers are preparing for the worst-case scenario: that is, the Jewish state could face rising boycotts and a blow to the economy if the peace talks were to fail and the international community assigns blame to Israel.
“The Soda Stream [controversy] is the warm-up act for what’s coming,” said Jonathan Rhynhold, a political science professor at Bar-Ilan University, which has monitored academic boycotts against Israel.
The flap over the in-home carbonated beverage maker is waking up pro-Palestinian activists around the world, as well as Israeli policy makers concerned about boycotts, he said. What started off as an effort by marginal activists opposed to Israel’s existence a decade ago has been adopted by the Palestinian leadership and by Europeans as a way of exerting diplomatic leverage on Israel, Rhynhold continued.
“Everyone knows that if the talks collapse, the Palestinians are going to the United Nations to push [for] economic sanctions.”
Over the weekend, U.S. Secretary of State John Kerry warned Israel about boycotts if the peace process collapses, triggering angry personal criticism by Israeli ministers like Yuval Steinitz, who called his remarks “hurtful” and “irresponsible.” U.S. officials fired back, saying Kerry’s remarks follow rising efforts, both by the European Union, and by individual companies, to avoid supporting entities with activities in the settlements.
Prime Minister Benjamin Netanyahu seemed to take umbrage as well at Kerry’s remarks, vowing that he would not be pressured into concessions by threats of “immoral” boycotts.
American Jewish leaders like Abraham Foxman, the Anti-Defamation League’s national director, also took Kerry to task, accusing the secretary of giving the Palestinian leadership an “incentive” not to reach a deal and suggesting that his remarks reflect “historical amnesia” by not pressing the Palestinians.
Indeed, in recent weeks, it seems that almost every day Israelis have gotten news about a new European financial institution that has decided impose some sort of boycott on the Israeli economy over the settlements: Three investment institutions from three different countries announced plans to skip investments in companies over links to the West Bank.
Though boycott efforts are relatively small and marginal now, Israeli officials and the public are frightened that they could coalesce into a potent campaign to isolate Israel economically. According to a survey by the Israel Democracy Institute, 50 percent of Israeli Jews believe there’s a high chance that boycott efforts will escalate, while 47 percent believe the chances are low.
Speaking last week, Finance Minister Yair Lapid — who is trying to push Netanyahu to go along with peace talks — put some numbers behind the fear, and said the phenomenon of boycotts was the largest threat to Israel’s economic stability. In a speech to the Institute for Strategic Studies, he painted an alarming picture: A Finance Ministry study of a “reasonable reaction” from Europe projected a 20 percent drop in exports, inflation, and thousands of job layoffs inside of Israel should Europe step up efforts to boycott Israeli companies. Israel could expect to lose a full 1 percent of Israeli GDP he said.
“Israel’s economy is more vulnerable than its national security,” he said. “The cost of living, which is already high, will be hard to bring down.”
Lapid predicted a snowball of boycotts in Europe that could eventually spread to the Far East. Playing on the heartstrings of Israelis, he said Israel’s star basketball team, Maccabi Tel Aviv, would be banned from European tournaments, or that Israel would not receive the latest versions of iPads.
However, Economy Minister Naftali Bennett has criticized the notion of a boycott as a threat for diplomatic concessions. “Never has a nation abandoned their land because of economic threats,” he wrote on his Facebook page.
Though the current sanctions against Israel are largely symbolic and without a significant impact, a boycott could indeed have a notably adverse effect on the Israeli economy, said professor Yotam Margalit, a political economy expert and a senior fellow at the Israel Democracy Institute.
He said that Israel’s export-oriented economy is potentially quite vulnerable to sanctions, given that much of the country’s exports are concentrated among a narrow group of corporations like Teva Pharmaceuticals and defense systems maker Elbit Systems.
“The question is what kind of actions would materialize: it could range from small, local initiatives that have a fairly marginal significance ... but you could certainly also imagine it picking up momentum and having a notable impact.”
Israel’s government is starting to ratchet up efforts to grapple with boycotts. Labor Knesset member Nahman Shai told Israel Radio that tens of millions dollars will be required to formulate an effective response. The damage from boycotts will be much higher, he said.
“If we don’t block the small efforts, it will escalate. That’s how to deal with it: They check you and they test you. It’s an international effort.”
Bar-Ilan’s Rhynhold thinks that the likely fallout from boycotts will lie somewhere in between Israel being left on an economic island, as Lapid predicted, and the boycotts having no effect. And while the boycotts are essentially a political tool, there’s likely to be economic damage.
The key to defusing the potency of the boycott, Rhynhold said, would be to withdrawal from some settlements — removing the raison d’etre of much of the international criticism directed at Israel.
“Settlements are not worth damage to Israel’s economy and having officers dragged into international courts,” he said.
“If it becomes clearer that Israel is paying for settlements instead of security, then the portion of the Israeli public that makes that distinction will start swinging.”
Related Recommended Reading
The Jewish Week feels comments create a valuable conversation and wants to feature your thoughts on our website. To make everyone feel welcome, we won't publish comments that are profane, irrelevant, promotional or make personal attacks.