What A Boycott On Israeli Goods Would Mean For Israel
Though chances still remain low, Israel wants to be prepared as threats grow of a major global boycott of its goods, like what happened in South Africa in the 1980s.
TEL AVIV — Is there a real threat of an international boycott against Israel? And what would the damage be?
Currently, most Israelis seem to agree, the situation is unpleasant, but bearable. The chances are still slim that the boycott against Israel and Israeli-made goods could reach the magnitude of that against apartheid-era South Africa.
As hopes fade in peace talks between Israel and the Palestinian Authority, both the Finance and Economy Ministers have joined the debate about the intensifying boycott.
Finance Minister Yair Lapid cited a ministry study last week saying that the Israeli economy would face immediate layoffs of 9,800 employees and a loss of 20 billion shekels ($5.7 billion) to the country's GDP if the European Union decided to scrap the accord that grants Israel special status in political, economic and cultural exchanges.
But at the same time, Economy Minister Naftali Bennett dismissed the severity of the threat, quipping that a single rocket attack on Israel's Ben Gurion Airport would deal a more damaging blow to the Israeli economy than a boycott on Israeli exports.
Senior government officials, as well as left-leaning think tank Molad, believe that the truth is in the middle of these two positions. Such a boycott wouldn't cause irreversible damage to the Israeli economy, since markets like the United States, Latin America, and East Asia could compensate for the partial loss of European imports.
Yet such a scenario would leave Israel scarred, harming its image and status in a way that is difficult to quantify in shekels.
The question that now both the government and exporters are grappling with is how to avoid any such "doomsday scenario," as it was dubbed yesterday by the government.
A dramatic collapse in the talks currently taking place between Israel's chief negotiator Tzipi Livni and the Palestinian envoy Saeb Erekat could help trigger a major backlash. The negotiations that started last August are meant to last no more than nine months, and Erekat has already stressed he will not agree to extend the timeframe further.
If failing talks coincide with a new wave of calls to stop doing business with the Israeli government — and even more specifically Israeli firms operating in the settlements — the boycott could spread quickly. For such calls to infiltrate the European public and political mainstream, legitimacy from official or academic bodies is required.
Growing pressure from pro-Palestinian organizations, as well as calls for boycott by university professors associations, has led the British Department of Trade and Industry to warn against working with citizens and businesses that deal with Israeli settlements in the West Bank, citing "potential reputational implications." Still, the same statement also mentioned the UK government "strongly opposes boycotts."
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Protest in London — Photo: claudia gabriela marquez vieira
Last week, Danske Bank, Denmark's largest bank, announced it is severing its ties with Israeli Bank HaPoalim due to the latter's activities in the settlements; and Sweden's Nordea Bank asked for clarifications from two other Israeli banks regarding their own activities in the West Bank.
At the same time, Norway's pension fund has recently revived a decision not to invest in Israeli holding and investment company Africa Israel for the same reason; and in November, Israel's government had to agree to a convoluted legal compromise for the European Union to sign the Horizon 2020 agreement, which enables the participation of Israeli scientists in research projects and grants.
Dr. Assaf Sharon, academic director at Molad, studied the boycott scenarios, and he believes concern should not be only over the risk of boycotts of current relations, but also from economic relations not being renewed in the future.
For example, says Sharon, in 2009 the Israeli-EU agreement to upgrade the level of bilateral relations was frozen during Israel's Operation Cast Lead in Gaza. The agreement was intended to improve Israel's status vis-à-vis EU member states and allow for removing hurdles in trade, tax as well as science and technology cooperation. However, to this day the talks are stumbling due to disputes over the question of the Israeli-Palestinian conflict.
But the government is not standing idle. The strategic affairs ministry is busy with working out a plan meant to prevent, or at least significantly minimize, boycott scenarios. The plan is expected to include an overt advocacy campaign, meetings with European politicians and encouragement of pro-Israeli activists to prevent boycotts, and perhaps also explicitly encourage purchasing Israeli products.
Meanwhile, the UK government's warnings haven't influenced British investors. Two weeks ago the Israeli government issued a 10-year 1.5 billion euro bond with a yield of 2.932%, after demands were exceptionally high. The stock exchange success might therefore suggest that boycotting bell peppers from the Jordan Valley is one thing, but government bonds is another.