Boycotts. Old motives, new tact

By KSENIA SVETLOVA
How effective have Arab boycotts been?
The question is how effective is this new form of boycott, led by individuals and NGOs rather then by governments and pro-government organizations such as the Arab League? Also, considering the internalization of the boycott, can one assume that it will have a broader and a more significant impact on both international companies and Middle East policies?
The Arab League first declared an official boycott of Jewish companies and products in 1945. Three years later, following the War of Independence, it introduced the boycott laws, which covered not only Israeli products but also those of other countries which maintained economic relations with Israel or supported the Jewish state. A Central Boycott Office was created in Damascus, which became an administrative center for boycott activity. Three circles of boycott were established in the early 1950s and since they weren’t canceled or amended, they are still standing.
The primary boycott prohibits the importation of Israeli-origin goods and services into boycotting countries.
The secondary boycott prohibits individuals, as well as private and public sector firms and organizations, in member countries from engaging in business with any entity that does business in Israel. The Arab League maintains a blacklist of such firms.
The tertiary boycott prohibits any entity in a member country from doing business with a company or individual that has business dealings with US or other firms on the Arab League blacklist.
How effective was the boycott during its prime time, before the peace treaties between Israel, Egypt, Jordan and the PA were signed? Although it’s almost impossible to calculate the exact amounts, some estimates have ranged from 3 percent to 10% of Israel’s GDP since 1948. As for secondary and tertiary boycott success, the experts say that they were never really implemented or had any serious impact on international corporations.
However, it’s important to note that the Arab League never had any tools to enforce the boycott, and it was and still is implemented rather sporadically.
As certain member states, such as Egypt and Jordan, officially ended the boycott by signing peace treaties, others – mainly in the Gulf, but also in some parts of North Africa – turned a blind eye to importing relabeled and repackaged Israeli goods.
Under the Arab League’s recommendations, member countries should demand certificates of origin on all goods acquired from suppliers to ensure they meet all aspects of the boycott. However, there is plenty of evidence that many Israeli goods successfully make their way from Ben-Gurion Airport to Saudi Arabia, Morocco and Kuwait. After the Oslo Accords were signed, the Gulf Cooperation Council decided to end the secondary and tertiary boycotts, but generally they keep on going across the world in a low-key manner. The Palestinian Authority stopped the boycott in 1995, yet introduced a ban on settlement products 15 years later.
Naturally, Arab-Israeli trade serves as a barometer of the conflict: The relatively quiet first quarter of 2008 saw a sharp increase in exports, while the similar first quarter of 2009, which coincided with the Gaza war, experienced a drop of 27%. Yet even the disappointingly low figures of 2009 prove that neither the primary, nor the secondary or tertiary boycotts are in any way sacred cows as far as the Arab governments are concerned. After all, strict boycott enforcement would mean no Coke or Pepsi, no Mercedes or BMW, and no Intel or Microsoft either.
Also US antiboycott legislation acts against any cooperation of US companies with the secondary and tertiary boycotts. According to the Department of Commerce Web site, during the mid-1970s the US adopted two laws that seek to counteract the participation of US citizens in other nations’ economic boycotts or embargoes. These anti-boycott laws are the 1977 amendments to the Export Administration Act and the Ribicoff Amendment to the 1976 Tax Reform Act.
– K. S.