Study Finds Economic Boycott of Israel Generally a Flop

In the decade since the founding of the boycott movement, foreign investment in Israel has nearly tripled, Bloomberg finds.

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An Egyptian boycott activist holds a BDS pin (illustrative).
An Egyptian boycott activist holds a BDS pin (illustrative).Credit: AP

Despite some high-profile instances in which businesses and performers have publicly announced that they would abide by BDS, the international movement to boycott, divest and sanction Israel, the Bloomberg business news service has found the opposite trend—that foreign investment in Israel is at a record high.

In fact, Bloomberg reported Thursday, that since the BDS movement was founded in 2005 by a group of Palestinians, foreign investment in Israeli assets almost tripled hitting a record $285.12 billion in 2015.

Supporters of BDS include those who reject Israel's existence as well as other who more narrowly oppose Israel's policies toward the Palestinians, Bloomberg noted, "but even the more limited focus on the occupation and companies that benefit from it has had little discernible impact."

“We don’t have a problem with foreign investment in Israel - on the contrary,” Yoel Naveh, chief economist at Israel’s finance ministry, told Bloomberg. The news service noted that investment in Israel has been seen as an attractive alternative to weak returns elsewhere around the world.

"Plus, many reject the notions driving the boycott - that investing in Israeli innovation and natural gas violates Palestinian rights, and that Israel’s misdeeds are so exceptional that they justify singling it out for censure," the Bloomberg story said.

For his part, however, one of the founders of BDS, Omar Barghouti, said the BDS effort "is not just working. It is working far better and spreading into the mainstream much faster than we had anticipated.”

Just this week, the Israeli mission to the United Nations convened a conference at the UN General Assembly in New York, co-sponsored by a number of Jewish organizations, to explore ways to combat BDS.

Barghouti is a Qatari-born Palestinian whose wife is an Israeli Arab. Last month, Israel has refused to issue Barghouti a permit to travel abroad. He is a permanent resident of Israel but does not hold a passport. His status is being reexamined by the Interior Ministry, which suspects that his "center of life" is in the West Bank rather than Israel, as he claims.

Despite the surge in foreign investment in Israel over the past decade, Bloomberg notes a number of prominent overseas funds that have established a policy of not investing in companies with a business presence tied to the occupation, including Norway's $860 billion sovereign wealth fund and the second-largest Dutch pension fund, Pensioenfonds Zorg & Welzijn. "Five months ago, the $20 billion pension board of the United Methodist Church, the largest faith-based benefit plans administrator and pension fund asset manager in the U.S., added the five largest Israeli banks to its list of companies in which it will not invest," Bloomberg noted.

In March, Ahava, the Dead Sea cosmetics company that had been a major target of BDS for maintaining a manufacturing plant in the West Bank settlement of Mitzpeh Shalem, announced that it would be relocating the facility within Israel's pre-1967 borders. There was no mention of BDS, however, in a statement that the company released announcing the move.

In 2011, Ahava was forced to shutter its London store in Covent Garden after months of noisy demonstrations by pro-Palestinian groups. In moving facilities inside Israel proper and out of a West Bank, Ahava is following the lead of SodaStream International, the carbonated beverage dispenser manufacturer, which relocated last year from the West Bank industrial zone of Mishor Adumim, in the area of the settlement of Ma'aleh Adumim, to the Negev. The move followed an aggressive campaign against SodaStream by the BDS movement abroad.

Two years ago, when SodaStream first announced that it was considering relocating its Mishor Adumim plant, it said that it was doing so for financial reasons. At the time, SodaStream CEO Daniel Birnbaum told Haaretz's business publication, TheMarker: "The considerations will be purely financial and do not include the European boycott on manufacturing in the territories.” And he added: "Nor [will they include] the various calls to boycott products of the company because of its location in Ma’aleh Adumim. The boycott is a nuisance but does not cause serious financial damage. We are not giving in to the boycott. We are Zionist.” Opponents of the boycott point out that the Mishor Adumim plant had been a major employer of West Bank Palestinians.

"What most worries Israel’s defenders," Bloomberg reported, "is that foreigners will associate Israel with ill-doing and choose to avoid controversy. Given the small size of its market, this can be easily done without acknowledgment and could lead to a slow, subtle process of isolation." And Barghouti explained that the strength of BDS is its "indirect, palpable psychological impact on the mainstream Israeli psyche."

Apart from efforts to enlist support for a business boycott, there have also been efforts at a cultural boycott by performers who refuse to appear in Israel. They include directors Mike Lee, Ken Loach, Mira Nair, Jean Luc Godard, musicians Elvis Costello, Stevie Wonder, Roger Waters and Lauryn Hill.

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