Gilad Erdan Handed the anti-BDS Mantle

Israeli officials note that while the boycott movement has inflicted little damage so far, it is picking up steam.

Emil Salman

Gilad Erdan, who in addition to being information minister and public security minister is also strategic affairs minister, is creating a unit in the latter ministry to combat foreign efforts to boycott Israel. Erdan has been formally given the green light to handle the issue, as well as a budget, according to diplomatic sources.

The Boycott, Divestment and Sanctions movement has increased its public profile recently, notably over the European Unions move to require origin labeling for products from West Bank Jewish settlements. BDS activists are also leading efforts to get United States colleges and universities to divest from companies that have business ties with Israel, including firms with a presence in West Bank settlements or that do business with the Israel Defense Forces.

Israeli officials say that while the BDS movement has had only a marginal impact so far, it seems to be gathering support over a feeling in many Western countries that Prime Minister Benjamin Netanyahus new government is unlikely to vigorously pursue peace talks with the Palestinians. If not a present threat, BDS is seen as a potential future strategic threat.

The boycott has been around in various forms for decades, and in earlier years centered on a refusal in the Arab world to do business with companies that conduct business in Israel. Confronted with the choice of Arab business or the benefit of a presence in a Jewish state that had a small, generally poor population at the time, for some companies the decision was to opt for commerce with the Arab world. That boycott faded by the 1990s, particularly after Israel and the Palestine Liberation Organization signed the first Oslo Accords in 1993.

The newer incarnation of the boycott is the BDS movement, which has also resulted in raucous demonstrations in front of Israeli offices and stores selling merchandise made in the settlements.

The Europeans have excluded products produced in West Bank settlements, which are outside the sovereign territory of the State of Israel, from liberalized trade provisions that commerce between EU countries and Israel normally enjoy. In addition, the settlement labeling provision is expected to come into force in the coming months so that consumers can identify such products more easily. Nonetheless, a spokesperson in Israel for the European Commission told TheMarker that the EU is officially opposed to boycotts of any kind, including anti-Israeli boycotts.

The most recent controversy over the prospect of overseas businesses pulling out of Israel came with comments made in Cairo last week by Stephane Richard (see further coverage below), CEO of Orange S.A., the firm that used to be known as France Telecom. He reportedly said that he would pull the use of the Orange brand by Israel cellular service provider Partner Communications tomorrow if it wouldnt cost the company major sums in legal damages. Richard later apologized for any offense caused, and his company explained that he was referring to a corporate decision that the Orange brand not be used by firms that Orange S.A. doesnt own, rather than any anti-Israel animosity.

In response to the flap, however, an emergency anti-boycott summit was convened in the American Jewish community by Las Vegas gambling magnate Sheldon Adelson, a major supporter of Republican candidates in the U.S. and the Netanyahu government, and by Israeli-American entertainment mogul Haim Saban, a Democratic party supporter who has a controlling interest in Partner Communications.

European Jewry has also mobilized. The Europe Israel Press Association is organizing a mission to Israel for about 15 senior business reporters and editors from Britain, France, Germany, Italy, the Netherlands, Belgium and Poland, with the aim of making it clear to Europeans what they stand to lose by boycotting Israel.

Rabbi Menachem Margolin, who founded the EIPA and also serves as director of the European Jewish Association, said that in his opinion anti-Israeli sentiment has long ago been transformed into the new form of anti-Semitism that European Jewry is confronting. In recent years, the advocacy efforts have included dialogue sessions with hundreds of editors, reporters, bloggers and commentators from leading European media outlets. The effort has been funded by European Jews, Margolin said, adding that he thinks the time has come for the Israeli government to provide funding for it. He suggested that the funding be drawn from the defense budget, since he said it affects the security of Europes Jews and Israel.

Economists and business people in Israel are still voicing the opinion that the effects of the boycott have been marginal, involving mostly damage to Israels image. Most of the companies making concessions to the boycott are European, along with a few American firms. The high-tech sector seems immune to the pressures – the technology sector here includes global giants such as Google, Facebook, Apple and Intel.

European companies involved in the infrastructure and defense sectors, however, seem more sensitive to pro-Palestinian campaigning. Someone who was involved in the purchase of training aircraft from Italy for the Israel Air Force in a transaction signed about six months ago recounted: When we put the transaction together, we were careful not to put British components into the planes because Britain bans the export of military equipment parts that could be used for an attack.

The boycott has also affected investment in Israel, as is apparent from the fact that the major global energy companies have not sought to explore for natural gas in Israels economic waters. (Instead a consortium that includes a smaller U.S. firm, Noble Energy, has.) Economic sources say the absence of the energy giants is the result of the boycott rather than any Israeli government regulatory policy.

On the other hand, a Dutch infrastructure company that does business in the Arab world recently submitted a bid to build a new privately-run port in Ashdod, We havent encountered any negative aspect on the part of major Dutch companies operating in Israel, Henriette Fuchs, an international tax lawyer with the Pearl Cohen law firm, noted this week. On the contrary, they relate to business with Israel in a very professional manner.

The companies know how to split their operations between Israel and the Arab world, she added, so as not to alienate Arab customers.

On the other hand, Norman Menachem Feder of the Caspi & Co. law firm noted negative political consequences on foreign business transactions after Israel built the West Bank separation barrier, a project that started more than a decade ago, which he said caused some infrastructure firms to leave Israel unexpectedly. But Feder also noted that legislative efforts have been gaining traction in the U.S. to combat the anti-Israel boycott.