The following article is written by Sydney-based Evan Jones (his previous contribution to the site is here):
Israel has long thumbed its nose at international law and its moral underpinnings. But its flouting of the International Court of Justice’s July 2004 ruling declaiming the illegality of the wall cutting through the West Bank was a threshold for dissenters. The Boycott, Divestment and Sanctions movement against Israel took off, and has acquired fresh impetus after each Israeli outrage that transcends its garden variety daily criminality.
A decisive event was the campaign against French infrastructure services giant Veolia. Veolia was involved in a light rail project that was to connect West Jerusalem to West Bank settlements. In January 2009, the Stockholm community council declined to renew the operating contract for Stockholm’s subway system with Veolia’s subsidiary, Connex, the largest public sector contract then on offer in Europe.
Isolated skirmishes have escalated. But what is the likelihood of such efforts having a substantial impact on Israel’s economy? Adam Horowitz and Philip Weiss (of the Mondoweiss blog) have neatly (if crudely) articulated the division of labour: “boycotts are commonly carried out by individuals, divestment by institutions and sanctions by governments.”
What amongst Israeli exports provides prime opportunities for boycott? Fruit and vegetables? Demonstrations down the aisles of French supermarket giant Carrefour are heart-warming. But apart from the problems of accurate source labeling, fruit and vegetables constituted only 1.2% of merchandise exports in 2008 and 1.8% in 2009. Together with manufactured food products and textiles/clothing/footwear, these three important consumer categories constituted less than 5% of merchandise exports.
Israel’s largest export category is diamonds. Diamonds (including rough) constituted over 30% in 2008 and 24% of exports in 2009 (adversely hit by the GFC). Here is the particular skill of Jewish communities that has survived 500 years of persecution and discrimination. In the hands of Lev Leviev and others, this hallowed occupation is now being employed for the persecution of others. The diamond trade is a key pillar of the Israeli economy, but diamond buyers are possibly the most apolitical of consumers.
The bulk of Israel’s exports are manufactured intermediate goods and machinery/equipment, destined for business users. Intel, the largest private sector employer, alone contributed US$3.4 billion in exports in 2009. Boycotts are an improbable agenda in this realm. Some of this machinery and equipment is sophisticated and linked, as in the US, to an industrial sector embedded in military imperatives.
Then there is the arms trade proper. Israeli arms exports ballooned in 2009 to US$760 million, destined to myriad countries (information from the Stockholm International Peace Research Institute, SIPRI). India is now on the drip, with arms sales a key means of bringing India into Israel’s fold. From 2000 onwards Israel sold weaponry to Sri Lanka in facilitating the latter’s successful obliteration of the Tamil separation movement. Apart from armoured vehicles, Israel’s surveillance turned killer drone is a bit hit amongst potential customers. Arms sales are, of course, an ethics-free zone.
But here is a dimension of interest. The most important 2009 customer for Israeli arms exports was Turkey (with close relations between the two militaries), to the tune of US$320 million. The Gaza massacre was a turning point for Turkey; a healthy earner for Israel may disappear from this most reliable of profitable sectors, assuming that US-Israeli subversion doesn’t overturn the incumbent Justice and Development Party beforehand.
Israel’s overall current account balance was perennially in deficit (“living beyond their means”) but has been in surplus since 2003. The aggregate of net merchandise and services trade and capital financing costs remains consistently in deficit, but is offset by sizeable transfers from abroad which in 2008 topped US$9.4 billion. Part of this sum is the annual grant from US taxpayers, which helps foot the bill for Israel’s purchases of American weaponry. In spite of Israel’s self-confidence regarding its trade sophistication, Israel remains a mendicant state.
Israel’s exports to Australia are representative of its export trade in general (apart from arms). Of total Australian imports of $715 million in 2008-09, the largest category is ‘pearls & gems’ (read diamonds) at $81.6 million. Politics is rarely uppermost in the minds of betrothed couples seeking to symbolise their union. Fertiliser (farmers, are you out there?), machinery and intermediate goods comprise the bulk of the remainder. Of the few consumer items on which Australians could exercise a personal boycott, caesarstone is a standout case, but also footwear.
Playing the underdog card to the hilt (not least in the face of early boycotts from Arab countries) and pushing the cultural affinity line, Israel has worked assiduously for decades to secure and entrench trading and financial relationships, to make Israel economically impregnable. A breakthrough occurred in December 1994 when the European Union granted Israel ‘special economic status’, on the basis of ‘reciprocity and common interest’ (which incidentally included development of the Occupied Territories). The agreement gave Israel privileged access to the massive EU market.
There has followed deeper integration of Europe-Israel economic relations with a series of arrangements for joint investment and research activities – in particular, the EU-Israel Association Agreement of 2000, and an April 2008 consolidation. The ongoing economic ‘integration’ was given a formal political dimension with the April 2005 Action Plan, claiming: “The EU and Israel share the common values of democracy, respect for human rights and the rule of law and basic freedoms. … Historically and culturally, there exist great natural affinity and common heritage.”
Europe has long been Israel’s major trading partner, although Israel now exports more to the US than to all of Europe (US$ 16.8 billion and US$15.4 billion in 2009). Europe, however, remains Israel’s major source of imports, with Germany as Israel’s most important European supplier (Belgian trade is mostly about diamonds).
Israel has also assertively pursued free trade agreements, beginning with the US in 1985. This FTA has been a boon to Israel, with the trade balance working consistently in Israel’s favour, underpinning the rise of the US as Israel’s dominant market. Israel has also established FTAs with the EFTA countries (1992), an Eastern European bloc (1996-99), Mexico (2000), Turkey (2000), the MERCOSUR countries (2007) and Canada (2009).
Finally, in May Israel achieved membership of the OECD, which formally requires a decent record on human rights, and thus a monumental diplomatic achievement. The decision comes courtesy of the US strong-arming member states, not least Turkey. Haaretz correspondent Aluf Benn laid out the significance, with Israel selling itself as: “… a small island of Western values and development in an Arab and Muslim sea. Now we’re in the club and the Palestinians, Egyptians and even the Saudis aren’t. They’re not even on the waiting list. In the OECD they can’t bother Israel with decisions condemning the occupation.”
On the sanctions front, the situation remains parlous. The edifice would start to crumble if the US pulled the plug, but hell will freeze over. The US Congress is owned by Israel, reflected in its indulgence of the 2008-09 Gaza massacre and its subsequent condemnation of the Goldstone report into Israeli culpability. Europe is equally in bed with Israel (Germany is under permanent blackmail), save for dissent on the margin from Norway and Sweden, and now Ireland. Europe raises muffled concern, but continues to extend measures furthering the miscreant’s integration into the fold of privilege.
Civic boycotts were conceived because of Western governments’ complicity in Israel’s crimes, and the improbability of meaningful sanctions ever being applied. Yet Israel’s susceptibility to economic boycotts by consumers is walled about by the same political superstructure that prevents sanctions, and reinforced by the generally tightly packaged character of Israeli trade, integrated into supportive American and European markets and with industrial trade submerged within commercial supply chains.
Consumer boycotts are limited in potential aggregate impact but can have effect on specific products (Ahava cosmetics, Max Brenner chocolates). Turkey is now a significant wildcard. But the heavyweight vehicle on the economic front is the docking boycott, which hampers all Israeli exports regardless of character and end user. Witness the blockage at Oakland by a pro-Palestinian coalition on 20 June, and that by Swedish dockworkers at Gothenburg after 23 June.
Divestment, ironically mediated by corporate self-interest, appears to be an avenue less blocked. Alas, the heralded divestment of Deutsche Bank from Israel’s largest defence firm Elbit appears to have been a false alarm. But, despite the slow pace, not least due to the omnipresent shock troops for the status quo, there is momentum. Unsullied church groups and employee pension funds are leveraging shareholder power – if not in quantum at least in symbolism.
The boycott resolutions by two of Britain’s largest unions, Unite (4 June) and UNISON (24 June) are probably also initially more symbolic than substantive. But symbolism matters, as embodied in the climactic isolation of the South African springboks and its after-effects. Add the cultural arena, where the potential impact is great. The September 2009 boycott of the Toronto Film Festival showcasing Tel Aviv is significant; ditto the protests against performances of the Jerusalem Quartet in Australia (late 2009) and London (March 2010). The recent cancellations of tours by music groups to Israel is an exemplary escalation of the cultural boycott.
Exporting Israeli culture abroad is a formal strategic vehicle to deodorise the naked imperative of lebsensraum at home. Yet the highlighting of the explicit propaganda role of such connections by would-be boycotters is met with fury by that fusion of self-delusion and mendacity that is peculiar to the Israeli hasbara. Embarrassing for its degeneracy yet curiously comforting to watch because of its unsustainability. Bring it on.