Labour MPs with heads in a bubble about Palestinian workers and land
For earlier report, January 2012, see Bursting Sodastream’s bubbles
Why do some Labour MPs know – or care – nothing about the laws being broken by Sodastream?
By Sunny Hundal, Liberal Conspiracy
January 24, 2013
This week the foreign secretary William Hague announced in FCO questions that the two-state solution to the conflict between Israel and Palestine is slipping away, largely as a result of settlement construction [see Hague says 2-state solution should be single highest priority for new US government]. He also talked about exploring “incentives and disincentives” to settlement construction, but failed to elaborate on what these might be.
Meanwhile, as Israelis went to the polls to elect their next parliament, the UK’s largest pro-Israel lobby group BICOM (Britain-Israel Communications and Research Centre) hosted an election night party for the Labour, Conservative and Lib Dem Friends of Israel at Skyloft in Millbank tower.
Organisers of the event were publicising the Israeli company SodaStream (a fizzy drinks makers), having the company’s carbonators on hand to provide soft drinks. Sodastream was name-checked by Israeli Ambassador Daniel Taub from the platform and BICOM was thanked for promoting a great Israeli export.
Except that Sodastream’s ‘principal manufacturing facility’ is located in Mishor Adumim, which is the industrial zone of one of the largest illegal settlements on the West Bank, Ma’ale Adumim.
Mishor Adumim, the industrial zone which promoted the expansion of Ma’ale Adumim, one of the largest settlement. It borders ‘E1′, the corridor to Jerusalem for the West Bank which Netanyahu has said he will block with a new settlement.
Mishor Adumin, the industrial zone which promoted the expansion of Ma’ale Adumim, the illegal settlement which borders the E1 West Bank corridor to Jerusalem which Netanyahu has said he will block with another settlement.
Last October, 22 European NGOs published a report on the effects of settlement construction on the Palestinian economy and prospects for statehood.
That report included a section on Sodastream and how it pays taxes directly back into the settlement enterprise and intentionally mislabels its products ‘Made in Israel’.
BICOM has form on not caring a great deal about illegal settlement construction on the Palestinian West Bank. They have repeatedly played down the importance of settlements in articles on their site and at the Telegraph and Huffington Post.
Furthemore, BICOM’s Chairman and primary funder, Poju Zabludowicz has significant investments in a mall in Ma’ale Adumim settlement – and has property on the West Bank himself.
But Labour Friends of Israel prides itself on the slogan “working towards a two-state solution”.
So how can anyone claim to be working towards a two-state solution in Israel while supporting the very settler economy which makes such a solution impossible? Labour Friends of Israel are contributing towards greater instability in the region with such alliances.
By Who Profits
Moving to a West Bank Settlement
In 1996, SodaStream, then Soda Club, made a strategic decision to embark on the independent manufacturing of soda makers. It then opened its first plant. The location chosen was Mishor Edomim, the industrial park of Ma’aleh Edomim, an illegal settlement east of Jerusalem. The SodaStream site includes a metal factory, a plastic and bottle-blowing factory, a machining factory, an assembly factory, a cylinder manufacturing facility, a CO2 refill line and a cylinder retest facility. This 164,000 square foot facility in Mishor Edomim is also used as a warehouse and as offices.
In an interview for Globes magazine given in March 2000, Peter Wiseburgh, the founder of the company, explained that he
chose to build the factory in Mishor Edomim because of the low real estate prices and lax bureaucratic regulations he found
there. “I looked everywhere,” he said, “but anywhere I looked the bureaucracy was cumbersome. When I got here, the space
[formerly occupied by the Israel military industry] was deserted and full of pigeons.
So I just turned around and walked away. A week later, the Jerusalem Economic [which leases the industrial zone from the
Israeli Civil Administration] offered to give me the site for free for the first six months, and then for forty-four thousand shekels rent per month and also offered one hundred thousand dollars in cash for the cost of renovating the place. I rented 13,000 square meters, and it was a good deal. Not a political act”. The registration statement by the company, which was filed to the American Securities and Exchange Commission (SEC), as part of the process of registering the company on NASDAQ, gives the public a rare glimpse into the internal considerations of a settlement producer, weighing consumer boycotts and possible negative publicity, against the economic benefits of having a factory in a settlement. On the one hand, the statement lists boycott campaigns as a significant “risk factor”. The location of the factory on occupied land is described as causing “rising political tensions and negative publicity,” and the company adds that it “may negatively impact demand for our products or require us to relocate our manufacturing activities to other locations.” Another “risk factor” that the statement mentions is the new legislation by the Palestinian Authority, which may prohibit Palestinians
from working for Israeli companies located in the West Bank.
On the other hand, SodaStream declares that moving its factory out of the settlement would require the expenditure of resources and, more importantly, “limit certain of the tax benefits for which we are currently eligible.” These benefits stem from the fact that, as aforementioned, the Israeli government provides economic incentives, including tax deductions,
for businesses operating in West Bank settlements.
Palestinian Workers in the Israeli Industrial Parks in the West Bank
The Israeli occupation of the Palestinian uterritory conquered in the 1967 war has become an issue not only of land but of
labor, too. Israeli employers see Palestinian workers as cheap labor to whom they do not have to provide the full set of workers’ rights and legally required conditions. Due to the difficult economic situation and the high percent of unemployment in the occupied Palestinian territory (oPt), many Palestinians are forced to earn their living in the settlements, despite the fact that by doing so they support the settlement economy.
It is important to highlight that the Palestinian residents of the West Bank who work in settlements suffer not only from potentially exploitative employment conditions, but also from the fact that they are occupied subjects and thus they do not enjoy civil rights, and depend on their employers for work permits.
The main criterion for receiving such a permit is a ‘security clearance’, which attests that the worker’s personal record in the Israeli security forces records is clear of any action or pronouncement which is defined as endangering Israel’s security. Ironically, involvement in a labor disagreement with an employer is also defined as a security risk.
Thus, workers jeopardize their work permit if they demand anything of their employers. By losing this permit, workers do not only lose their current employment; they also lose the ability to work in settlements in the future. Therefore, fear
of losing the work permit most often overrides the workers’ desire to demand their rights. Consequently, it is very rare for Palestinian workers to demand their legal employment rights.
Palestinian Workers at the SodaStream Factory
Most of the Palestinian workers in the SodaStream factory in Mishor Edomim come from the Palestinian villages and cities which are adjacent to the Ma’aleh Adumim settlement: Azaria, Abu Dis, Hazma, and Jericho. According to reports from
three consecutive years (2008 to 2010) of Kav LaOved (an NGO committed to protecting the rights of disadvantaged workers employed by Israeli companies), the workers in the SodaStream factory suffer from harsh working conditions. This is particularly true for the Palestinian workers.
During the last few years, there have been several occasions on which workers complained about low wages and poor working conditions, and about ‘revolving door’ employment policies. A Palestinian worker, Salim, who was hired in 2008, states in
a report to Kav LaOved (April 2010): “I’ve been working for almost two years, and every few months there’s a problem:
workers are let go, and new ones brought in. We work hard to stay at the factory, but we feel insecure. There are rumors they’ll be hiring workers to replace those fired.”
In April 2008, and following several unheeded appeals to the contractor to increase the workers’ salaries, the Palestinian workers decided to hold a protest at the factory, hoping to improve their work conditions, including their wages, which were far below the minimum wage. Salwa Elinat, a coordinator for Kav LaOved stated at the time, after meeting with workers from the factory: “The Palestinian workers say that they are being discriminated against, they don’t even earn half of the minimum wage and the work conditions are terrible. If they demand their rights they will be fired. It is like this in many factories in this area but Soda Club’s factory is one of the worst”.
According to Israeli law, based on a 2007 Supreme Court ruling, Palestinian workers from the West Bank are entitled to the
same rights enjoyed by Israeli workers. This ruling was a result of a 14-year struggle led by Kav LaOved in the Israeli Labor Court.
According to Kav LaOved, “The length of the struggle and the persistent resistance of the State of Israel to the application of Israeli labor laws in the settlements reflected the State’s preference to maintain low labor costs in the settlements. A cheap and available workforce was an incentive for Israelis and foreigners to invest in the settlements.”
At that time, and in reaction to the protest, 17 Palestinian workers were fired, and then were rehired with better conditions, only following the publication of the story in the Swedish press and the intervention of Kav LaOved.
However, according to Kav LaOved’s report of March 2010, Palestinian workers continue to be “at the bottom of the hierarchy in the factory and remain fearful of dismissal”. In March 2010, the Palestinian workers were fired again, allegedly because SodaStream wanted to hire them directly and not through a subcontractor. The workers told Kav LaOved that Sol Pearl Ltd., the Israeli subcontractor which employed the Palestinian workers, demanded 6,000 shekels (approx. 1,250 Euros) from each worker for their ‘release’ from their contract. Sol Pearl denied these claims. However, on April 16, 140 Palestinian workers who were employed by SodaStream through Pearl Sol were fired and were not paid their March salaries. When the workers, relying on the promises of Sol Pearl, returned to the factory to collect their salaries, SodaStream
called the security personnel of the settlement, asking them to expel the workers from the factory and to keep them off the
premises of the industrial zone.
Only after Kav LaOved intervened were the workers paid their salaries, and SodaStream promised to rehire the dismissed
workers who were employed via Sol Pearl.
However, although SodaStream did rehire the workers, it did not hire the two workers who led the struggle and were the contact people for Kav LaOved. Since then, Kav LaOved has not been able to obtain any information concerning the working conditions of the Palestinian workers at SodaStream.
SodaStream is located in the Mishor Edomim Industrial Park, which is one of 17 industrial parks Israel has established in the occupied Palestinian territory. The industrial parks in the oPt were developed to serve illegal settlements as places of employment and sources of revenue. They also serve the major Israeli urban centers, by providing the benefits of nearby industrial production, without the downsides of heavy industrial activity in the urban area. These parks were established to explicitly serve the settlements, the Israeli economy as a whole and to strengthen Israeli control of the oPt. The Mishor Edomim Industrial Park constitutes a permanent infrastructure, which serves the settlement of Ma’aleh Adumim and the Jerusalem area, as well as Israeli businesses and workers. This is despite international law, which prohibits the occupying power from constructing permanent infrastructure in occupied territory, unless it is for military use or serves the Coninterests of the occupied population. The history of the establishment of Mishor Edomim suggests that the intention of
the Israeli government from the very start was to create an industrial park for the development of Jerusalem. The Mishor
Edomim Industrial Park was established in 1974, following a decision by an interministerial committee convened by the
government and headed by the Attorney General. The committee’s mandate was to locate land set up a new industrial park
for Jerusalem. The committee reviewed a number of alternatives in the Jerusalem area, some within the Green Line (in Israel), and some on occupied land in the West Bank.1 The committee’s final recommendation was in favor of Mishor Edomim, in the West Bank. On November 23, 1974, the government adopted the recommendation to establish the Mishor Edomim Industrial Park.
Section B of the government decision states as follows:
Development of Mishor Edomim as an industrial park for Jerusalem:
1. The Mishor Edomim area will be developed as an industrial park for Jerusalem(…)
2. The planning will consider the urban and industrial development needs of the city of Jerusalem in coordination with the Jerusalem municipality.
3. The legal aspects of land reclamation for the project will be arranged by the military administration according to the Attorney General’s instructions.
Therefore, from the start, the Israeli government designated this area, which is within the occupied territory, for the development needs of Jerusalem, in a way that does not conform with international law and without regard for the needs of
the local population and original land owners. Furthermore, the industrial park of Mishor Edomim was built with the explicit plan of bringing about the establishment and development of the settlement of Ma’aleh Adumim. The inter-ministerial committee located an area of land spanning 4,500 dunams (ca. 1,100 hectares) for the industrial park. However, the ministerial committee, which was set up by the government to execute the plan, instead, decided on expropriating an area almost seven times larger (30,000 dunams or ca. 7,500 hectares). The government decision, which referred to the construction of an industrial park at Mishor Edomim, also allowed for the construction of accommodation “for workers whose work is in the area”. Following that, a “workers’ compound” was erected in the winter of 1975. Later that year, this compound was declared the settlement of Ma’aleh Adumim. This was among the largest land expropriations in the history of the occupation, spanning a vast area from Jerusalem to the city of Jericho.
Thus, the creation of the Mishor Edomim Industrial Park played a central role in the establishment and development of the
Ma’aleh Adumim settlement, which today occupies the largest land area of all Israeli settlements and, with its 35,000 residents, ranks third in population. Because of its scale, its location and the difficulties associated with relocating such a large and established population, Ma’aleh Adumim is, today, considered to be a major obstacle to any future peace agreement. The land expropriated for Mishor Edomim and Ma’aleh Adumim originally belonged to the Palestinian towns of Abu
Dis, Azarya, A-Tur, Issauya, Han El Akhmar, Anata and Nebbi Mussa. Israel used two methods to take over the land. The first
is known as the Survey Procedure, which Israel uses to convert private Palestinian land to “State Land” (or government property). This method is based on a manipulative interpretation of the Ottoman Land Law of 1855, which often leaves Palestinians whose land is converted as such with no plausible legal recourse to protect their ownership of the land.
Other parts of Mishor Edomim are also located on private Palestinian land. Israel assumed control over these lands using a
procedure called Expropriation for Public Purposes. It allows the occupying power to expropriate land to serve the local population. This expropriation evidently was not used to serve the local population, which not only renders it illegal according to international law, but also according to Israeli military law. This is considered the largest single expropriation in the history of the Israeli occupation. Expropriation of land has made an abundance of land available at attractively low lease prices in the industrial park. This, with other government benefits, attracted companies such as SodaStream to relocate there, as it did in 1996.
The Framework of Export from srael to the EU
In June 2000, the EU-Israel Association Agreement came into force. The agreement defined Israeli goods as exempt from
customs fees. The West Bank, East Jerusalem, Gaza and the Golan Heights are not recognized as part of Israel by EU member
states. However, de facto, Israel applied the agreement to the occupied territory as well, creating a fierce dispute between Israel and the EU. This dispute was resolved in August 2004, when Israel agreed that Israeli goods would be marked with their place of origin so that the customs authorities of the EU member states could distinguish between products from the settlements and products from inside Israel proper. In practice, an unknown amount of goods produced in settlements are still exported as Israeli products.
Settlement Products are not Part of the Preferential Trade Agreement
On February 25, 2010, the European Court of Justice in Luxembourg ruled that goods produced in settlements in the occupied
West Bank must not be considered as made in Israel. The decision stated:
Products obtained in locations which have been placed under Israeli administration since 1967 do not qualify for the preferential treatment provided for under that agreement […] Products originating in the West Bank do not fall within the territorial scope of the EC-Israel Agreement and do not therefore qualify for preferential treatment under that agreement.
The decision was made following a disagreement between the German distributer of SodaStream, Brita, and Hamburg’s port customs office. Brita, which imported SodaStream products manufactured in Mishor Edomim, reported to the customs
authorities that the source of the goods was Israel, in order to avoid paying customs. The German authorities suspected
that the source of the goods was a settlement, and asked the Israeli Customs Authority to validate that the soda devices
were not made in the West Bank or Gaza.
The Israeli Customs Authority replied that the source of the goods is in a region un-der its responsibility, but did not declare that the goods were not produced in the territories. As a result, the customs authorities of Hamburg imposed import tariffs on the goods, claiming that it is impossible to rule out production in the West Bank or Gaza. Brita contested the decision to the Court for financial affairs in Hamburg (Finanzgericht Hamburg), which referred the case to the European Court of Justice. The Court of Justice’s ruling backed the customs authorities of Hamburg, in line with overall EU policy.
The ruling of the European Court of Justice has considerable implications, politically as well as economically. It was a further blow to Israel’s settlement policy in general, and to SodaStream in particular. The ruling also serves as precedent for other products which are produced by companies in Israeli settlements in the occupied territories. With its ruling, the court has taken a clear stance, stating that the occupied territories should not be seen as part of the State of Israel. It is interesting to note that SodaStream did not provide a disclosure about the ruling against it in the European Court of
Justice in its report to the U.S. Securities and Exchange Commission on October 19, 2010.
Mislabeling and Consumer Fraud
Mislabeling of settlement products has another aspect; it raises the issue of consumer fraud. A settlement product cannot
be considered to be a product of Israel; if these products are sold under the Made in Israel label it raises suspicions that this information misleads consumers. The definition of consumer fraud varies from country to country. The prohibition against consumer fraud is generally perceived as part of the consumers’ right to know the basic facts about the product they are purchasing, a right which has been enshrined in consumer protection laws. The place of production is part of this basic information. For many years SodaStream was a private company, and thus information about the location of its production facilities was incomplete. That changed in October 2010, when the company went public on NASDAQ and was obligated to disclose extensive details about its operations. In its report to the SEC on October 19, 2010, under the section “Manufacturing and Production”, SodaStream explains where each of its products is produced. For the manufacturing of the carbonation devices SodaStream indicates only one production facility: the factory in Mishor Edomim.
This factory is used for metal works, plastic and bottle blowing, machining, assembly, cylinder manufacturing, CO2 refill and cylinder retest. The syrups are manufactured in the Ashkelon factory (within the Green Line). “Certain components” of the products are outsourced to two subcontractors in China. The CO2 cylinders are refilled in facilities in Australia, Germany, Israel, New Zealand, South Africa, Sweden and the United States.
To explore the issue of mislabeling and potential consumer fraud, we initially chose to look at labels on the carbonation devices, because, according to the company’s own statement, the entire production of these products takes place in the Mishor Edomim Industrial Park in the occupied Palestinian Territories. The following are a few examples of packages of SodaStream devices from retail shops in European countries:
A package on display at Co-op City department store in Bern, Switzerland is sold under the label Made in Israel. As seen in
photo number 1, the address reads: “Gilboa Street, Airport City, Ben Gurion Airport”.
Airport City is a business center next to the Ben Gurion Airport. The device could not be manufactured there as SodaStream
runs no factory in Airport City, but only offices and a warehouse, as stated by SodaStream itself in its October report to the Securities and Exchange Commission and, also, as evident from pictures of the company’s facility published on the Airport City website.
On January 4, 2011, new pictures of two packages of the carbonation device were taken at a Coop City store in Bern,
Switzerland. Again, the packages bore the label Made in Israel, using the address of SodaStream offices in Airport City. Photo number 3 was taken on the same date in a Manor department store in Bern, Switzerland. In this case the print on the package reads “Made in Israel”, however, a small sticker placed on it reads “Made in Mishor”, although “Mishor” is not
a known country or city. Photo number 4 shows the package of a carbonation device sold at a Carrefour shop, Hérouville Saint Clair, Calvados, France, on December 17, 2010. The label on the package reads Made in China, although in the company’s statement there is no mention of device production in China, but only of “certain components”. We later decided to look at other products sold under the label Made in Israel.
A package of a SodaStream bottle for use with the carbonation device was bought on November 16, 2010, at Super de Boer in Utrecht, the Netherlands. See photo number 5. Here again, the product is sold under the Made in Israel label. The address
on the package is that of company offices in Airport City. However, SodaStream has only one factory that produces bottles in Israel and the occupied Palestinian territory – the factory in Mishor Edomim, which is not mentioned on the package.
The issue of labeling became a hot topic as pressure from the growing global Boycott, Divestment and Sanctions (BDS) movement on Israel mounted. This led SodaStream to issue several statements about the location of its factory.
In Sweden, which is one of SodaStream’s main markets, a report published in 2008 by the development organization Diakonia on another company located in a settlement (Assa Abloy’s Mul-T-Lock), turned the media’s attention to SodaStream as well. As a result, Empire, which sells the devices in Sweden, said it was not aware that the factory was located in a settlement, and added that it had informed SodaStream that Empire did not want the factory to stay there. Mr. Daniel Birnbaum, CEO of SodaStream, was asked for comments by the National Swedish Radio. He said SodaStream, “will supply the Scandinavian markets with products sourced from any of our 7 facilities other than the Mishor plant”.
However, as the information disclosed by the company in their report to the SEC indicates, this statement cannot be supported by the facts, as described at length above. In addition, in a letter to EU customs authorities on April 15, 2010, SodaStream confirmed that its “carbonation machines are produced at […] Mishor Adumim Industrial Zone”. But the letter leaves open the possibility that the carbonation devices were not produced in a settlement or in Israel, by adding a
reservation: “unless otherwise indicated on the packaging”.
Labour Friends of Israel
First posted in Conservative Friends of Israel biggest group in parliament
Director: Luciana Berger MP
Chair: Andrew Gwynne MP
Vice Chairs: Andrew Dismore MP, Louise Ellman MP and Glenis Willmott MEP.
Policy Council: Rt Hon Stephen Byers MP, Rt Hon Derek Foster MP, Rt Hon George Foulkes MSP, Jane Kennedy MP, Rt Hon Paul Murphy MP, Rt Hon Don Touhig MP and Denis MacShane MP. House of Lords Chair was Baroness Ramsay of Cartvale.
David Abrahams – former Treasurer
Lord Archer of Sandwell
Sir Stuart Bell MP
Tony Blair former MP and Prime Minister
Lord Janner of Braunstone Q.C. Former MP for Leicester West, Former President of the Board of Deputies of British Jews & Current Chair of the British Israel Parliamentary Group.
David Blunkett MP and former Home Secretary
Gordon Brown MP and former Prime Minister
Chris Bryant MP and former Minister for Europe
Stephen Byers former MP and Secretary of State for Trade and Industry
Wayne David MP
Derek Foster MP
Lord Foulkes MSP and former MP
Mike Gapes MP – former Vice Chair of LFI (2004)
Anthony Greenwood MP, first Chair of LFI (1957)
Fabian Hamilton MP
Joan Humble MP
Barbara Keeley MP
Jane Kennedy MP – Chair (2007)
Ivan Lewis MP, former Vice Chair of LFI
Lord Macdonald of Tradeston
Denis MacShane (former MP, now resigned over his expenses)
Jonathan Mendelsohn – former Chair of LFI (2002)
Alun Michael MP, former Leader of the Welsh Labour Party
Andrew Miller MP
Jim Murphy MP – former Chair of LFI (2001), former Secretary of State for Scotland
Dan Norris former MP
Nick Palmer MP
James Purnell former Chair of LFI, MP and Secretary of State for Work and Pensions
Baroness Ramsay of Cartvale
John Reid former MP and Home Secretary (2007)
Terry Rooney MP
Siôn Simon MP
Dari Taylor MP
Gary Titley MP
John Woodcock MP, Chair of LFI (2011)
Iain Wright MP, former Chair of LFI (2006)
Lord Young of Norwood Green