Boycott of settlement goods is biting hard

The cover story of this morning’s (June 21 2010) Maariv business section reports that targeted boycott and divestment actions — Israeli, Palestinian and international — are pushing an increasing number of Israeli companies out of the West Bank settlements and into Israeli proper:

He [Yaakov Malach, CEO and owner of a company located at the Barkan Industrial Zone] says, “there is not a single factory in Barkan today that is not searching for alternative locations inside Israel, particularly if the construction freeze continues.”  However, other factory owners are not willing to discuss the matter at the moment, for fear of prematurely harming their workers.  “Clearly, we’re concerned, and we are also examining things, but we don’t want to reveal the name of the factory,” a CEO of one of the largest factories in the area told Ma’ariv.

Along with this, Avraham Barkan, director of the Jezreel-Afula industrial zone administration, reports that he has received a number of requests from owners and managers of factories located over the Green Line, regarding the relocation of their activity to the Alon Tavor industrial park.  Barkan attributes this to the factories’ fear of a shortage of workers as of the start of 2011, because of the Palestinian boycott, and to the fear that the construction freeze will continue

On June 17 2010, Calcalist’s Weekend Supplement profiled Who Profits?, the organization that compiles much of the data enabling targeted action:

Dr. Dalit Baum and Merav Amir watched all of that media noise from the side. They prefer to remain behind the scenes: to manufacture the thunder but to be away from the stage when it rolls into the media. The two are responsible for the project “Who Profits From the Occupation” that maps Israeli companies that earn money from the Israeli presence in the territories. Baum and Amir, with another 10-20 activists, do an in-depth study of each company, “based on stock exchange reports, newspaper reports and more,” explains Amir.

Full translations of both articles are posted below.

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Factories over Green Line looking for way back

Ronit Morgenstern, Maariv, June 21 2010 [business section cover story; Hebrew original here]

Ma’ariv has learned that the Achva factory, which is located in the Barkan industrial zone in Samaria, over the Green Line, is examining the possibility of relocating its factory for manufacturing halva and tehina into the boundaries of the Green Line.  The revenues of the factory, which is the leading factory for halva in Israel and one of the leading manufacturers of tehina and pastries, come to about NIS 100 million per year.

Yaakov Malach, CEO and owner of the company, which exports about 25% of its products, says that he is encountering increasing difficulties on the part of clients in Europe, because he is situated over the Green Line.  “Selfridges of London took our products off the shelf in the past,” Malach relates, and adds that “it is difficult to reach sales points in Europe because of the fact that our products are marked as ‘Made in the West Bank.’”

Malach adds that the company also absorbs the special 7% tariff that is imposed on products manufactured over the Green Line, in order to keep his European clients.  “Now the situation is even more complicated because of the Palestinian boycott, which affects clients abroad.  What will break us down, and other factories in Barkan, is the fact that starting on January 1, 2011 Palestinian workers will no longer be permitted to work in Israeli factories over the Green Line.”

Achva has recently invested some NS 35 million of its capital in setting up a new pastry factory in the Ariel industrial zone, near Barkan.  “Despite the large investment, and despite the fact that we have prepared a nearby area for transferring the halva and tehina factory from the Barkan industrial zone to the site in Ariel, we are preparing an alternative within the Green Line, and examining sites along the Trans-Israel Highway,” Malach explains.

About 200 workers are employed in the Achva factory, of whom about 100 are Palestinian workers.  “There are no politics in our factory,” the CEO declares, “our Palestinian workers are the richest people in their villages, because they earn NIS 6,000-7,000 per month here.  From talking to them, [I know that] they are afraid of what will happen, it means a loss of livelihood for them.”

Malach adds that he doesn’t understand the Palestinian Authority, “which prefers politics at the expense of thousands of workers in Israeli factories.  If it acts at the beginning of 2011 as it has announced it will act, it is harming its citizens more than the factories, which will find an alternative.”

He says, “there is not a single factory in Barkan today that is not searching for alternative locations inside Israel, particularly if the construction freeze continues.”  However, other factory owners are not willing to discuss the matter at the moment, for fear of prematurely harming their workers.  “Clearly, we’re concerned, and we are also examining things, but we don’t want to reveal the name of the factory,” a CEO of one of the largest factories in the area told Ma’ariv.

Along with this, Avraham Barkan, director of the Jezreel-Afula industrial zone administration, reports that he has received a number of requests from owners and managers of factories located over the Green Line, regarding the relocation of their activity to the Alon Tavor industrial park.  Barkan attributes this to the factories’ fear of a shortage of workers as of the start of 2011, because of the Palestinian boycott, and to the fear that the construction freeze will continue.

He says, “the Alon Tavor industrial park and the Afula Illit industrial zones are defined as National Priority A areas — and therefore they enjoy the benefits specified by the law for encouraging investments, a 24% refund of investments in property or a 10-year tax exemption.  In addition, the area enjoys the benefits included in the employment track.”  Barkan says further that the relocation of the factories will create hundreds of new places of employment for residents of the Afula and Jezreel Valley area.

The Manufacturers Association of Israel has also mobilized, and on July 1 will hold an emergency gathering together with Industry, Trade and Labor Ministry Director General Sharon Kedmi on the matter of the Palestinian boycott against factories over the Green Line.  Reports say that Chairman of the Manufacturers Association of Israel Shraga Brosh is holding talks on the matter with senior PA officials, and asking them to separate politics from economics.

It has further been reported that Brosh is working at the same time to find a substitute for the Palestinian workers — and is demanding that the government bring foreign workers in their stead.  Brosh has already approached Prime Minister Binyamin Netanyahu on the matter, and also met with Industry, Trade and Labor Minister Binyamin Ben-Eliezer.

Mul-T-Lock will move

The Barkan industrial area has 120 Israeli factories of different sizes including Bagel Bagel (which once announced it was considering moving back into the Green Line) and Mul-T-Lock, whose owners – the Swedish lock giant Assa Abloy announced two years ago in Stockholm its decision to immediately pull the Mul-T-Lock factory it owns out of the West Bank.

The company took that step after human rights organizations and the Swedish Church published a harsh report warning the company directors that Assa Abloy and its directors could be prosecuted personally for violating international law which forbids building settlements on occupied territory. Mul-T-Lock said it had not yet found an alternative site and the minute it did it would move its factory out of the Barkan industrial area.

The Barkan Winery left the Barkan area for similar reasons in the early 2000s and moved its operations to Kubbutz Hulda in the Green Line.

Knesset Speaker Reuven Rivlin toured the factories in the Barkan industrial area in Samaria less than a month ago because of the boycott on products from Jewish settlements in the West Bank announced by the Arab Authority [sic]. Rivlin, who visited factories that employ both Israelis and Arabs, said: “This boycott is exactly the same as a boycott on factories in Tel Aviv or Sderot. It is a hostile activity which should be treated accordingly.”

Rivlin called on the Prime Minister and Finance Minister to check whether damage was caused by the boycott and to compensate the factories accordingly.

Chairman of the Samaria Regional Council, Gershon Mesika, who accompanied Rivlin on his tour, said “the Israeli government is not acting seriously to stop the boycott.” He said the Arab Authority “is biting the hand that feeds it while gravely violating the Paris agreement of economic cooperation between Israel and the Palestinian Authority. Israel cannot continue honoring the free trade agreements unilaterally while the PA violates the agreements and harms Israeli industry.”

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Boycott the Occupation: The Israelis promoting the boycott on settlement products

Dr. Dalit Baum and Merav Amir are waging a resolute economic battle against businesses operating beyond the Green Line. Their comprehensive study maps out all of those companies and served as the basis for the boycott throughout the world, which is expanding. In an interview with the Calcalist Supplement they explain they are not extremists — it is simply Dankner, Levayev, Arison and about a thousand other companies who are violating international law

Ari Libsker, Calcalist Weekend Supplement, June 17 2010 [Hebrew original here]

The Israeli takeover of the flotilla to Gaza set off a series of tsunami waves, from the political sector to the volunteering arena. Meanwhile it brought up the issue of the economic boycott on Israeli companies. Britain’s largest worker’s union decided on such a boycott, port workers from Europe refuse to unload cargo from Israeli ships and this week it turned out that European business parties approached Israeli companies with whom they have long-standing relations to make sure they do not work with the security system. If the Israeli companies do, explained the European partners, we will have to cut off relations with them; our companies’ ethical codes require us to do so.

The flotilla was just the trigger; measures towards severing relations have been underway for months. A few hours before the raid on the ship Marmara, for instance, the media reported that Deutsche Bank sold all of its shares in the Israeli high-tech company Elbit. According to the reports, the CEO of the largest banking group in Germany announced it at the annual shareholders meeting, liquidating a holding of 50,000 shares within two months. Two international political organizations quickly welcomed the move and explained it was the outcome of pressure they put on Deutsche Bank to prevent investment in the Israeli company that manufactures security equipment. A few hours after the initial reports Deutsche Bank issued a denial, explaining it had not directly held any Elbit shares and therefore obviously did not sell them, but the noise had already been made.

Four months earlier Elbit had already gotten onto another “blacklist” — the list of companies the Danish bank Danske Bank will not invest in because of their business involvement in the territories. Elbit got on the list as manufacturer of equipment to secure the separation fence, and was joined by Africa Israel, because of its construction projects in the settlements. In December it was a Belgian bank that dealt a blow: it turned out that Dexia Israel — a Belgian government-owned bank that gave sizable loans to local authorities in Israel in cooperation with the finance ministry — refused to loan money to local councils in the territories. Dexia claimed they were following procedure, while the authorities in the territories claimed the bank was using weak official excuses, and there was much ado.

Dr. Dalit Baum and Merav Amir watched all of that media noise from the side. They prefer to remain behind the scenes: to manufacture the thunder but to be away from the stage when it rolls into the media. The two are responsible for the project “Who Profits From the Occupation” that maps Israeli companies that earn money from the Israeli presence in the territories. Baum and Amir, with another 10-20 activists, do an in-depth study of each company, “based on stock exchange reports, newspaper reports and more,” explains Amir. Their activity has strong activist backing: it is undertaken as part of the Coalition of Women for Peace, an umbrella organization including organizations such as Women in Black and Machsomwatch and funded by American donors and various funds through the New Israel Fund.

And so, while the Yesha Council was furious at Dexia and claimed that pressure by Arabs and anti-Semitic parties acting against Israel was behind the stoppage of the loans, it was actually the work of two industrious women from the heart of Tel Aviv. “A Belgian human rights organization called Inatl found our website, read our reports about Bank Dexia funding councils in the territories and began to act,” Amir recounts how it developed. “Following the global collapse, the bank was nationalized by the Belgian government and became a national resource — and that made it possible to apply pressure that yielded results.”

Don’t you think it’s a little extreme? Even you aren’t claiming they are arms manufacturers or companies working with the Army or helping to build the fence.

Baum: “Israeli companies that have interests and business overseas or are under foreign ownership are subject to a different law, even if they operate in Israel by Israeli law. Dexia’s Belgian management is subject to the Belgian law, according to which providing services to settlements is helping settle the population of an occupying power in an occupied territory.”

The foreign companies do not want to take a risk and get dirty

Baum is a lecturer in the Department of Women and Gender Studies at the University of Haifa, and Amir is a doctoral student at the Cohn Institute for the History and Philosophy of Science and Ideas at Tel Aviv University. We met at Café Bialik in Tel Aviv and from there took off around the world, to activities that concern hundreds of corporations, banks and companies.

Take the Norwegian case. The Norwegian government manages a national pension fund that administers state revenues from its oil resources and allocates them for retirement allowances for all the residents. In September 2009 the fund administrators withdrew their $5.4 million investment from Elbit, explaining they were not willing to have their fund financed by a company that contributes so directly to the violation of international law. “We were really active in this story the whole time,” says Amir. “When I say ‘we’ I mean various left-wing organizations in Israel, but without doubt the main catalyst for the process was the website’s research.” Baum adds proudly: “We published a public letter in the Norwegian press calling on the pension fund to withdraw its support from the Elbit deal. We received an answer very quickly and subsequently met with a delegation from the fund that came to Israel. We showed them Elbit’s involvement in the control regime of the separation wall.” That involvement consists of Elbit applying the “Lapid” surveillance system planned especially for the fence (Elbit did not provide a reaction).

The Norwegian fund’s ethics committee was convinced, the money was withdrawn, and Finance Minister Kristin Halvorsen announced that her government would not finance companies that contribute so directly to the violation of international law. “People automatically resent the Norwegians and call them ‘anti-Semites, haters of Israel,”‘ says Amir. “Look how it was written about in the newspapers here. But in many cases the Europeans are insisting on international law. That is an insight the Israeli public lacks — that there is something about the entire settlement enterprise that is not legitimate, and that business and economic involvement in the settlements is not perceived by the world as legitimate business involvement.”

One of the companies who understood that is Unilever. The giant corporation holds 51% of Bagel Bagel, which manufactures crackers and other snacks in the Barkan industrial area near Ariel. The corporation’s strong base is in Holland, which exposed it to local pressure: a group of Dutch left-wing activists called United Civilians for Peace investigated the connections of Dutch companies with companies operating in the territories, and among others worked with Baum and Amir. When it discovered the connection between Unilever and the territories it began to apply heavy pressure on the matter. “They waged a very serious campaign,” says Baum. “They approached the company’s workers’ committee and ran giant ads in the newspapers calling on the company not to continue its dealings in the territories. In this way they created public pressure without a consumer boycott, which is only one possible tool. Their technique was to try to educate the company and tell it about the occupation, the Barkan industrial area and the history of the land on which the factory was built. In the end Unilever said: ‘We are not willing to be part of this, it is against our policy and ethics.’ They understood it was not worth it for them to take the risk and sully their prestigious reputation because of such a small company. They went to their partners, the Israeli Bagel family, and asked them to relocate the factory into the Green Line. The Bagel family refused for ideological reasons, and since then Unilever has been trying to sell its share of the company.” Bagel Bagel Unilever said: “Unilever has been working for several years to simplify the organization, focus and increase investments in a smaller number of categories and brand names in the corporation’s business core. As part of that process activities that were not in the business core have been sold and the company has among other things decided to leave the area of baked goods and seek a buyer for its share of Bagel Bagel. The sales process is still underway.”

Levayev, Dankner, Arison, Tshuva. There all there

A look at the “Who Profits From the Occupation” website shows that almost all the large companies in the Israeli economy have reason to fear similar cases such as those of Elbit and Bagel Bagel concerning business abroad and international partnerships. There are some 400 companies on the list, and outside of the website, in Baum and Amir’s files, there are another 600. The names are well-known: Africa Israel, for example, entered the list because of construction in the settlements through Danya Cebus and because of its holdings in Dor Alon, which controls the supply of oil and gas to Gaza. Nohi Dankner’s IDB is on it because it operates Celcom in the territories, and according to Baum and Amir exploits various restrictions on the Palestinian companies to profit from the existing situation; because it owns the FiberTech company in Karnei Shomron that is involved in building infrastructures in the territories; and because Nesher Cement owned by Klal Industries profits from construction of the separation fence and infrastructures in the territories. You can also find on the list Tshuva’s Delek, Arison’s Solel Boneh, all the major banks, oil and communications companies and chains such as Café Café and Castro.

It is not surprising: 43 years of Israeli rule have weaved the territories deep into the local economy, and over the years they served as comfortable ground for manufacturing resources — as well as a new and emerging market, Israeli and Palestinian. Now there are a number of parties trying to tear the fabric. On the one side is the Palestinian Authority, recently leading a boycott of settlement products and planning to forbid its residents from working in Israeli factories in the territories or building settlements. On the other hand pressures are increasing on foreign organizations, especially European, to tighten the boycott of the Israeli economy in general and settlement business in particular. In the middle are Baum and Amir. Both are afraid of the assault on Israeli left-wing activists who support the boycott of Israel; they hesitated before the interview and Amir refused to have her picture taken. They are aware that the various pressures being applied today could have far-reaching consequences for the Israeli economy, but that is not their goal, they say. “Our goal is to end the occupation.”

How did you get the idea to create the website?

“In a series of discussions about the economic aspect of the occupation that we held in the coalition the question came up of how we could contribute to fighting the occupation in the commercial-economic area. The conclusion was that there is a change in the way bodies treat the situation in the territories. Economic activism is accepted in the world and has a glorious history. In recent years for instance we have seen the border-crossing public campaign against Nike because of its sweat shops and the campaign by vegetarians and vegans against McDonald’s. There are large campaigns today against products from Iran and Iranian companies because of the violation of human rights there. In Israel we know it mainly from mobilization of workers or consumer boycotts in the haredi sector, but it was not known here in the past in the area of fighting against the occupation.”

Does the Israeli economy profit from the occupation?

Baum: “Definitely yes. Shlomo Svirsky has been writing for years that the occupation has a heavy price. But the money that goes to security expenses and settlement construction, all of the things that Svirsky viewed as expenditures — we view as profits that lead to the growth of the Israeli economy.”

Amir: “A situation that is not economically feasible cannot last for years. If the situation has persisted for decades then somebody is profiting from it. It is not possible to be paying all the time because a society cannot pay heavy economic prices without an economic rationale. We said: ‘Let’s deconstruct this mass called the occupation and see where the money is, where the interests are.”

How do two women from the liberal arts and culture deconstruct economic interests? What tools do you have to do that?

“I think the very fact that economics have become something inaccessible to anyone who did not go through the academic training course is what allows very specific dogmas take over the economic discourse. We do not do economic analysis of companies and analyze their profits or losses or their economic feasibility. We only point to their business involvement in the territories, which can be learned about easily from the companies’ own publications and reports.”

It was painstaking work. For a year Baum and Amir traveled themselves to all of the industrial areas in the territories, documented the companies operating there and concentrated all of the information from the media and reports. Only in February did the website go up. All of the material they collected redefines the term settlement economy. “In the past the product of the actual settlements was viewed as the main thing,” explains Baum. “But actually the settlement industry is not the main source the settlement economy relies on. When you talk about the settlement economy, the industrial and agricultural part of it is small. What really maintains the settlements are two things: first of all construction. If you check where the construction industry grew in the last decade, you see that it grew mainly in the territories; within the Green Line the industry remains quite static. The large construction companies are the ones who profited from that growth, especially Africa Israel, Shikun and Binui and all of their adjuncts. The other big story is the infrastructures and services — all of the communication companies and supermarket chains allow the settlements to exist. This includes public transportation.

“The next category is what we call population control. It includes the wall, the checkpoints and everything that restricts the movement of Palestinians — roads meant only for Jews, security areas. The wall is the largest national project Israel has ever undertaken. It is a project that has exceeded the budget dedicated to it and there is also the maintenance of the fence. They didn’t just put a wall and go home.”

Another source is Palestinian retail. “The Palestinians cannot achieve decent production conditions in their factories, which once functioned,” says Baum, “and because of the checkpoints and the separation and the customs envelope agreements they cannot import or export independently. They must go through Israel and that increases costs. Furthermore, there are entire categories of products that they cannot export or import and are forced to buy from Israel. Therefore a great many Israeli exporters make a tidy profit from the current situation and therefore have a vested interest in maintaining it and the system of checkpoints, which harms their competitors in the West Bank. Maintaining a situation of underdevelopment of the territories also allows them to dump cheaper products on the Palestinian market, which they may not have had any way to get rid of elsewhere. We found that most of the Israeli food industries flood the Palestinian market with goods.”

Defective goods?

Baum: “Cheap goods, because it is a cheap market that is 20 minutes from the factory. They can sell goods they could not sell in Israel for a good price.

Amir: “Meaning all of the products whose expiration date is near.”

Which companies do you mean?

Amir: “Go into any Palestinian grocery store and you will see there are hardly any local products. The products are Israeli. That was not the case in the past. There was self manufacture and relative economic independence. Today you cannot speak about that at all because all of the products are Israeli, from all the companies.”

Baum: “It really is all of the companies. We are not complaining about the companies or telling them not to sell there. What we want is to open a discussion in the Israeli political sphere of the fact that the large chains and food manufacturers have a vested interest in continuing the current situation, the continued control of the Palestinian market.”

Not politicians, just showing things as they are

Selling product is only one aspect. Services are another. According to the Oslo Accords, Israeli companies are not allowed to provide services to the Palestinians without approval of the PA, but they have found a bypass route. “The Palestinian cellular companies are not allowed to build antennas in area C, which is 60% of the West Bank, without permission, and it is very hard to get a permit for an antenna. They can erect antennas in Ramallah and Nablus but there is no reception between the cities. The Israeli companies are deployed over the entire territory, they have hundreds of antennas, so not only do they provide services to the settlements but unofficially and under the table they also provide services to the Palestinians.”

Are they doing this illegally?

Baum: “If they want to sell subscriptions in the territories they have to pay tax to the PA and they are interested in avoiding that. So they do not let residents of the PA subscribe by credit and sell only prepaid cards for cash, and that is how they circumvent this tax question. I call it settlement on the airwaves. After all, the airwaves belong to the Palestinians.”

Another issue treated extensively on the site is use of natural resources beyond the Green Line. There is currently a pending petition submitted to the High Court of Justice by Yesh Din against 13 Israeli mining companies who, the petitioners claim, use Palestinian natural resources. The largest one is Hanson, controlled by the international corporation HeidelbergCement. Baum and Amir are doing the research for the petitioners. “According to international law, the quarries are in a territory that is still defined as occupied,” says Baum. “According to the Geneva Convention an occupying power cannot exploit land resources for its needs, except for a certain exploitation for the needs of the occupied population. In this case we are talking about the gravel industry. The resources of building materials in the Israeli quarries are depleting and therefore a large part of the product of the resources from the territories goes to construction in Israel. It borders on looting.”

Another project in which Dalit and Baum are currently involved with the Coalition of Women for Peace and left-wing American and European organizations is an aggressive international campaign against the Ahava company, which manufactures cosmetic products from the Dead Sea and whose laboratories are at Mitzpe Shalem. Over the last months Ahava has been contending with mud-covered demonstrators standing next to its sales points in Europe and the US and explaining to potential buyers about the occupation. Recently the Dutch Foreign Minister Maxime Verhagen has ordered an investigation to check the source of the company’s products (no reaction was received from Ahava).

“We want to harm the image of the brand in the world,” explains Baum. “The demonstrators are only the beginning, I am sure there will be more activist protests in the future.”

Mitzpe Shalem is on the shore of the Dead Sea and the Israeli public does not perceive it as a controversial settlement. Why are you involving in the project settlements that are not perceived as unequivocal settlements? Doesn’t it weaken your struggle?

Amir: “According to Israeli law a settlement in that area is considered a settlement. Everything north of Ein Gedi is outside of the borders of Israel. Whether the Israeli public perceives it as a settlement or as occupied territory or not is not our concern. We are not politicians or publicists trying to sell something and who need to be considerate of the public perception. We are attempting to show things as they are.”