Arab Steps to Ease Israel's Isolation Seen As Sign to Syria

THE easing of the ``secondary'' Arab boycott on Israel and the creation of Israeli-Tunisian commercial ties may have more impact on Syrian-Israeli peace talks than on the Israeli trade picture, Israeli analysts say.

The Tunisian and Gulf state moves, which were announced over the weekend, are seen here as part of a United States-orchestrated attempt to accelerate the momentum of the peace process as US Secretary of State Warren Christopher returns to the region next week. Mr. Christopher reportedly will seek further concessions from Syria and Israel on the thorny issue of the Golan Heights.

Israeli and Tunisian representatives meeting in New York announced yesterday morning that the two countries would establish economic interest sections in the Belgian Embassies in Tel Aviv and Tunis. That followed Friday's announcement by the six Arab states of the Gulf Cooperation Council (GCC) - Saudi Arabia, Kuwait, United Arab Emirates, Oman, Bahrain, and Qatar - that they are canceling a 42-year-old boycott on foreign companies doing business with Israel and taking steps to ease movement of foreign tourists and cargo.

Deputy Foreign Minister Yossi Beilin yesterday hailed the recent Arab moves as ``proof that the Middle East is entering a new era.'' He suggested that the gradual ending of the Arab boycott will make it easier for a deeply divided Israeli public to accept painful concessions to Syria on the Golan Heights issue.

Business world reacts

But the Israeli business analysts were more matter-of-fact in their reaction.

``The boycott has been slowly winding down since the end of the Gulf war,'' says David Rosenberg, director of market research at Tel Aviv-based Pacific-Mediterranean Investments, a firm that recruits foreign investment for the Israeli market. ``The key development will be when Israeli companies are allowed to do business openly in the Gulf; but by the time it happens, it won't matter.''

Already, an estimated 150 Israeli companies are doing business in the Gulf states via third parties, says Gil Feiler, owner of the Tel-Aviv-based Info-Prod Ltd., a business research firm that specializes in finding Arab markets for Israeli and international firms. Other Israeli analysts estimate that about $500 million of Israel's $11.7 billion in annual exports is already earned in the Arab world.

Mr. Feiler says that Israeli companies selling products ranging from pharmaceutical products to tires and computer software have major potential markets in the Gulf states, which lack local industries to supply a relatively sophisticated consumer market.

Impact of eased embargo

And Israeli Energy Minister Moshe Shahal said yesterday that Gulf states have expressed interest in using Israel as a transit point for crude oil shipments to Europe.

But Mr. Rosenberg argues that the slow death of the Arab boycott is having a bigger impact on Israeli exports to big growth markets in the Far East, than in bilateral commerce with Gulf states. Nations such as Japan and China, once reluctant to do business in Israel, have been steadily improving commercial ties with Israel since the 1991 Gulf war.

``If you compare the market in China with Saudi Arabia, there is nothing to talk about,'' Rosenberg says.

``China is a growing, dynamic country, whereas a typical country in the Middle East is small and hidebound,'' Rosenberg adds.

Rosenberg says that the GCC move appears to be designed to signal Syria to move quickly in peace talks with Israel before further normalization of pan-Arab-Israeli ties weakens Damascus's negotiating position.

``The message to [Syrian President Hafez al-] Assad is that if he waits much longer, there won't be anything left to barter. The Middle East is falling into line, even without Israel signing an agreement with Syria,'' Rosenberg says. ``I don't believe in conspiracies, but I think the Arab states are putting a lot of pressure on Syria where they can.''