European boycotts begin to bite, catching Israel's attention

For years, boycott efforts in Europe seemed to be only symbolic gestures. But several major efforts announced in the past year, including one by the EU, are raising alarm.

Focus

Drive down the steep road from Jerusalem to the Dead Sea, and as the desert hills unfold toward the Jordan River the eye meets hundreds of rows of lush palms laden with succulent dates.

More than a third of the world's Medjool dates are grown here in the Jordan Valley, a narrow strip of the West Bank where Israeli agriculture is flourishing. Nearly all Israeli grape exports, as well as abundant crops of peppers and herbs, also come from this arid region.

The European Union, Israel's No. 1 trading partner, accounts for about a third of its total trade, and was long the favored destination for Jordan Valley produce. But these fruits and vegetables are grown on land that Israel has occupied since 1967. For a growing number of European consumers, that's a problem. They say that buying such produce is supporting the illegal confiscation and control of land and water resources that should be in Palestinian hands.

The campaign is starting to bite. Last year, Jordan Valley farmers lost an estimated $29 million, or 14 percent of revenue, because they were forced to find alternative markets for their exports, such as Russia, where prices are 20 to 60 percent lower. Pepper exports to Western Europe have stopped completely, and grape exports are likely to be phased out this year because of consumer pressure, says David Elhayani, mayor of the Jordan Valley Regional Council and a farmer himself.

Israeli leaders have for years scoffed at the notion that fewer dates or peppers in European shopping carts could put a dent in the Israeli economy. But in the past six months, a flurry of European banks, pension funds, engineering firms, and lawmakers have driven home their displeasure with Israeli settlements, and Israeli leaders are taking the threat more seriously.

On Feb. 9, Prime Minister Benjamin Netanyahu convened a special meeting of government ministers to formulate a strategy against the growing economic boycott. One minister reportedly pushed for a $28 billion budget to counter the movement with aggressive media and legal campaigns.

It's not so much that their pocketbook is starting to feel the pressure – last year's drop in Jordan Valley exports represents a mere 0.01 percent of total Israeli exports for 2013. But there's concern that rising opposition to Israeli policies signals increasing displeasure with the very idea of Israel. "Sanctions are also what we Israelis should fear most – disenchantment of the world with the very idea that Jews are entitled to have a state of their own," says Yitzchak Mayer, who served as the Israeli ambassador to Belgium and Switzerland in the 1990s.

Discontent on the rise

According to a 2013 BBC poll, public opinion of Israel is worsening. Favorability ratings dropped 8 percent in both Spain and Germany, to the single digits. Even in Britain, the first European country to formally support the establishment of a Jewish state, only 14 percent of citizens have a positive view of Israel today.

EU citizens and lawmakers alike have long opposed Israeli policies, but popular discontent – cultivated by the Palestinian-led Boycott, Divestment, and Sanctions (BDS) movement since 2005 – is increasingly pressuring businesses and governments to take more concrete action.

Dutchman David Ross says he supports such moves. "What it accomplishes is putting more focus on the problem," he says. "People will ask, 'What are we really doing there?' It brings the problem to the streets."

Nothing brought the issue to the streets quite like Scarlett Johansson's recent endorsement of the home sodamaker SodaStream, which operates a factory in the West Bank. Ms. Johansson refused calls to stop supporting Israel's occupation of Palestinian lands with her endorsement, instead praising the factory as a haven of coexistence that provides some 500 Palestinians with badly needed jobs. The Hollywood star's step into the fray gave the BDS movement new currency.

"[The SodaStream boycott] has ... led to mass education of the public everywhere about the illegality of Israel's settlements, Israel's denial of Palestinian rights, and, crucially, the need to boycott companies producing in settlements as a minimal measure of ending complicity in grave violations of human rights," says human rights activist and BDS cofounder Omar Barghouti.

Many of the nongovernmental organizations in Israel that challenge the government's policies in the West Bank have long been funded by European governments, but the fact that lawmakers are now making their own moves ups the ante.

"The language has become sharper, and the instruments are sharper," says Gerald Steinberg, a political science professor at Bar Ilan University and president of NGO Monitor, which tracks European funding of NGOs with a critical eye. "Diplomatically Israel has lived without Europe for 15 years, if not longer. Militarily, Europe isn't much of a power. So most of this is about economics."

Last summer the EU said it would refuse to provide funds from Horizon 2020 – the largest EU research and innovation program, with €80 billion ($109 billion) in funding over seven years – to entities operating in East Jerusalem or West Bank settlements.

Then European institutions stepped up demands for verification and guarantees that none of their business was happening over settlement lines.

One of the most significant moves came in January. A $200 billion Dutch pension firm, among the world's largest, divested from five top Israeli banks. The fund, PGGM, said it would be almost impossible for the banks to "end their involvement in the financing of settlements in the occupied Palestinian territories."

In September a Dutch engineering firm, under pressure from the government, dropped plans to build a sewage treatment plant in East Jerusalem, and in December, a Dutch water company cut ties with Israel's national water carrier over its operations in the West Bank.

But it's not just the Dutch. Germany announced in January that it would not renew research grants to Israeli companies that do business over the Green Line, the de facto border before Israel captured East Jerusalem and the West Bank in the 1967 war. That was the first move by an individual EU member to apply standards for academic research to the private sector. The liberal Israeli newspaper Haaretz called it "a significant escalation in European measures against the settlements."

Germany's move prompted concern that if Israel's best friend in Europe, still burdened by the guilt of the Holocaust, takes such steps, every other EU country could follow suit.

"I think there is a danger that one should not underestimate, which is the snowball effect that once someone starts, the others begin to adopt the same kind of policy," says Oded Eran, the Israeli ambassador to the EU from 2002 to 2007.

Why now?

For years Europe tried to use incentives on Israel, eliminating trade tariffs and enhancing cooperation in other areas. But Israel's 2008-09 war against Hamas-run Gaza sparked demonstrations in Europe and pushed EU lawmakers to adjust, wrote Claire Spencer, head of the Middle East and North Africa Program at the London-based think tank Chatham House, in an April 2009 report. Still, last year, Israel was the only non-EU country invited to join Horizon 2020.

Daniel Levy, director of the Middle East and North Africa Program at the European Council on Foreign Relations in London, says the flurry of activity of European firms is not a reaction to any specific Israeli action. Rather, it comes at a time when companies are more accountable to consumer and civil society groups, whether it's human rights violations in Bangladeshi garment factories or logging in the Amazon.

"What you are seeing is this slow accumulation of a sense that there are legal and reputational risks for companies to engage in business activities which involve the settlements," he says.

But retiree Pieter Duistermaat of Rotterdam, whose job in the chemicals industry took him to Israel a few times, says that his opinion of Israel has worsened over time because of Israeli actions toward Palestinians.

"I don't like their attitude," he says. "No one deserves that."

He says he would not support a large-scale boycott of Israeli products or companies doing business in Israel, however, because it punishes the wrong culprits. "I have nothing against Israelis. It is the Israeli government that is very tough towards these people."

Sacha Stawski, who runs a media watchdog called Honestly Concerned in Frankfurt, says some Germans are increasingly moving in an "extremely critical, if not anti-Israel" direction.

Mr. Stawski says that he considers German Chancellor Angela Merkel – who is visiting the Jewish state on Feb. 24 – to be pro-Israel but says she's surrounded by a new generation of politicians and voters who increasingly are trying to "rid themselves of their past."

"There is this new generation that is saying, 'We have nothing to do with [the Holocaust].' They are not understanding the relationship between guilt and responsibility. The new generation is not guilty, but they still have a responsibility to make sure nothing of the sort ever happens again."

Mr. Mayer, the former ambassador to Belgium and Switzerland, sees the rise of terrorism and intractable conflicts as one of the factors driving opposition to Israeli policies. The perception that the world has become ungovernable – bolstered by crises like Syria, where world leaders have failed to curb violence – is causing citizens and governments to act out of fear to reduce such instability.

"One of those ways is to believe that part of the global problem is ... the unfinished problem between Palestinians and Israelis," he says. "And therefore the pressure of the world to bring about a settlement between Israelis and Palestinians is increasing."

Pocketbook pain

Martin Schulz, president of the European Parliament, acknowledged a movement to label products from West Bank settlements, which do not enjoy the exemption from trade tariffs that is granted to farmers in Israel proper. But he denied a wider campaign.

"There is no boycott, and in the European Parliament there is for sure no majority for a potential boycott," he said in a speech about the future of EU-Israel relations in Jerusalem on Feb. 11. "My personal view, a boycott is not a solution for anything."

Numerous leaders, from US Secretary of State John Kerry to Israel's own minister of finance, Yair Lapid, have warned that a collapse of current negotiations between Israel and the Palestinians could bring increasing diplomatic and economic consequences for Israel.

"There is a risk that you will face increasing isolation [if talks fail]," EU Ambassador to Israel Lars Faaborg-Andersen told Israel's Channel 2 recently. "Not necessarily as a result of European Union policy, but Israel has to realize that economic relations are established by private economic actors – be it consumers, be it companies – and we, as a government, have no influence on the private decisions that private citizens and companies are making."

That has Mr. Lapid worried, especially given that pocketbook issues were one of the primary issues of the latest Israeli elections.

"If the negotiations with the Palestinians get stuck, and we enter the reality of a European boycott, even a partial one, the Israeli economy will retreat; every Israeli citizen will be hit directly in his pocket; the cost of living will rise; budgets for education, health, welfare, and security will be cut; and many international markets will be closed to us," he said last month.

But Mr. Netanyahu has refused to be cowed by an economic boycott, and some of his ministers have dismissed it, pointing to increasing trade relations with developing countries from Mexico to China. Last year, exports to Asia pulled nearly even with US-Israel trade.

"Attempts to impose a boycott on the State of Israel are immoral and unjust. Moreover, they will not achieve their goal," Netanyahu said, who made it the first order of business at his weekly cabinet meeting Feb. 2, amid the Soda-Stream firestorm.

Still, some Europeans say they'd like to see their governments take stronger action – and that's a role Europe can play, Mr. Levy says.

"If anything, I think Europe's role is to be a little more demanding than Americans can be because of their politics," he says, adding Europe has to wield a stick rather than allowing Israel to keep "feasting" on carrots from both parties. "Europe has to be able to have relations, but also hold its ground."