United with Israel

Israeli State Report: Boycotts Have Little Effect on Economy – for Now

anti-Israel boycott

Palestinians call for the boycott of Israel. (AP/Nasser Shiyoukhi)

The likelihood of a boycott on Israel’s economy that is truly damaging is low at the moment, but an all-encompassing embargo, if taken to the extreme, could be devastating.

Motions to boycott Israel are usually led by student bodies and local work unions that are coaxed to do so by anti-Israel and Palestinian organizations. The effect of such boycotts is negligible for the time being, although the results could be damaging if divestment becomes widespread, according to a report compiled by the Ministry of Finance.

Israeli products are considered to be of high quality on the European market, and most European economic bodies that conduct business with the Jewish state refrain from meddling in the political arena.

A motion was passed by some European Union (EU) countries to boycott products from Judea and Samaria. Goods manufactured in that region, however, constitute only a small fraction of Israel’s exports to Europe. Yet there is concern that many European grocery chains will find it difficult to differentiate between the origins of the products and will therefore prefer to avoid selling Israeli merchandise altogether.

Israeli sales to the EU constitute 30% of its total export, which is continuously climbing. When Israel begins to export natural gas, it should see a sharp increase in European business. Israeli hi-tech and innovation is highly valued by European investors.

Last week, US President Barack Obama fixed his signature to a trade bill that also contains legislation combating the anti-Israel Boycott, Divestment and Sanctions (BDS) movement in Europe.The amendment discourages actions by potential US trading partners, such as the EU, that prejudice or discourage trade between the US and Israel, in particular “politically motivated actions to boycott, divest from, or sanction Israel and to seek the elimination of politically motivated non-tariff barriers on Israeli goods, services, or other commerce imposed on the State of Israel.” This new bill would make European boycotts of Israeli good highly unlikely.

Boycotts Harm Palestinians

Nevertheless, the ministry still fears the possibility of an all-out boycott and compiled a special report on the matter.

Israelis and Palestinians work side by side at factory in Judea. (Nati Shohat/Flash90)

The report, which was finalized in mid 2013 and withheld for publication until recently, outlines the low probability of an all-out boycott on Israel.

In these extreme circumstances, Israel’s economy could loss approximately half a billion shekels ($130 million) annually and up to 500 people could loss their jobs, depending on the scope of the boycott, such as if all EU countries boycotted all Israeli products,  NIS 40 billion could be lost yearly and 36,500 Israelis and Palestinians would lose their livelihood.

The report offers several courses of action to contend with the possibility of mounting boycotts. While developments are unpredictable, the study continues, palpable damage from boycotts on Israel is unlikely.

Nevertheless, Israel is aware that relying mainly on the European market is dangerous and has been working to diversify its export markets and to develop new ties, primarily with the Far East and South America.

Calls for economic boycotts have so far failed, and as such, the BDS (Boycott, Divestment and Sanctions) movement has been promoting academic and cultural boycotts on Israel.

By: Max Gelber, United with Israel

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