The boycott of Israel is already here — and is intensifying; But the current government has no answers
The world is losing patience with the war in Gaza. Countries around the globe have begun announcing moves against Israel. From unilateral recognition of a Palestinian state, through restrictions on exports to Israel, cancellation of participation in professional conferences and withdrawal from planned entry into the Israeli economy — Israel is sustaining one blow after another, and consumers will suffer
By Sami Peretz, TheMarker • Translated by Sol Salbe
The current Israeli government has no achievements to its credit, only a long list of failures as well as damage on every possible front: political, defence, economic and social. When the prime minister, treasurer [finance minister in the local parlance] and economy minister are asked what they are doing, for example, to curb the appalling cost of living, they mumble something about the reform, “What is good for Europe is good for Israel” — which will make it possible to rely on European standards without running products imported from there through bureaucratic Via Dolorosa.
When the government approved this particular reform and associated slogan in March 2023, it never imagined that a year later it would be facing a tsunami of European decisions that harm Israel’s economy and the country’s standing, due to the war in Gaza. In recent weeks, news items that have gnawed at what until recently was called “Start-Up Nation” have been dropping on Israel almost daily. The days of the country being a magnet for foreign investment from all over the world are but a distant memory.
Each such message piles upon the others. It creates the feeling that international companies and European countries feel the need to punish Israel, or distance themselves from it.
In the diplomatic sphere, Spain, Norway and Ireland announced recognition of a Palestinian state last week. Other European countries are examining their steps and may follow suit. In a particularly serious move, the Maldives government announced that it would ban Israelis from entering the country, due to the war in Gaza.
In the economic sphere, Turkish President Recep Tayyip Erdogan imposed a ban on exports of goods and raw materials to Israel. This was not surprising given his hostility to Israel. What was surprising was France’s decision to cancel Israel’s participation in a large international exhibition for defence and security expected to take place there in three weeks, in protest of the IDF’s activity in Rafah. It is one of the largest arms exhibitions in Europe. Israeli defence companies have a large range of products to present there at a time when many European countries are acquiring advanced weapons against the backdrop of the Russia-Ukraine war.
Israeli companies have a great advantage stemming from the fact that their products are being used in the current war, and they can point to real-time performance. Minister Benny Gantz appealed to French Prime Minister Gabriel Attal to rescind the decision, claiming it was a “reward for terrorism.”
No discounts for soldiers
In the business sphere, there have been several decisions made recently stemming from the prolongation of the war, including a decision by the British coffee and sandwich chain Pret a Manger, which decided to cancel the franchise it granted to the Israeli Fox company to open dozens of branches. Fox reported to the stock exchange that the British chain explained that the war was a force majeure that affected its “ability to take preliminary steps required to commence operations under the licence agreement.”
This sounds like a convoluted way of saying: We have managed without any operations in Israel until now, thank you very much. There is no reason to upset our Muslim customers in Europe. The chain faced criticism from pro-Palestinian groupings who demonstrated in front of its London stores and signed petitions calling for a boycott.
The McDonald’s fast-food chain also faced a pro-Palestinian boycott that hurt its global sales, according to its own reports. In April, in a lightning-speed deal, the global chain acquired the entire Israeli operation, which includes 225 branches, from franchisee Omri Padan, who set up the Israeli operations in 1993.
In fact, McDonald’s penetration into Israel was one of the harbingers of the end of the Arab boycott that Israel has faced since its foundation. The acquisition of Israeli activity by the global network is intended to reduce the network’s friction with Muslim customers around the world, inter alia by reducing the identification of local operation with IDF soldiers and the abductees in Gaza.
After October 7, Paden launched an unprecedented 50 per cent discount for soldiers in uniform at all of the chain’s branches, which increased pressure on the global chain. It is estimated that once the deal is complete, McDonald’s will reduce or cancel the discount — hoping to abate criticism and boycotts against it worldwide.
Shrinking Capital raising
High-tech — the Israeli economy’s flagship — also has difficulties stemming from the war, but there the situation is not perceived as a boycott but as a temporary lowering of profile until the war ends. According to data presented last week by the Governor of the Bank of Israel, Prof Amir Yaron, the volume of capital raised in the second quarter of 2024 will amount to $3.5 billion, a significant increase compared to the past six quarters, when the average volume raised for the quarter was $2 billion. The continuation of this trend is critical for the Israeli economy at a time when attitudes toward it are becoming more negative.
These boycotts will have a long-term impact on the cost of living and competition. We have already seen price increases in recent months because domestic demand is high due to a decline in the number of travellers abroad, and because of the shortage of workers in the construction and agriculture sectors. If the boycott expands, Israeli consumers will feel it in their pockets. What is good for Europe now not as good for Israelis.
Translated by Sol Salbe, Middle East News Service
Hebrew original in TheMarker (Haaretz’s financial news affiliate):
