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Arab League Boycott: Background & Overview

by Mitchell Bard

The Arab boycott was formally declared by the newly formed Arab League Council on December 2, 1945:

“Jewish products and manufactured goods shall be considered undesirable to the Arab countries.” All Arab “institutions, organizations, merchants, commission agents and individuals” were called upon “to refuse to deal in, distribute, or consume Zionist products or manufactured goods.”

As is evident in this declaration, the terms “Jewish” and “Zionist” were used synonymously by the Arabs. Thus, even before the establishment of Israel, the Arab states had declared an economic boycott against the Jews of Palestine.

Overview
America Fights the Boycott
Example of Boycott Requests
The Boycott Begins to Crack
Into the New Millennium
Alleged Violations
Boycott Remains in Force
BDS

Overview

The boycott, as it evolved after 1948, is divided into three components. The primary boycott prohibits direct trade between Israel and the Arab nations. The secondary boycott is directed at companies that do business with Israel. The tertiary boycott involves the blacklisting of firms that trade with other companies that do business with Israel.

The blacklisting process is capricious; it is unclear whether boycott officials collect any evidence at all before placing an individual or company on the blacklist. No two countries have identical lists, and six countries — Algeria, Mauritania, Morocco, Somalia, the Sudan and Tunisia — do not enforce the secondary boycott. Egypt's policy changed from strict enforcement to unofficial complicity after the signing of the peace treaty with Israel, despite the provision whereby Egypt agreed to the “termination of economic boycotts and discriminatory barriers to the free movement of people and goods. . . .”

Once on the list, it is sometimes difficult to get off, since the company or some Arab sponsor must initiate the request. A firm might be required to supply proof that it no longer has any business with Israel and/or might be asked to make investments in Arab countries equal to those made earlier in Israel. Bribery is another means of becoming “de-listed.”

The objective of the boycott has been to isolate Israel from its neighbors and the international community, as well as to deny it trade that might be used to augment its military and economic strength. Israel’s capacity to reach its full economic potential was hindered for decades by the actions of Great Britain, Japan and other countries that cooperated with the boycott. It has undoubtedly enhanced Israel’s isolation and separated the Jewish State from its most natural markets, but the boycott failed to undermine Israel’s economy to the degree intended.

America Fights The Boycott

In 1977, Congress prohibited U.S. companies from cooperating with the Arab boycott. When President Carter signed the law, he said the “issue goes to the very heart of free trade among nations” and that it was designed to “end the divisive effects on American life of foreign boycotts aimed at Jewish members of our society.”

The Arab League threatened to take a decisive stand against the new law, which was regarded as part of “a campaign of hysterical laws and bills . . . which Israel and world Zionism are trying not only to enforce on the U.S.; but also in some countries of Western Europe.”

Contrary to claims that the bill would lead to a drastic reduction in American trade with the Arab world, imports and exports increased substantially. Broader diplomatic and cultural relations also improved. Nevertheless, certain U.S. companies were blacklisted for their relations with Israel. In addition, few other nations adopted anti-boycott laws and, instead, complied with the boycott. For example, the Military Aircraft Division of British Aerospace sent a purchase order to an American supplier in connection with the British agreement to sell Saudi Arabia Tornado aircraft and other weapons in the late 1980’s. It guaranteed none of the items “are made in Israel directly or indirectly either in whole or in part and such items are not reshipped from Israel for Israeli account or by proxy for or on behalf of or with any persons or organizations resident in Israel. The supplier moreover warrants not to dispatch any of the items on any Israeli carrier.”

For many years, language has been included in the foreign operations appropriations acts concerning the boycott. For example, Section 535 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2006 (P.L. 109-102), states that: (1) it is the sense of Congress that the Arab League boycott is an impediment to peace in the region and to United States investment and trade in the region; (2) the boycott should be revoked and the CBO disbanded; (3) all Arab League states should normalize relations with Israel; and (4) the President and the Secretary of State should continue vigorously to oppose the boycott and encourage Arab states to assume normal trading relations with Israel. U.S. embassies and government officials raise the boycott with host country officials, noting the persistence of illegal boycott requests and the impact on both U.S. firms and on the countries’ ability to expand trade and investment.

In August 2007, the federal antiboycott statutes were revised amending the existing penalty guidelines and outlining procedures for firms to voluntarily report violations of the law. Officials hope that by providing companies an incentive to “come clean ” they will do so and save the Commerce Department the need for costly investigations.

Example of Boycott Requests

By law, companies are required to report any boycott requests they receive to the Office of Antiboycott Compliance. This is an example of a boycott request from Bahrain:

Prohibited Boycott Condition in a Purchase Order:

“In the case of overseas suppliers, this order is placed subject to the suppliers being not on the Israel boycott list published by the central Arab League.”

Reportable boycott condition in an importer’s purchase order:

“Goods of Israeli origin not acceptable.”

Reportable boycott condition in a letter of credit:

“A signed statement from the shipping company, or its agent, stating the name, flag and nationality of the carrying vessel and confirming ... that it is permitted to enter Arab ports.”

Prohibited Boycott Condition in a Contract

“Israeli Clause: The Seller shall not supply goods or materials which have been manufactured or processed in Israel nor shall the services of any Israeli organization be used in handling or transporting the goods or materials.”

Prohibited Condition in a Contract

“The Contractor shall comply in all respects with the requirements of the laws of the State of Bahrain relating to the boycott of Israel. Goods manufactured by companies blacklisted by the Arab Boycott of Israel Office may not be imported into the State of Bahrain and must not be supplied against this Contract. For information concerning the Boycott List, the Contractor can approach the nearest Arab Consulate.”

Prohibited Condition in a Letter of Credit

“Buyer shall in no way contravene the regulations issued by Bahrain Government and or Israel Boycott Office. Buyer shall not nominate a vessel blacklisted by the said office.”

The Boycott Begins To Crack

The beginning of the end of the boycott started with Egypt signing a peace treaty with Israel that ended its compliance with the boycott in 1979. 

On September 30, 1994, the six Gulf Cooperation Council states announced they would no longer support the secondary boycott barring trade with companies doing business with Israel. Nevertheless, as of 2019, U.S. companies continued to receive requests to cooperate with the boycott from GCC countries.

At a meeting in Taba, Egypt, February 7-8, 1995, Egyptian, American, Jordanian and Palestinian trade leaders signed a joint document — the Taba Declaration-supporting “all efforts to end the boycott of Israel.”

Since the signing of peace agreements between Israel and the PLO and Jordan, the boycott has gradually crumbled. The Arab League was forced to cancel several boycott meetings because of opposition from countries like Kuwait, Morocco and Tunisia. The primary boycott — prohibiting direct relations between Arab countries and Israel subsequently cracked as nations like Qatar, Oman and Morocco negotiated deals with Israel and, now, the United Arab Emirates and Bahrain have cancelled the boycott as part of the normalization of relations with Israel. In addition, few countries outside the Middle East continue to comply with the boycott. Japan, for example, has exponentially increased its trade with Israel since the peace process began. Still, the boycott remains technically in force and several countries continue its enforcement (e.g., Lebanon enforces the primary, secondary and tertiary boycotts).

Into the New Millennium

In April 2004, representatives from 19 Arab countries met for the 72nd conference Bureau for Boycotting Israel to discuss tightening the boycott. The four-day meeting considered blacklisting new companies that do business with the Jewish state. Mauritania, Egypt and Jordan, which have diplomatic ties with Israel, stayed away from the meeting.

In late 2005, Saudi Arabia was required to cease its boycott of Israel as a condition of joining the World Trade Organization. After initially saying that it would do so, the government subsequently announced it would maintain its first-degree boycott of Israeli products. The government said it agreed to lift the second and third degree boycott in accordance with an earlier Gulf Cooperation Council decision rather than the demands of the WTO. In June 2006, the Saudi ambassador admitted his country still enforced the boycott in violation of promises made earlier to the Bush Administration and the Saudis participated in the 2007 boycott conference.

During free trade agreement negotiations with Bahrain, Oman and the United Arab Emirates, the status of the boycott was an issue of concern and the countries agreed not to comply with the boycott. However, indications suggest that these countries continue to support the boycott.

Representatives from only 14 Arab countries attended the biannual conference of the Arab League’s Bureau for Boycotting Israel in Syria in April 2007. Mauritania, Egypt, Jordan, Bahrain and Oman were among the nations that were absent. Those that did participate included the Palestinian Authority, Lebanon, Saudi Arabia and Iraq.

The U.S. government has raised concerns about the enforcement of the boycott by Iraq. In 2006, the number of requests from Iraq for U.S. companies to comply with the boycott increased 287%. Requests in 2006 were also up from Lebanon, Bahrain and Qatar. The largest source of boycott-related requests comes from the United Arab Emirates. In 2006, according to the Department of Commerce, nine companies paid just under $96,000 to settle allegations that they violated the U.S. antiboycott provisions, an increase from five cases in 2005 and $57,000. In January 2007, the New York office of the National Bank of Egypt was fined $22,500 for boycott violations.

In 2011, four companies, ChemGuard Inc., Bank of New York Mellon (Shanghai Branch), World Kitchen LLC, and Tollgrade Communications agreed to pay  a total of $72,000 in civil penalties to settle allegations that each violated the antiboycott law. 

Kuwait Airways refused on 14 occasions to accept passengers with Israeli passports on flights from New York to London. In 2020, the airline agreed to pay a $700,000 fine, $100,000 of which was suspended for three years and would be waived if it committed no further violations.

Alleged Violations

Below is a list of companies alleged to have violated the antiboycott law from January 12, 2007 to July 23, 2020:

Case ID

Case Name

Order Date

A765 Independent Freight International, LLC 07/23/20
A764 Mirasco Inc. 05/11/20
A763 Kuwait Airways Corporation (New Jersey) 01/14/20
A762 Honeywell Middle East FZE (Dubai) 11/13/19
A761 Mitsubishi International PolymerTrade Corporation 06/13/19
A760 Mitsubishi International Corporation 06/13/19
A759 Zurn Industries, LLC 05/20/19
A758

Citibank, NA

08/02/18
A757

Mitsui Plastics, Inc.

02/09/18
A756

Great Lakes Dredge & Dock Company LLC

12/21/17
A755

Bank of America

11/13/17
A754

Whirlpool Europe Srl (Italy)

09/25/17
A753

Whirlpool Corporation

09/25/17
A752 Oxyde Chemicals, Inc. 09/28/17
A751

C H Robinson Freight Services, Ltd.

08/24/17
A750

Carrier Saudi Services Complany Ltd. (Saudi Arabia)

08/22/17
A749

Pelco Inc.

02/17/17

A748

Coty Middle East FZCO (UAE)

09/29/16

A747

Westlake Vinyls Company LP

09/28/16

A746

RHDC International, LLC (Houston)

08/11/16

A745

Gaylord Industries Inc.

06/07/16

A744

Vinmar Overseas, Ltd.

09/25/15

A743

Vinmar International, Ltd.

09/25/15

A742

Morex, Inc.

04/22/15

A741

Infinova Corporation

 01/05/15

A740

McWane International Sales Company

09/29/14

A739

Electro-Motive Diesel, Inc.

09/08/14

A738

BWI Corporation

 02/12/14

A737

TMX Shipping Company, Inc

10/31/13

A736

AIX Global LLC

 09/27/13

A735

Digi-Key Corporation

09/13/13

A734

Leprino Foods Company 

 09/16/13

A733

Laptop Plaza Inc (aka IWEBMASTER.NET INC) 

 09/07/13

A732

Baker Eastern, SA (Libya)

06/12/13

A731

BAC Florida Bank (Coral Gables)

04/05/13

A730

International Veneer Company, Inc.

12/19/12

A729

Climax Molybdenum Marketing Company

11/09/12

A728

W W Grainger Inc.

09/25/12

A727

Dover Energy Inc.

09/11/12

A726

Polk Audio Inc.

07/31/12

A725

SteelSummit International, Inc.

04/13/12

A724

Samuel Shapiro & Company, Inc.

03/08/12

A723

Banco Sabadell SA (Miami Branch)

01/23/12

A722

Parfums De Coeur, Ltd.

01/12/12

A721

Rexnord Industries LLC

10/24/11

A720

JAS Forwarding (USA) Inc. (Los Angeles)

10/06/11

A719

Weiss-Rohlig USA

10/04/11

A718

Tollgrade Communications Inc.

09/29/11

A717

World Kitchen, L.L.C.

09/23/11

A716

Bank of New York Mellon (Shanghai Branch)

08/19/11

A715

Chemguard, Inc.

08/18/11

A714

Smith International Inc.

06/29/11

A713

Lynden Air Freight (Lynden International)

06/28/11

A712

Applied Technology Inc.

06/28/11

A711

UPS Supply Chain Solutions (Houston)

01/25/11

A710

Thermon (UK) Limited (United Kingdom)

08/13/10

A709

Thermon Europe, BV (Netherlands)

08/13/10

A708

Thermon Far East, Ltd (Japan)

08/13/10

A707

MultiCam, Inc.

08/03/10

A706

Mashreqbank PSC

07/23/10

A705

OAC Shipping Company Inc.

07/23/10

A704

Plane Cargo Inc (Houston)

06/21/10

A703

Messina, Inc.

06/09/10

A702

United Source One, Inc.

03/26/10

A701

GM Daewoo Auto & Technology Company (Korea)

01/08/10

A700

JP Morgan Chase Bank, NA

01/08/10

A699

Nectron International

01/27/10

A698

Fortessa Inc.

01/27/10

A697

York International Corporation

11/05/09

A696

M-I Production Chemicals (ME) FZE

09/30/09

A695

Gulf International Bank (New York)

05/07/09

A694

American Rice, Inc. (Houston)

10/20/08

A693

Rohde & Liesenfeld, Inc (Houston)

09/29/08

A692

Aviall Pte. Ltd. (Singapore)

05/01/08

A691

AR-AM Medical Services LLC

01/14/08

A690

DMA Med-Chem Corporation

01/14/08

A689

Colorcon Limited (United Kingdom)

11/15/07

A688

Expeditors International of Washington, Inc.

10/17/07

A687

HornerXpress Worldwide, Inc.

08/29/07

A686

QSA Gloabal Inc.

07/27/07

A685

Dresser, Incorporated

07/13/07

A684

Cooper Tools Industrial Ltda.

05/16/07

A683

Nissin International Transport U.S.A., Inc.

02/16/07

A682

National Bank of Egypt (New York)

01/12/07

Violations have continued to the present. In 2019, 178 prohibited boycott requests from Arab League members were reported. By far the most (81) came from the UAE, followed by Iraq (45), Qatar (17) and Saudi Arabia (17).

Israel has had informal relations with Gulf states for many years and they have grown stronger as the predominantly Sunni states became more concerned with threats from Iran. Interactions between Israelis and the Gulf Arabs have become increasingly public and a breakthrough was achieved in August 2020, when the UAE normalized relations with Israel. A few days later, the UAE cancelled the boycott law, which had been enacted in 1972.

Boycott Remains in Force

Even though the boycott has crumbled, it remains technically in force. On August 12, 2020, the 94th session of the Conference of Liaison Officers of the Regional Offices of the Arab Boycott of Israel was held by videoconference due to the coronavirus. According to a summary published by the Arab League:

The conference stressed the importance of following up and strengthening the work of the Arab boycott agencies, their efforts and activities in implementing the provisions of the Arab boycott, based on the decision of the Tunis summit held on March 31, 2019, which stated that “boycotting the Israeli occupation and its colonial regime is one of the effective and legitimate means of resisting it and ending it and saving the two-state solution and the peace process. Appreciating the coordination between liaison officers in the regional offices, noting the need to strengthen communication and follow-up with the main office of the province, regarding the implementation of decisions and recommendations, and within the framework of the liaison officers’ efforts in following up developments related to the provisions of the Arab boycott.

BDS

Today, most Arab countries publicly support the boycott even as several quietly trade with Israel. One reason has been U.S. pressure for these countries to normalize relations. Beyond the Arab League boycott, an additional boycott campaign was launched in 2001 aimed at isolating Israel and, ultimately, making it disappear with the help of international sanctions. This boycott, divestment and sanctions (BDS) movement has spread around the world. Various countries, including Spain, France and the United Kingdom, have taken measures to outlaw aspects of the campaign. Legislation at the Federal level is still being developed to combat BDS. Congress, for example, has called on negotiators in trade talks with the European Union discourage politically motivated economic actions intended to penalize or otherwise limit commercial relations specifically with Israel or person doing business in Israel or in Israeli controlled territories.

The BDS movement has been adopted by anti-Israel organizations on a number of college campuses, some of which have attempted to convince their universities to divest from U.S. companies doing business in Israel. Even on the few campuses where student government passed divestment resolutions, the university administrations have made clear they have no intention of boycotting Israel.

Another campus-led phenomenon involved faculty who have lobbied professional associations to boycott Israel. Curiously, these faculty insist on their academic freedom to call for a boycott against Israel, but deny their critics the right to speak out against them. They also see no hypocrisy in denying Israelis their academic freedom. The Modern Language Association and American Studies Association were two of the groups that voted to boycott Israel. The decisions had no practical effect since the associations themselves do not have relations with Israel and the only members who adhere to the boycott are those who had no interest in visiting Israel or working with Israeli colleagues. Those decisions to boycott Israel also provoked a backlash against faculty and associations supporting BDS. The American Studies Association decision, for example, was condemned by more than 200 university presidents/chancellors. More esteemed associations, such as the American Historical Association, have rejected efforts to put a boycott on their agenda.

The backlash has extended off campus as well where state legislatures have adopted legislation aimed at preventing any boycott of Israel.


Sources: Martin A. Weiss, “Arab League Boycott of Israel,” Congressional Research Service, (June 10, 2015, August 25, 2017);
Office of Antiboycott Compliance.
“Annual Report to the Congress for Fiscal Year 2019,” U.S. Department of Commerce Bureau of Industry and Security, (February 6, 2020).
League of Arab States, (August 26, 2020);
United States of America Department of Congress in the Matter of Kuwait Airways Corporation (New Jersey), Department of Commerce, (January 24, 2020);
Marcy Oster, “UAE cancels Israel boycott law as El Al prepares first direct flight and Kushner promises more deals,” JTA, (August 30, 2020).