Why EU Labeling of Israeli Squatter Goods could Affect Israeli Economy

By Juan Cole | (Informed Comment) | – –

The European Union will probably issue a ruling today that goods produced in the Occupied Palestinian West Bank by Israeli squatters must be so labeled. Such labeling is already carried out in some European countries, but this ruling would extend the practice to all 28 EU members.

It is illegal in international law for an Occupying power to flood its own citizens into Occupied territory, so ipso facto what squatters produce is the fruit of a crime of expropriation and illegal in character.

The EU, however, will not declare the products to be illicit, it will simply indicate the point of origin and let consumers decide.

The initial economic impact of this move will be slight. According to the Yahoo article linked above, the squatter economy, based on stealing Palestinian land and resources and suppressing Palestinian economic activity, comes to $200 – $300 million a year, and about a third of it goes to the EU, i.e. $70 – $100 million a year. Europeans are likely to cut back such buying by 50% for a loss of up to $50 million. That seems minor given Israeli trade with Europe is $30 bn. a year. But it is actually a big deal.

First of all, a loss of 1/6 to 1/4 of trade would put a damper of squatter commerce.

But the principle the EU is establishing is more important. That is, there is a difference between commercial enterprises in Israel proper and those in the Occupied territories.

But many Israeli companies have a subsidiary in the West Bank. How do you separate out legitimate and illegitimate companies if this is true?

Sodastream got caught up in this conundrum when it had a factory in the West Bank (I think it has since gotten out).

I wrote last winter regarding the Sodastream controversy:

“The European Union has decided to use its economic clout to push back against the clear Israeli determination to annex the whole West Bank while keeping its indigenous Palestinian population stateless and without the rights of citizenship.

The European Union has insisted that Israeli institutions and companies based in the Palestinian West Bank be excluded from any Israeli participation in a program of the European Union. (The EU treats Israel like a member, offering it many perquisites, opportunities for technology interchange, and access to EU markets; Brussels is saying, however, that none of that largesse can go to Israelis in the Occupied Weat Bank.)

About a third of Israel’s trade is with Europe (the US and China are its biggest trading partners, and Turkey comes after the EU). The EU imports $300 million a year from the settlements, but is clearly moving toward cutting that trade off.

Norway’s enormous sovereign wealth investment fund has just blacklisted Israeli firms with settlement ties.

This follows on a Netherlands’ investment fund divesting from five Israeli banks that fund squatter settlements on Palestinian territory.

European governments are increasingly warning their companies not to invest in or do business with Israeli firms in the Palestinian West Bank, since they might well be sued in Europe by the Palestinians so harmed. The recognition by the UN General Assembly of Palestine as a non-member observer state (on the same footing at the UN as the Vatican) has given Palestine more standing, even in national courts. Palestine is increasingly being upgraded diplomatically in Europe. The issue is also affected by European Union human rights law and a halo effect from the enactment of the Rome Statute in 2002 and the establishment of the International Criminal Court.

Here’s the problem for Jews in Europe and the United States who, like Ms. Johansson, do business with Israeli companies: It is increasingly difficult to distinguish between West Bank firms and Israeli ones. As the Israeli annexation of the West Bank accelerates, the hundreds of thousands of Israelis there bring along with them banks, factories and other economic activities from the metropole. Sodastream isn’t primarily a West Bank company, but it has a West Bank factory and so is embroiled in controversy.

That is, the growing international movement to divest, boycott and sanction the squatter institutions on the Palestinian West Bank is unlikely only to affect the latter over time. There is increasing danger of Israel proper being subjected to boycott because it is so tightly intertwined with the settlers.”

Then there was the kerfuffle over Orange Telecom’s desire to avoid having its brand used in the West Bank. While Orange backed down in the face of an onslaught by Israeli PM Binyamin Netanyahu and Israeli-American billionaire Haim Saban, the issue is not going away. I wrote about that controversy,

“The issue is not boycotting Israel proper. Richard would have had no problem with doing business with a Tel Aviv firm that had no West Bank presence. The issue is profiting from a vast project of illegal theft of an occupied people’s property. But the controversy signals something I predicted: As mainstream Israeli companies become more and more intertwined with West Bank settler investments and partners, all Israeli businesses risk getting caught up in BDS (the campaign to boycott, sanction and divest from Israeli firms implicated in the settlements). A similar dilemma hurt the Sodastream company, which suffered economic reversals after it advertised at this year’s Superbowl, drawing attention to itself. Many American consumers were disturbed to discover that one of the company’s factories was in the West Bank (it has since been closed), and they launched a boycott campaign against it.

Since the French foreign ministry (like those of the UK, the Netherlands and other European countries) has advised the country’s corporations not to partner with Israeli firms doing business in Israeli squatter settlements on the Palestinian West Bank, critics had argued that Orange is contravening French policy.

The reason for the foreign ministry warning is that European firms making money from the illegal Israeli squatter settlements on the Palestinian West Bank could theoretically be sued in European courts under the Rome Statute and under a 2004 finding of the International Court of Justice that the squatter settlements contravene international law. Orange’s Richard is eager to avoid such a lawsuit now that Partner has dragged the company’s brand into the settlement controversy.”

If the EU distinction between squatter products and Israeli ones gains traction in international law and practice, Israeli companies can’t be held harmless unless they disinvest. What the EU is doing could well enlist Israeli entrepreneurs themselves in a sort of BDS of the squatter enterprises. And that is what the far right wing Likud government fears most of all.


Related video added by Juan Cole:

PressTV: “Israel struggles to convince EU not to label its products”

14 Responses

  1. It is really up to Europeans to resolve this festering situation since they are less compromised, marginally perhaps but nevertheless. People are always saying, Obama could or should do this or that but in the end he is not able to, the knot is too tangled, there are too many conflicting interests at each others’ throats. By sort of washing his hands of responsibility he is effectively leaving the stage to Europeans, and that is not doing nothing, in fact it’s doing quite a lot.

    This EU labeling business closes a loophole It needn’t be seen as controversial since in theory it is as likely to attract buyers as to put them off. I live in Southern Spain where local agriculture suffers from US inspired sanctions against Russia. In a German supermarket oranges from South Africa were on sale next to Spanish oranges and I bought the local though they were more expensive. That was not just a gesture of support, it also satisfied my feeling that it is morally questionable and environmentally absurd to send oranges half way round the world to compete with a local produce surplus.

    What is good about the labeling is it provides a focus for public action, and there are not that many. However distressing Europeans find Israel’s behavior there is little most ordinary people can do about it; now they need only not purchase something. Many may avoid buying Israeli products as well with the issue in front of them since, after all, it is Israelis who oppress Palestinians not produce. Most such produce will presumably be sold through supermarkets and it need only be left unsold on their counters for them to switch suppliers since turpitude is no match for the bottom line.

    Quaeque ipsa miserrima vidimus, et quorum pars magna fuimus Vergilius, cum excusatione

  2. Settlement product labeling is a “EU bottom-up strategy”; provide establishment status quo coverage whilst allowing gradual erosion via freedom of choice consumerism.

    It should be noted that the US administration has stopped lobbying the EU not to label.

  3. As a consumer of mainstream media news, I have been so poorly informed that I assumed BDS WAS directed against Israel, not just against businesses operating as squatters in the West Bank. With today’s post I learn otherwise.

    • Those Asian countries have been voting with their feet in favor of Palestinians at the general assembly for decades and almost all of them had to fight expel colonialism from their lands. Over time, what happened to apartheid South Africa will catch up with Israel? I even doubt if Israel oranges (and other products) can be able to compete with low cost oranges from tropical zones of Asia.

  4. This will just accelerate Israel’s turn to Asian markets, China, India and Japan, and others who have no dog in the Israeli-Palestinian fight.

    • There is no “Asian market” for Israeli products.

      There is NOTHING that Israel produces that Asians can not get from other places, with equal or better quality and usually for much lower cost.

      Then there is the Asian cultural problem Israel can not change – Asians like to buy their own products for the most part. Yes they buy high end European and American products (iPhones, etc.) but they buy mainly for the status and there are few products they will do this for and NONE of the products Israel produces have the cache of European and USA products.

      In particular, all China wants to do with Israel is strip-mine it for intellectual property and throw away the dry husk. China has the ability to reproduce anything Israel can think of and then vastly improve the item, while producing it for a lot less than Israel can ever hope to match.

      Because most people that live outside Asia have zero knowledge about Asian history they often fall into the centuries old European stereotypes of Asians. BUT, except for a short 200 year period of European empire rule, Asia has a 5000+ year history of innovation and mercantilism unmatched by Europe.

      Now that Asia, lead by China, is rapidly catching up from 200 years of European oppression they are on track to be vastly more innovative than the so-called “west,” including Israeli.

      As a result, Asia simply has no possible need for any products from Israel. They can source most stuff within Asia or just make it themselves.

      Israel has NO REPLACEMENT for the European market.

    • India has the largest Moslem population in the world.
      Indonesia and Malaysia are also large Moslem countries.
      The Philippines has a restive Moslem minority.
      The anti-colonial narrative has power in S. Korea.
      China has huge plans underway in Moslem Central Asia, which may surge into Iran, Pakistan, and the Arab world.

  5. Israel strongly resists such labeling to protect those producing in the occupies territories. So be it. There are those who will then as a matter of practicality boycott all Israeli products as there is no practical way to distinguish between Israel proper and West Bank.

    • If I remember rightly, there was a case a little time ago of some produce labelled “Palestine” but with the producer’s details showing a Tel Aviv phone number.

  6. As you point out, the amount of financial loss to Israeli economy as the result of new regulations is minimal, but what the Israelis are worried about is that this is just the tip of the iceberg and that other steps will be taken in future. For instance, nearly all major Israeli banks are involved in financing illegal settlements in the occupied territories and all of them are doing a great deal of business in Europe. If those banks are disqualified from operating in Europe, it would be a major loss to Israeli economy. If Iranian banks could be stopped from doing any business with foreign banks on trumped up charges of Iran having a nuclear weapons program, why can’t Israeli banks be thrown out of SWIFT for Israel’s real nuclear weapons and for the illegal operations of those banks in the occupied territories?

    • The USA and UK control the SWIFT network, so it is unlikely that Israeli banks would be effected in any way. But if there was any possibility of a problem, Israel could do what most other countries have done; join the Chinese sponsored international trade bank network (the same one Iran joined to get around USA financial transaction restrictions).

  7. Such Rabinists and Lesser Israel Two-State Solutionists as still exist in Israel are like miners trapped in a cave-in. This European policy of separating out criminal settler enterprises for separate labelling could be a first step towards digging out and rescuing the Lesser Israel 2SS Rabinists from the Likud-Revisionist cave in they are buried under. If it were extended to economic product from the illegally-“annexed” Golan Heights, it could help to zero out the settler economic presence there too.

    Making everything from Golan/West Bank into “stuffa non grata” could be a first step towards tilting the power-balance within Israel to the point where the Rabinists might have an outside chance at holding up their end of the ongoing civil war in that country . . . and conquering enough power over the State and the Armed Forces to be able to use that power to round up all the Outlaw Settlers and march them at gunpoint back into Israel Proper . . . killing any who resist along the way in order to encourage the rest to come along quietly.

    That would be the sort of “confidence-building measure” which actually “builds confidence”.

  8. Thank you for your comments on EU labeling. I have a question: why can’t we move squatters out of their home one home at a time or one street at a time? The squatters could be moved out (people only) at night to ensure their safety. They would be moved to a safe area. Then the house would be secured legally. Then the squatters’ possessions could be moved out to a secure location. The cost of this operation would be paid out of the 3 billion we send Israel each year. Do you think this could work? We could learn how best to do this as we empty the squatters houses.

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