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Prospects of a long-awaited Middle
East peace plan may bring an end to the
45-year-old economic boycott of Israel.

R. J. KING
SPECIAL TO THE JEWISH NEWS

W
i∎o THE DETRO IT J EWISH NEWS

A

s plans toward peace
begin in the Middle
East, many Israeli busi-
ness and economic
experts predict once
hostile and strained
relations with Arab nations
will slowly dissipate and lead
to a surge of investment and
trade activity in Israel.
While no one is forecasting
a burst of business opportu-
nity overnight, world leaders
can hope for a reduction of
tensions in the Middle East
and a solution to the
Palestinian uprising.
Ultimately, peace will bring
business to the region.
The anticipation of peace
also means the creation of a
common regional market and
brings for the first time a
realistic hope for the elimina-
tion of the Arab boycott,
whose leaders for years pro-
moted an international trade
embargo with Israel.
"First and foremost, the
Arab boycott must be abol-
ished," said Jess Hordes,
director of Washington
affairs for the Anti-Def-
amation League. "It should
never have started. The

under pressure from stu-
dents for his role in cooperat-
ing with the boycott.
"Why didn't the Arab boy-
cott get more resistance in
the United States? Quite
frankly, laws against the
boycott were working," Mr.
Hordes said. "It was in my
mind a major policy success
and it did compel some Arab
countries to adjust their
practices."
In recent years, Israel has
signed free-trade accords
with the United States and
European Com-
munity, and foreign
trade experts predict
more will follow.
Joint research and
development pro-
jects, a build-up of
infrastructure, an
influx of new prod-
ucts and a resulting
increase in competition is
expected to boost Israel's
economy as well.
"The boycott already was
weakening before Israel and
the Palestinians sealed their
accord in Washington last
week," said Will Maslow, edi-
tor of the Boycott Report, an
Israeli anti-embargo newslet-
ter published nine times a
year. "Kuwait has relaxed its
policies and Saudi Arabia
privately told the State
Department that if any
American companies have
problems, they should con-
tact the U.S. Embassy in
Riyadh.
"In briefings last week,
President Clinton and Israeli
and Arab leaders said they
would move more vigorously
toward eliminating the boy-
cott," Mr. Maslow said.
Last week, the Jerusalem
Post reported that the United
States recently opposed
Saudi Arabia's request to
become a member of GATT
— the international trading
agreement — because of the
secondary boycott which
denies companies trading
with Israel access to Arab
countries.
GATT conditioned Saudi
Arabia's entry on repealing
the boycott.
At a Joint Economic Devel-
opment Group meeting held
in Jerusalem last week,
GATT discussed future eco-
nomic relations between

recent movement toward
peace in the Middle East will
do wonders for Israel.
"In the past, Israel had to
devote significant resources
to military and defense pur-
poses," Mr. Hordes said.
"Today, we are seeing compa-
nies from Japan and
Germany increase their
trade to Israel where in the
past they were intimidated
by the Arabs. There is no
excuse to continue the boy-
cott."
The Arab boycott of Israel
has been in effect since the
nation was founded in 1948.
All 21 members of the Arab
League except Egypt, which
in 1979 signed a peace treaty
with Israel, have taken part
in the ban.
Though always viewed as
harmful, the policy did not
begin to sting until the boom
days of the 1970s when the
United States witnessed
hefty price hikes due to an
OPEC-sponsored oil embar-

go.
As a result,
many U.S. com-
panies, including
American fav-
orites like Pepsi-Cola, Coca-
Cola, Proctor & Gamble and
Sara Lee, participated at
some point in this trade
embargo with Israel. In addi-
tion, a secondary boycott pro-
hibited Arab nations from
dealing with any company
doing business with Israel.
Other companies that par-
ticipated in the boycott
include Ford, Xerox, Union
Carbide and most Japanese
automakers and electronics
manufacturers. Almost all of
these companies have long
since started doing business
in Israel, but remnants from
the Arab boycott still linger.
According to the Feder-
ation of Israel Chambers of
Commerce, the boycott
reduced Israeli exports and
foreign investments by 10
percent a year. The Federa-
tion calculates that at that
annual percentage, the coun-
try has lost more than $40
billion over the last 45 years.
In 1977, under President

Jimmy Carter, it became ille-
gal for American firms to
cooperate with the boycott.
And last March, the Clinton
administration sent U.S.
firms a strong reminder of its
resolve in the matter by levy-
ing the first criminal penalty
in such a case.
Under the proceeding,
Baxter International, the
world's largest hospital sup-
plier, pleaded guilty to violat-
ing provisions of the law that
forbids U.S. companies to
provide the Arab League
with information about their
dealings with Israel.
The federal government,
which three years ago began
investigating the matter,
issued $500,000 worth of
fines in the case while charg-
ing an additional $5.9 million
to settle a number of sepa-
rate civil proceedings. In
addition, the firm is preclud-
ed from doing business with
Syria and Saudi Arabia for
two years.
What's more, Vernon
Loucks, longtime Baxter
chairman, resigned last
month as a senior trustee of
Yale University after coming

