Israeli economy troubled by boycotts

Dollar voting has taken its toll on foreign direct investment in Israel as it slumps by almost 50 percent

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

In a market economy, dollars are a form of consumer power. Throughout history boycotts have been a strategy used to changed policies and practices in companies, communities and even nations. Recently, Israel has been hit hard by the power of consumer demand due largely to the Israel-Gaza conflict in 2014 and the growth of the Boycott, Divestment and Sanctions (BDS) movement.


BDS is a non-violent movement which allows people to play an effective role in the Palestinian struggle for justice.

According to a report published by the United Nations Conference on Trade and Development (UNCTAD), only $6.4 billion was invested into Israel in 2014 in contrast with $11.73 billion in 2013. 

Adding to the fall, Newsweek wrote in an article that Israel’s foreign direct investment fell by 15 percent, from $4.69 in 2013 to $3.91 in 2014. 

Dr Ronny Manos, an economist who authored the report, told the Israeli news website Ynet Newsthat  "we believe that what led to the drop in investment in Israel are Operation Protective Edge and the boycotts Israel is facing."

Manos then continued to stress over the fall in profitable business deals.

"In the past there were large transactions such as Waze [a traffic app sold to Google] and ISCAR Metalworking [a supplier of metal tools bought by Warren Buffett's Berkshire Hathaway] which boosted investment, but over the past year there were not enough such deals," she said.

A recent study outlined in the Rand Corporation’s report shows that a peace agreement ending the Israeli-Palestinian conflict could inject more than $120 billion to the Israeli economy over the next decade. Similarly, the Palestinian economy would receive a $50 billion boost over 10 years.

“In the absolute size of GDP dollar terms, the Israeli economy would be 5 per cent bigger and the Palestinian economy 50 per cent bigger in 2024 if the two parties were to agree a two-state solution,” Charles Ries, co-author of the study, told the Financial Times.

Conversely, the report also claimed that Israel’s economy is expected to lose $300 million a year in exports to Europe as more of its trading partners avoid goods from Jewish settlements on Palestinian lands. 

Officials of the European Union are considering to tighten measures on the new Europe-wide guidelines for labelling settlement-made goods. This of course, sends a wave of worry to the Israeli government thus, the level of attention they will give to this report remains unclear as previous calls for peace were swiftly rejected.  

The power of boycotts

Boycotts have been a powerful tool used to voice public emotions towards a certain issue. Throughout time, many organisations have been a target of global strikes. 

On 1 Dec. 1955, the Montgomery bus boycott emerged with the arrest of Rosa Parks, later turning into a mass protest which pushed on for 13 months. 

It ended with the US Supreme Court ruling that segregation on public buses is unconstitutional. The movement was led by Montgomery Improvement Association (MIA) and its president Martin Luther King, Jr.

Moreover, leading clothing retailers such as Selfridges, Ann Taylor and Polo Ralph Lauren have all been jeopardised by consumer rejection amid animal cruelty when producing designs from real fur.

Upon this, they have all permanently pulled fur from their stores. However, fashion giant Burberry is still resisting boycotts, insisting to make design using real fur. 

Amazon has also faced consumer objection as unfair pay for Amazon workers was boycotted. The organisation came face to face with an “Amazon-free” Christmas campaign where they were expected to lose sales as much as $2.79 million.

In a more recent case, Sodastream products were boycotted globally as they were believed to infringe the rights of the Palestinian people. Consumer boycotts supported by organisations such as BDS assert that its main production facility is based in Mishor Edomin, an illegal settlement in the occupied West Bank.

In response, SodaStream announced that it will close its West Bank premises and relocate its operations at that site and another to northern Israel by late 2015.