In his Feb. 5, 2014 column, Thomas Friedman of The New York Times implores Israel’s leaders to comply with international demands in order to derail a “Third Intifada” that is “led by the European Union in Brussels and other opponents of the Israeli occupation of the West Bank across the globe.” Echoing U.S. Secretary of State John Kerry’s warning that the boycott and delegitimization campaign “will only get stronger if current peace talks fail,” Friedman waves the boycott red flag to compel Israeli leaders to cease construction activity in Jewish communities locating beyond the 1949 armistice lines. Friedman’s advice recalls similar advice offered to the Israelis two years ago by his colleague, columnist Nicholas Kristof, that “friends don’t let friends drive drunk.” But when opinion page writers for The New York Times confer upon themselves the acumen that they know what’s in Israel’s best interests better than the Israelis do, a reality check is in order.
Since the founding of the Jewish state, Israel and its supporters have contended with an unrelenting effort to isolate and delegitimize it. Economic boycotts figure prominently as a non-violent form of coercion to squeeze concessions from Israel. Yet boycotts have historically yielded poor results. The Boycott, Sanctions and Divestment campaign, now in its tenth year, makes a lot noise, but has little to show for its efforts.
Many of Israel’s foes in the West seem caught in a time warp, imagining the Israeli economy as it was decades ago, relatively undeveloped, struggling under a mountain of debt with runaway inflation and hampered by an intrusive state and union monopoly.
The mass immigration of Jews from the former Soviet Union in the 1990s heralded a technological flowering and entrepreneurial boom that opened up and transformed Israel’s economy.
Boycotts are only effective when equivalent substitutes are available for purchase elsewhere or the boycotted products are deemed as luxuries that one can do without. Israeli exports increasingly no longer fit into these categories.Where once Israel’s exports were weighted toward agricultural products like citrus and flowers, today its exports mainly fall under the categories of high technology, pharmaceuticals, chemicals and aircrafts. For the most part these industries are impervious to boycott campaigns. Companies and consumers around the world purchase Israeli products mainly because they need them and they represent the best value in their respective categories.
Although boycott advocates have a voice in the European Union [EU] political process and have made inroads in academia, there are significant factors that work against an effective economic boycott. Israel imports substantially more from the EU than it exports to the EU. Furthermore, Teva Pharmaceuticals, Israel’s largest exporter to Europe, employs more people in Germany, Hungary and the Czech Republic (as well as the U.S.), than it does in Israel. Any decline in business could mean loss of employment among European and American workers.
The Israel Export and Cooperation Institute publishes a report each year tallying total exports by sector and by markets. The report reveals that Israel’s economy remains on strong footing. It offers a rich variety of exports to diverse markets. 2013 figures reveal substantial increases in Israeli exports over 2012. The details of Israel’s export trade are illuminating. The biggest increase in exports was to Turkey, now the third largest market for Israeli products, due to increased demand for oil and chemical distillates. The EU, especially Spain, also increased its imports from Israel. Turkey and Spain both have strong political differences with Israel.
The biggest decline in exports was to China, mainly due to a weakened market for chips for electronic components. This was partly offset by a sharp increase in exports to Malaysia, a predominately Muslim country, whose former Prime Minister Mahathir Mohamad gained notoriety by spouting Jewish conspiracy theories.
The U.S. still remains Israel’s largest single export market accounting for 23 percent of total exports. This consists mostly of electronic components and pharmaceuticals.
According to the Institute’s report, pharmaceuticals, electronic components, chemicals and aircrafts accounted for 52 percent of total exports in the first half of 2013. Diamonds and other precious stones represent the single largest export item, as they have for many years.
American computer giant Intel accounts for 10 percent of total Israeli exports and 75 percent of its exported electronic components. Teva Pharmaceuticals accounts for 88 percent of pharmaceutical exports. These two companies alone account for about 20 percent of Israel’s total exports.
The favorable economic data does not diminish the serious political dimension to the delegitimization campaign. Israel’s leaders recognize full well the need to confront and oppose delegitimization. However, Friedman’s employment of the economic boycott campaign as a scare tactic designed to compel Israel into making concessions is bluster not supported by the facts.
The following chart shows the diversity and strength of Israel’s export economy:
The chart shows Israel’s leading export markets and their change from the prior year (copied from the Israel Export and Cooperation Institute report).