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COLUMN ONE : Cracks in a 45-Year Boycott : With Cokes in Saudi Arabia and Toyotas coming to Tel Aviv, Arab sanctions against Israel are weakening. But ban on direct trade will probably endure.

May 22, 1991|KIM MURPHY | TIME STAFF WRITER

Under a secondary boycott in effect in more than half the 21 Arab countries since the early 1950s, Arabs refuse to deal with companies that have factories, agencies or offices in Israel; which have trademarks or copyrights belonging to Israeli companies; which use Israeli consultants, or which use shipping firms whose ships call on Israeli ports or deliver oil to Israel. Under a tertiary boycott, subsidiaries and subcontractors are included.

Secret Blacklist

A Damascus-based office maintains the official blacklist of prohibited companies, and though the list has not been made public for more than 15 years, it is said to name up to 6,000 firms.

In this month's amendments, one of two routine adjustments made every year, Coca-Cola was removed from the list, probably in recognition that Coke is available in several Arab countries, including Saudi Arabia, Bahrain, Lebanon, Yemen and Egypt, and in North Africa. Three other U.S. businesses were also removed from the list, despite their continued business dealings with Israel, including J. B. Williams Co., Helene Curtis International S. A. and Home Insurance Co.

But 110 new companies were added to the list, including 104 companies or subsidiaries held by British media tycoon Robert Maxwell, who heads a European-Israeli business group and owns interests or sits on the board of two Israeli publications. Among the others added to the list were two U.S. companies, LeClic Products Inc. and Phoenix Ware.

For some Israeli officials, these are indicators that the boycott is not yet over, at least within hard-line Arab states like Syria, home of the boycott office.

"Talks are there. Action is missing," said government spokesman Yosef Olmert.

Indeed, most Western and Israeli officials agree that the most that can be hoped for in upcoming diplomatic forays is an end to the secondary boycott of Israel.

The bans on direct trade between Israel and Arab states are likely to remain in place as long as the state of war remains, they concede.

There has never been consensus within the Arab world about the secondary boycott--individual countries decide which parts of the blacklist to enforce or whether to enforce it at all, often seemingly on individual market considerations.

But many Arabs continue to defend the boycott and criticize the current U.S. political campaign to end it.

"All this hoopla from Washington sounds all the more ridiculous these days when it is the United States itself which spearheads almost every boycott in effect, including food and medicine against Iraq, even after the end of the Gulf crisis, and a number of other countries, mainly from the Communist Bloc in Southeast Asia and Cuba, which do not agree with Washington's way of doing things," Palestinian journalist Maher Abukhater, editor of the Jerusalem-based Al Fajr, wrote recently.

"But when the Arabs, who everyone agrees are in a state of war with Israel over what everyone agrees is an illegal occupation of Arab territory, decide to impose a boycott, such action is condemned as mean-spirited and lacking in largess and prompts the United States to enact laws to fight it."

The Arabs' complaints about U.S. campaigns against the boycott is a longstanding one, and not without reason. The U.S. has one of the toughest anti-boycott measures in the world, adopted in 1977, imposing fines and potential criminal penalties against companies found to be honoring foreign boycotts by furnishing boycott-related information about their business activities. A separate tax law passed a few years later requires companies that cooperate with foreign boycotts to forfeit certain tax credits.

Safeway Fine

In the largest enforcement action under the law, Safeway was fined $995,000 on a complaint filed in 1987 for not allowing goods from blacklisted companies to be shipped to its stores, according to records maintained by the American Jewish Congress. Sara Lee was fined $725,000 in 1988 for furnishing the names and nationalities of members of its board of directors and its relationship with blacklisted companies in doing business with Arab countries.

Earlier this year, the Commerce Department referred for Justice Department investigation allegations that Baxter Corp., the world's largest hospital supply company, sold one of its companies in Israel and took other actions to remove itself from the blacklist and win a contract with the Syrian army. The case marks the first time that the United States has pursued possible criminal penalties under the anti-boycott statute.

Still, Jewish groups and a New York congressman have expressed concern that enforcement actions under the statute declined 77% in fiscal 1989, a figure U.S. officials attribute largely to compliance by U.S. companies to the statute, and, in some cases, a lack of enforcement staff.

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