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Arab Countries Boycott U.S. Goods Over Mideast Policies

Economy: An Iranian beverage company has benefited from a campaign directed at Coca-Cola and McDonald's, which has hurt businesses.


DUBAI, United Arab Emirates — Zamzam Cola has new customers in the Persian Gulf and plans to expand soon into more Arab markets. The Iranian company can indirectly thank Israel for its growth.

Zamzam, which previously exported only to Iraq and Afghanistan, is benefiting from a grass-roots campaign by Arabs and other Muslims to boycott American goods over U.S. backing for Israel. Set off by the latest Palestinian uprising, the boycott is especially directed at well-known American products such as Coca-Cola and McDonald's.

"After Arab countries in the region started boycotting some American goods, including Coca, demand for Zamzam began," said Bahram Kheiri, director of the Iranian beverage company.

He wouldn't give sales figures, but said Zamzam has started exporting to Bahrain and is discussing orders with companies in the United Arab Emirates, Kuwait, Saudi Arabia, Syria, Lebanon, Jordan, Egypt and Indonesia.

Zamzam is sweeter than Coke and has a built-in appeal for Muslims because it takes its name from a holy spring in Saudi Arabia.

The boycott is being urged across the Middle East and North Africa by Muslim preachers, students, intellectuals and--in Saudi Arabia, a main U.S. ally--even some advisors to the Saudi king. The appeal is delivered in mosque sermons, leaflets and Internet sites.

It's difficult to say how hard the boycott is hitting American companies or Arab-owned businesses selling U.S. products.

Two of the six McDonald's franchises in Jordan have closed for lack of business--one in the capital, Amman, and one near a Palestinian refugee camp.

In Morocco, a government official who asked not to be identified, estimated sales of Coca-Cola could fall by half in the country's north, a base for Islamic groups. In the United Arab Emirates, sales of the local Star Cola are up 40% in the last three months.

In Dubai, business appears to be down at such American fast food chains as McDonald's, KFC and Hardee's and up at local restaurants.

In Saudi Arabia, prices have been cut up to 50% on some U.S. imports, and ads for U.S.-linked fast food outlets point out they are owned and managed by Arabs.

A respected Muslim cleric in the Persian Gulf state of Qatar, Sheik Youssef al-Qaradawi, issued a religious ruling saying American products should be viewed like Israeli products, which have long been banned in the Arab world.

In Riyadh, Saudi Arabia, mosque preacher Sheik Omar bin Saeed al-Badna argued the boycott would be good for the kingdom's economy.

"Boycotting American food and drinks means more business for Saudi, Lebanese and other restaurants, as well as local producers of soft drinks. This will be good for the majority of Saudis," he said.

The boycott is not that simple, economists and government officials say. They say it harms local businesses, franchisees and employees while it has little effect on parent companies in the United States.

"Most of the companies that people consider American are multinational and those who own them are Arabs," said Suleiman al-Mazrouei, an economist at Emirates International Bank.

Coca-Cola executives said Coke's Middle East operations are run by Arab workers and managers and it gets materials from local suppliers.

"We, for example, have a bottling partner in the Palestinian Authority area that employs about 320 people. So we are one of the largest employers in the Palestinian Authority area," said Steve LeRoy, Coke's communications director for central Europe, Eurasia and the Middle East.

LeRoy said Coke sales had been affected by the boycott but refused to say how much. The international headquarters of McDonald's and Hardee's did not respond to repeated requests for comment.

Samer Tawil, director general of Jordan's Ministry of Trade and Industry, said the effect of the boycott spreads beyond boycotted companies to their workers--who could lose jobs -- and to their investors, who in Jordan are mostly Jordanians.

Critics of the boycott say its advocates are proposing a simple answer to a complex problem.

Jordanian economist Fahd Fanek said Arabs who find it easy to boycott American soft drinks and fast food probably would balk at doing without "American medicines, airplanes and the Internet" as well as American college education for their children.

One backer of the boycott is Lebanon's Grand Ayatollah Mohammed Hussein Fadlallah, who had his U.S. assets frozen in 1995 as part of an anti-terrorism campaign because he wielded influence over Hezbollah, a militant anti-Israeli group considered a terrorist organization by Washington.

Fadlallah has issued a religious edict urging a boycott of U.S. goods but acknowledges the weapon is imperfect.

In an interview with the Associated Press, he said exceptions to the boycott could be made for necessities and U.S.-made products that cannot be replaced with goods from other countries.

He listed one such exception as buying and selling the U.S. dollar, noting: "Lebanon's economy is based on the dollar."

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