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Al-Ahram Weekly On-line 2 - 8 November 2000 Issue No. 506 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly On-line 2 - 8 November 2000 Issue No. 506
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region Interview International Economy Opinion Culture Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters The message is the medium
By Dina Ezzat, Sherine Nasr, Mona El-Fiqi
A popular desire to show solidarity with the Palestinian Al-Aqsa Intifada has been manifested during the past few weeks in calls for a boycott of Israeli and some US goods.
Amr Moussa
Mustafa Kamel El-Sayed
Hamdi Abdel-Azim
Three weeks into this popular boycott, the Arab summit delineated the formal position of Egypt and other Arab countries on the question of economic cooperation with Israel. In the case of Egypt, this amounts to no further talk of MENA [Middle East North Africa] regional integration conferences, explained Foreign Minister Amr Moussa. Egypt also rejects a formula recently suggested by the EU to institutionalise cooperation among all countries along the southern shores of the Mediterranean -- including Israel. This proposal was presented under the Barcelona Process which provides the framework for partnerships between Mediterranean countries. Egypt, like all other Arab countries, remains committed to Barcelona Process and Foreign Minister Moussa is scheduled to attend a meeting in France, two weeks from now, for the foreign ministers of the 27 countries participating in this process. The Barcelona Process is not seen as part of the regional cooperation that has been put on hold according to the recent Arab summit. "This is a separate process," said one Arab diplomat.
Egypt, however, is committed to continue selling oil to Israel, as stipulated in the peace treaty signed between Egypt and Israel in 1979. Stipulations under the World Trade Organisation concerning rules of origin for products could put Egypt in the position of unwittingly purchasing goods for which components were made in Israel or which were assembled in Israel. By virtue of containing parts from other countries such items might actually be labelled as coming from a country other than Israel.
"Trade between Egypt and Israel was at a very low point before the Arab summit. Also, this was basically between private sectors," a government official told Al-Ahram Weekly. Explaining that there has been "no real normalisation in the economic domain," he said that even the limited trade between the two countries has fluctuated with the changing of Israeli policies on the peace process. However, "trade reached an all time low when the current government of [Prime Minister Ehud] Barak started its aggression against Palestinian civilians," he said.
A boycott of Israel might also be circumvented by trade through a third country. There is nothing to prevent any of Egypt's trade partners from selling goods purchased from Egypt to Israel, noted the Foreign Ministry official.
In the private sector, Egypt's most prominent business associations are taking action to support the Palestinian cause. The Federation of Egyptian Chambers of Commerce (FECC) and the Sixth of October Businessmen's Association announced a boycott of all Israeli products "until Israel stops attacking the Palestinians." Other concrete measures taken by the FECC are the donation of ambulances, in response to a request from the Gaza Chamber of Commerce, and collecting monetary contributions from members through an account opened for this purpose at the Banque du Caire.
Recognising the power of associations, the FECC announced its support for the decision taken by the Egyptian Maritime Chamber which declared that it would cease all dealings with Israeli ships in Egyptian ports. It has also called on federations of chambers of commerce throughout the Arab world and the Muslim world to cut off economic relations with Israel.
While the FECC's actions are consistent with its formally announced positions against normalisation with Israel, the extent to which its members who are actually engaged in trade with Israel will follow the association's stance is unclear.
A noteworthy phenomenon during the first weeks of the popular boycott was a reduction in the number of shoppers at the hitherto congested multinational fast food outlets and supermarkets. One of these, Sainsbury's, was actually physically attacked based on the premise that it, along with others, represents US and pro-Israeli interests.
As popular interest in a boycott mounted, lists comprised of some 40 brand names alleged to be American or Israeli-owned were distributed at workplaces, in the streets and on public transportation. Erroneously said to have been compiled by the FECC, the authorship of these lists remains unknown. Making its case for the boycott, one such list began with the following statement: "You will not die if you do not use these products, but Palestinians will go on being killed in the occupied territories by Israeli forces."
An unintentional consequence of such activism was the opening of the door for an advertising war by supermarkets, with one chain, implying that unlike Sainsbury's, which has been rumoured to be Israeli-owned, it "is fully owned by Egyptians."
Fearing that the boycott advocated by the anonymous lists might have other unanticipated outcomes, business federations are preparing a memo to present to the government, expressing their concern that local investments -- franchises and manufacturers producing goods through joint ventures -- will bear the brunt of this brand name boycott. Helal Sheta, chairman of the exporters' division of the FECC said, "The FECC does not know the source of these lists and the memo we are preparing will say that the boycott should only include imported products." He added, "Fighting foreign companies investing in Egypt just because foreigners of the Jewish faith have shares in these companies will [impact negatively on] foreign investment in Egypt. People should be intelligent enough to use this boycott in a way that will not harm the economy."
Responding to rumours that Sainsbury's sales had dropped to 25 per cent of their levels prior to the upheaval in Palestine, Wahid Doss a spokesman for the company in Egypt denied any impact. "The boycott was of no relevance to sales at Sainsbury's because [sales] are mainly affected by the stability of the economy in general." Concerning company ownership, Doss said that Sainsbury's shareholders comprise "some 110,000 people all over the world, 25,000 of whom are Sainsbury's employees." He added that his company deals with 475 Egyptian suppliers and is selling more than 73 locally manufactured products, suggesting that the embargo will only harm the Egyptian economy, not multinationals.
Echoing such sentiments was Hisham El-Hagin, vice general director for Americana, which owns the Egyptian franchises for KFC, McDonald's and Pizza Hut. "The products we use are 100 per cent Egyptian. This includes not only food but also the furnishings, electrical connections, etc..."
Hamdi Abdel-Azim, dean of the research centre at Al-Sadat Academy for Administrative Science said that a boycott of franchises and the products of joint ventures will result in the "dismissal of thousands of Egyptian workers and exacerbate unemployment." A boycott of Israeli products, he suggested, would have a limited impact since the volume of trade between Egypt and Israel is "weak, amounting to only $250 million in 1998." Abdel-Azim added that although business between the private sectors of each country will probably continue, this will be done with a much lower profile following the announcement through paid advertisements of the names of businesses cooperating with Israel.
Mustafa Kamel El-Sayed, head of Cairo University's Centre for the Study of Developing Countries argues that use of an economic embargo as a pressure tool should be carefully examined. "We should not engage in such actions without weighing their consequences and considering alternatives. We have to realise that an embargo can have a negative impact on important sectors in Egypt as well as the business community."
Like other sources, El-Sayed assessed Egypt's business with Israel as extremely limited. He cautioned that those engaged in business with Egypt's neighbour may be unwilling to sever their ties, especially where large investments are concerned.
In terms of magnitude, a boycott on American products, El-Sayed suggested, is a different matter altogether. "The USA is the major exporter to Egypt. Many sectors of the Egyptian economy depend on imports of American products." Egypt's economic dealings with the United States also include aid and military assistance, so to boycott the US would involve devising ways to do without such support.
However, El-Sayed suggested that if the economic boycott is a popular movement, organised by non-governmental organisations such as professional associations, trade unions and human right groups, it will send a strong message to both the US and Israel. "Perhaps this will not have much of an impact on either country [economically], but it will be read as strong rejection of Israeli policies and practices," he concluded.
Concerning the impact of the boycott, El-Sayed's view seemed to be in line with that adopted by the Egyptian government. "The decisions by the Arab summit on an economic boycott were intended as a message to the Israeli people, saying that their government's practices will lead to Israel's total isolation, even if it does not incur any notable economic costs," said one government official.
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