Norwegian Ship owners Association 2012 06 20, Håkon Svane, Ingrid Mellingen
The Arab League still has a boycott in place against Israel, ultimately maintaining sanctions that can also affect Norwegian and other shipping companies. However, adhering to the boycott is an individual matter for the League’s member states. Each AL country’s implementation of the AL boycott scheme will vary over time, in line with overall political tension in the region. The US has imposed laws to prohibit US companies from adhering to the League’s boycott. This, and WTO regulations that are in effect for some AL member states, has caused Arab support of the Arab League boycott to diminish. Syria and Lebanon have traditionally been the staunchest supporters of the AL boycott, while Egypt is among states that does not effectively support the boycott.
The Arab League boycott:
The Arab League boycott against Israel was initiated prior to Israel’s founding, but was formalised after the 1948 Arab-Israeli war. It consist of three components:
- The primary boycott prohibits citizens of an Arab League member from buying from, selling to, or entering into a business contract with either the Israeli government or an Israeli citizen.
- The secondary boycott extends the primary boycott to any entity world-wide that does business in Israel. A blacklist of global firms that engage in business with Israel is maintained by the Arab League Central Boycott Office, and disseminated to Arab League members.
- The tertiary boycott prohibits an Arab League member and its nationals from doing business with a company that deals with companies that have been blacklisted by the Arab League[i].
Although some Arab League member states support the boycott against Israel, the majority of states in the Arab League do not enforce the secondary and tertiary boycotts. Some states still adhere to the primary boycott which entails direct trade with Israel and Israelis. This boycott does not include non-Israeli companies operating in Israeli waters or entering Israeli ports. Adherence to the boycott is an individual matter for each Arab League member and enforcement varies by state. U.S. companies are prohibited by US law to cooperate with the boycott and may face severe penalties. The Arab League has acknowledged that U.S. pressure has affected its ability to maintain the boycott.
Arab League Boycott of Israel – Fast Facts:
- The Arab League is an umbrella organization comprising 22 Middle Eastern and African countries and entities. Arab League members are Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, the Palestinian Authority, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, the United Arab Emirates, and Yemen.
- In November 2011, Arab League members suspended Syria from participating in Arab League meetings due to the Syrian government’s violent crackdown on political demonstrations.
- The Arab League does not enforce the boycott and boycott regulations are not binding on member states. However, the regulations have been the model for various laws implemented by member countries. The League recommends that member countries demand certificates of origin on all goods acquired from suppliers to ensure that such goods meet all aspects of the boycott[ii].
- Today, Israel has diplomatic relations with 163 states. Following the signing of the Israel-PLO Declaration of Principles on September 13, 1993, Israel established or renewed diplomatic relations with 36 countries.
- Israel has full diplomatic relations with Egypt and Jordan.
- On October 1, 1994, the Gulf States publicly announced their support for a review of the Arab boycott, in effect abolishing the secondary and tertiary boycotts against Israel[iii].
- In 1977, the US Congress passed laws making it illegal for U.S. companies to cooperate with the boycott and authorizing the imposition of civil and criminal penalties against U.S. violators. U.S. companies are required to report to the Department of Commerce any requests to comply with the Arab League Boycott.
- There are indications that some Arab League countries publicly support the boycott while continuing to quietly trade with Israel. Others assert that enforcement of the boycott waxes and wanes with the level of intensity of the Israeli-Palestinian issue[iv].
Individual countries’ adherence to the boycott:
Egypt: Formally ended the boycott.
The Palestinian Authority: Formally ended the boycott.
Jordan: Formally ended the boycott
Algeria: Does not enforce the boycott.
Morocco: Does not enforce the boycott.
Tunisia: Does not enforce the boycott[v].
Tunisia: Does not enforce the boycott[vi].
Kuwait: Enforces the primary boycott.
Oman: Enforces the primary boycott. Oman pledged to abandon the primary element of the boycott as a condition to signing a free-trade agreement with the United States in 2006, but the United States continues to receive requests for cooperation with the boycott.
Qatar: Enforces the primary boycott.
Saudi Arabia: Enforces the primary boycott. In 2005, Saudi Arabia was required to abandon the boycott entirely in order to gain entry into the World Trade Organization, however, the country still enforces the primary boycott, and an official delegation attended a meeting at the Central Boycott Office in May 2006.
United Arab Emirates: Enforces the primary boycott.
Lebanon: Enforces the primary, secondary and tertiary boycott[ix].
Syria: Enforces the primary, secondary and tertiary boycott[x].
Re potential US based sister/daughter companies
In 1977, Congress passed laws making it illegal for U.S. companies to cooperate with
the boycott and authorizing the imposition of civil and criminal penalties against U.S. violators. According to the Department of Commerce, participation in the boycott includes
- Agreements to refuse or actual refusal to do business with or in Israel or with blacklisted companies
- Agreements to discriminate or actual discrimination against other persons based on race, religion, sex, national origin or nationality
- Agreements to furnish or actual furnishing of information about business relationships with or in Israel or with blacklisted companies; and/or
- Agreements to furnish or actual furnishing of information about the race, religion, sex, or national origin of another person.
- Lastly, U.S. taxpayers who cooperate with the boycott are subject to the loss of tax benefits that the U.S. government provides to exporters. These benefits include, among others, the foreign tax credit, the benefits for foreign sales corporation (FSC) since repealed, and the tax deferral available to U.S. shareholders of a controlled foreign corporation (CFC).
Antiboycott laws apply to “U.S. exports and imports, financing, forwarding and shipping, and certain other transactions that may take place wholly offshore.”[xi]
Haakon Svane (director) and Ingrid Mellingen (consultant)
NSA Contingency Planning Secretariat