What was the Israel Boycott Law and what does its abolishment by UAE mean?

Abu Dhabi: A fortnight after the announcement of the peace treaty with Israel, President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued a Federal Decree – Law no. 04 of 2020, abolishing the Federal Law no. 15 of 1972 regarding boycott of Israel.

The move provides for free movement of people and goods between UAE and Israel.

The Decree comes as part of the UAE’s efforts to expand diplomatic and commercial cooperation with Israel, and by laying out a roadmap towards launching joint cooperation, leading to bilateral relations by stimulating economic growth and promoting technological innovation, WAM reported.

Following the abolition of the Israel Boycott Law, individuals and companies in the UAE may enter into agreements with bodies or individuals residing in Israel or belonging to it by their nationality, in terms of commercial, financial operations, or any other dealings of any nature.

Based on the Decree, it will be permissible to enter, exchange or possess Israeli goods and products of all kinds in the UAE and trade in them.

The abrogated law on boycotting Israel was in response to “the recommendations of the Secretariat of the League of Arab States, to the member states, to include in their legislation a unified law for boycotting Israel that would complete the documentary series of collective Arab measures to confront the imminent Zionist threat,” the 1972 law said.

That law “imposed on the freedom of trade in the United Arab Emirates the restrictions that guarantee the provisions of the boycott by prohibiting dealing with bodies and persons residing in Israel or who belong to it by their nationality or working for it or for its interest, and prohibiting dealing in Israeli goods or products, commodities, and other movable values,” it had said.

Under the abrogated law, offenders faced imprisonment for no less than three years and not exceeding 10 years and a fine, not exceeding seven thousand Bahraini dinars, as the UAE money was yet to be issued.

In all cases, the annulled law, provided for confiscating goods, and the means of transport that were used to commit the crime of failing to boycott Israel if their owners were aware of that crime.

The abolished law also provided for rewarding law enforcement officials with 20 per cent of the value of the confiscated goods.

Arab countries have started since 1948 issuing Boycott of Israel laws, based on a strategy adopted by the Arab League and its member states to boycott economic and other relations between Arabs and the Arab states, on the one hand, and Israel, on the other hand.

The Arab League Boycott of Israel strategy has specifically been meant to stop all trade with Israel which adds to that country’s economic and military strength. A secondary boycott was later imposed, to boycott non-Israeli companies that do business with Israel, and later a tertiary boycott involved the blacklisting of firms that do business with other companies that do business with Israel.

The Arab boycott was formally declared by the newly formed Arab League Council on December 2, 1945:

“Jewish products and manufactured goods shall be undesirable to the Arab countries.” All Arab “institutions, organisations, merchants, commission agents and individuals” were called upon “to refuse to deal in, distribute, or consume Zionist products or manufactured goods.”

The boycott, as it evolved after 1948, with the establishment of Israel, is divided into three components — The primary boycott prohibits direct trade between Israel and the Arab nations. The secondary boycott is directed at companies that do business with Israel. The tertiary boycott involves the blacklisting of firms that trade with other companies that do business with Israel.

The blacklisting process is capricious, no two countries have identical lists, and six countries — Algeria, Mauritania, Morocco, Somalia, the Sudan and Tunisia — do not enforce the secondary boycott. Egypt’s policy changed after the signing of the peace treaty with Israel, and the provision whereby Cairo agreed to the “termination of economic boycotts and discriminatory barriers to the free movement of people and goods”

Once on the list, it is sometimes difficult to get off, since the company or some Arab sponsor must initiate the request. A firm might be required to supply proof that it no longer has any business with Israel and/or might be asked to make investments in Arab countries equal to those made earlier in Israel. Bribery is another means of becoming “de-listed.”

The objective of the boycott has been to isolate Israel from its neighbors and the international community, as well as to deny it trade that might be used to augment its military and economic strength. Israel’s capacity to reach its full economic potential was hindered for decades by the actions of Great Britain, Japan and other countries that cooperated with the boycott. It has undoubtedly enhanced Israel’s isolation and separated the Jewish State from its most natural markets, but the boycott failed to undermine Israel’s economy to the degree intended.

In 1977, Congress prohibited US companies from cooperating with the Arab boycott of Israel. When President Carter signed the law, he said the “issue goes to the very heart of free trade among nations” and that it was designed to “end the divisive effects on American life of foreign boycotts aimed at Jewish members of our society.”

The Arab League threatened to take a decisive stand against the new law, which was regarded as part of “a campaign of hysterical laws and bills, which Israel and Zionist world are trying not only to enforce on the US; but also in some countries of Western Europe.”

Contrary to claims that the bill would lead to a drastic reduction in American trade with the Arab world, imports and exports increased substantially. Broader diplomatic and cultural relations also improved. Nevertheless, certain US companies were blacklisted for their relations with Israel. In addition, few other nations adopted anti-boycott laws and, instead, complied with the boycott. For example, the Military Aircraft Division of British Aerospace sent a purchase order to an American supplier in connection with the British agreement to sell Saudi Arabia Tornado aircraft and other weapons in the late 1980’s. It guaranteed none of the items “are made in Israel directly or indirectly either in whole or in part and such items are not reshipped from Israel for Israeli account or by proxy for or on behalf of or with any persons or organizations resident in Israel. The supplier moreover warrants not to dispatch any of the items on any Israeli carrier.”

For many years, language has been included in the foreign operations appropriations acts concerning the boycott. For example, Section 535 of the Foreign Operations, Export Financing, and Related Programmes Appropriations Act, 2006 (P.L. 109-102), states that: (1) it is the sense of Congress that the Arab League boycott is an impediment to peace in the region and to United States investment and trade in the region; (2) the boycott should be revoked and the CBO disbanded; (3) all Arab League states should normalise relations with Israel; and (4) the President and the Secretary of State should continue vigorously to oppose the boycott and encourage Arab states to assume normal trading relations with Israel. U.S. embassies and government officials raise the boycott with host country officials, noting the persistence of illegal boycott requests and the impact on both U.S. firms and on the countries’ ability to expand trade and investment.

In August 2007, the federal anti-boycott statutes were revised amending the existing penalty guidelines and outlining procedures for firms to voluntarily report violations of the law. Officials hope that by providing companies an incentive to “come clean ” they will do so and save the Commerce Department the need for costly investigations.

By law, companies are required to report any boycott requests they receive to the Office of Anti-boycott Compliance. This is an example of a boycott request from Bahrain:

Prohibited Boycott Condition in a Purchase Order:

“In the case of overseas suppliers, this order is placed subject to the suppliers being not on the Israel boycott list published by the Arab League.”

Reportable boycott condition in an importer’s purchase order:

“Goods of Israeli origin not acceptable.”

Reportable boycott condition in a letter of credit:

“A signed statement from the shipping company, or its agent, stating the name, flag and nationality of the carrying vessel and confirming that it is permitted to enter Arab ports.”

Prohibited Boycott Condition in a Contract

“Israeli Clause: The Seller shall not supply goods or materials which have been manufactured or processed in Israel nor shall the services of any Israeli organisation be used in handling or transporting the goods or materials.”

Prohibited Condition in a Contract

“The Contractor shall comply in all respects with the requirements of the laws of the State of Bahrain relating to the boycott of Israel. Goods manufactured by companies blacklisted by the Arab Boycott of Israel Office may not be imported into Bahrain and must not be supplied against this Contract. For information concerning the Boycott List, the Contractor can approach the nearest Arab Consulate.”

Prohibited Condition in a Letter of Credit

“Buyer shall in no way contravene the regulations issued by Bahrain Government and or Israel Boycott Office. Buyer shall not nominate a vessel blacklisted by the said office.”

On September 30, 1994, the six Gulf Cooperation Council states announced they would no longer support the secondary boycott barring trade with companies doing business with Israel, but US companies continued as of 2007 to receive requests to cooperate with the boycott from GCC countries. At a meeting in Taba, Egypt, February 7-8, 1995, Egyptian, American, Jordanian and Palestinian trade officials signed a joint document — the Taba Declaration-supporting “all efforts to end the boycott of Israel.”

Since the signing of peace agreements between Israel and the PLO and Jordan, the boycott has gradually crumbled. The Arab League was forced to cancel several boycott meetings called by the Syrian hosts because of opposition from countries such as Kuwait, Morocco and Tunisia. The primary boycott — prohibiting direct relations between Arab countries and Israel — has slowly cracked as nations like Qatar, Oman and Morocco have negotiated deals with Israel. Furthermore, few countries outside the Middle East continue to comply with the boycott. Japan, for example, has exponentially increased its trade with Israel since the peace process began. Still, the boycott remains technically in force and several countries continue its enforcement (e.g., Lebanon enforces the primary, secondary and tertiary boycotts).

In April 2004, representatives from 19 Arab countries met for the 72nd conference Bureau for Boycotting Israel to discuss tightening the boycott. The four-day meeting considered blacklisting new companies that do business with the Jewish state. Mauritania, Egypt and Jordan, which have diplomatic ties with Israel, stayed away from the meeting.

In late 2005, Saudi Arabia was required to cease its boycott of Israel as a condition of joining the World Trade Organisation. After initially saying that it would do so, the Saudi government subsequently announced it would maintain its first-degree boycott of Israeli products. The government said it agreed to lift the second and third degree boycott in accordance with an earlier Gulf Cooperation Council decision rather than the demands of the WTO. In June 2006, the Saudi ambassador admitted his country still enforced the boycott in violation of promises made earlier to the Bush administration and the Saudis participated in the 2007 boycott conference.

During free trade agreement negotiations with Bahrain, Oman and the United Arab Emirates, the status of the boycott was an issue of concern and the countries agreed not to comply with the boycott.

Representatives from only 14 Arab countries attended the biannual conference of the Arab League’s Bureau for Boycotting Israel in Syria in April 2007. Mauritania, Egypt, Jordan, Bahrain and Oman were among the nations that were absent. Those that did participate included the Palestinian Authority, Lebanon, Saudi Arabia and Iraq.

The US government has raised concerns about the enforcement of the boycott by Iraq. In 2006, the number of requests from Iraq for U.S. companies to comply with the boycott increased 287 per cent. Requests in 2006 were also up from Lebanon, Bahrain and Qatar.

In 2006, according to the Department of Commerce, nine companies paid just under $96,000 to settle allegations that they violated the U.S. anti-boycott provisions, an increase from five cases in 2005 and $57,000. In January 2007, the New York office of the National Bank of Egypt was fined $22,500 for boycott violations.

In 2011, four companies, ChemGuard Inc., Bank of New York Mellon (Shanghai Branch), World Kitchen LLC, and Tollgrade Communications agreed to pay a total of $72,000 in civil penalties to settle allegations that each violated the anti-boycott law.