Israel views Toyota's arrival as sign of weaker Arab boycott

April 16, 1991|By Robert Ruby | Robert Ruby,Jerusalem Bureau of The Sun

JERUSALEM -- It was a matter sufficiently important for a Cabinet minister to conduct some of the final negotiations himself. In the local press, it was hailed as a victory in a long-running, mostly invisible war with the Arab world.

All this over a decision by Japan's Toyota Motor Corp. to begin selling cars in Israel.

Toyota's pending arrival here has been received not as a matter-of-fact business item but as evidence of a gradual weakening of the long-standing Arab economic boycott against Israel and against foreign companies conducting business with it.

Most Arab countries have maintained a boycott since 1951, a measure that has helped keep Israel economically isolated and given foreign companies reason to think twice before selling products or making investments here.

Since the end of the gulf war, Israel has asked the United States to convince Arab countries to end at least the part of the boycott dealing with foreign companies. If Arab countries agree, Israeli officials say, that action would mark an improvement in Israeli-Arab relations.

"If one talks about confidence-building measures, changing the boycott certainly is one," said Yohan Shani, head of the Foreign Ministry section monitoring the boycott. "A boycott is on the borderline of an act of war."

The boycott formally bars Israeli companies and their products from Arab countries, and extends the ban to foreign companies doing business in Israel. Another provision demands that foreign companies conduct a boycott of their own against companies active in Israel.

Enforcement is in theory overseen by a central boycott office in Damascus, Syria, but in practice is decided by each Arab country, where the rigor of the boycott varies with political seasons. Kuwait, Saudi Arabia and Syria have been among the strictest adherents to the boycott, while Morocco and Tunisia have been the most lax.

A few companies have managed to be sufficiently prestigious to ignore the strictures. Coca-Cola, bottled in Israel, also is bottled in Bahrain and sold in Saudi Arabia. Western European airlines fly to Israel as well as the Arab world, even if their Arabic-language brochures omit mention of flights to Israel.

If the boycott can be said to have had a golden age, it occurred after the 1973 Yom Kippur War, when rising oil prices gave Arab countries sudden wealth that impressed foreign industrial companies.

"Until then, the boycott was mainly a nuisance," said Jess N. Hordes, Washington director of the Anti-Defamation League, an organization that urged successive U.S. administrations to find ways to weaken the measure. "After '73, the situation changed because of the massive transfer of wealth that made Arab markets tremendously appealing to business."

Israelis usually noticed the boycott in the form of the absence of products available everywhere else in the world. Japanese cars were among the most noticeable missing items, although officials generally found it impossible to link a company's decision not to enter the Israeli market directly to the boycott.

"It is the nature of the boycott that one never knows how many companies are complying," Mr. Hordes said. "It is never clear how many companies are intimidated into not dealing with Israel."

More important than the absence of certain consumer goods was a chronic lack of large investment by Japanese or European companies. Officials were strikingly unsuccessful in attracting major foreign banks and investments by industrial concerns active elsewhere in the Middle East, a phenomenon the government attributes to the boycott.

U.S. supporters of Israel began targeting Japanese companies in the mid-1980s. The Anti-Defamation League and other organizations urged the State Department and Congress to insist in their dealings with Japan that better business relations with Israel would help trade relations with the United States.

Subaru became the first Japanese auto manufacturer to enter the market, a company that officials here welcomed while labeling it Japan's "designated window-dressing." Mitsubishi came next, followed last year by Honda, importing cars assembled in the United States.

Some of the final details for Toyota's entry into the market were discussed last weekend when Transportation Minister Moshe Katsav met with the Israeli importer chosen by the Toyota company.

Toyota's announcement is being welcomed as an indirect endorsement of the long-suffering Israeli economy. Israelis assume that, politics aside, Toyota must have concluded this was a market about to grow, a pleasant change from steadily rising unemployment and rising inflation.

Toyota maintains that until now it was simply too busy building factories in the United States and other countries to deal properly with Israel. "If someone says Toyota hasn't been exporting cars because of the Arab boycott, it's not true," said Akikazu Kuda, corporate manager of Toyota in New York.

"It's probably a combination of everything," said Mr. Shani, the Foreign Ministry official. "There is some business sense in it, there's proably a re-evaluation by Japanese companies following the gulf war. We certainly are very satisfied."

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