Palestinian boycott call unlikely to trouble Israeli trade

Call to boycott Israeli goods over occupier's refusal to disburse millions in tax revenues may lend weight to activists' efforts for international bans and sanctions.

Palestinians demonstrate against the Paris Protocol and the Oslo Agreement, both key accords which govern economic ties between Palestinians and Israelis, and ask for the boycott of Israeli products in Nablus in the occupied West Bank on Sunday.Show less

RAMALLAH // A call by the premier of the Palestinian Authority (PA) to boycott all Israeli goods is unlikely to have much effect in the West Bank where Palestinian businesses and supermarket shelves are awash with Hebrew-language 'Made In Israel' labels.

But there are some who don't blame Salam Fayyad for his boycott pronouncement on Sunday, in response to Israel's refusal to disburse millions of dollars in tax revenues desperately needed by the PA's cash-strapped economy.

"Right now, it won't work," said Naser Abdelkarim, professor of financial economics at Birzeit University, just north of the Palestinian Authority administrative capital of Ramallah.

"The big question is whether we have the ability to do this now, regardless of we would like to do it," Mr Abdelkarim said. "And of course whether this step will have political consequences from Israel - that is, the Israeli reaction."

Israel's has criticised the boycott call, saying it would not advance peace and reconciliation, said Marg Regev, spokesperson for the Israeli prime minister, Benjamin Netanyahu.

"By boycotting Israel, they [Palestinians] are not doing the cause of peace or the Palestinian people any favours," he said.

About 70 per cent of all Palestinian imports are either goods made in Israel or those handled by its agents and wholesalers. Israel, due to economic agreements from the 1990s-era Oslo Peace Accords, controls the flow of all goods destined for Palestinians because of its stranglehold over borders, customs issues and tax collection.

In essence, the Palestinian economy may be too dependent on its occupier.

Israel's decision to withhold some US$100 million (Dh367m) of monthly tax revenue collected on behalf the PA was in retaliation for the Palestinians' successful bid to win non-member-state recognition in the United Nations last month.

Avigdor Lieberman, the Israeli foreign minister who has since resigned his post, warned his country would continue to withhold the tax cash until March.

Instead, Israel said it will use the money to help pay off Palestinian debts to Israeli institutions, such as the electricity company that supplies many West Bank Palestinians with hydro.

The drop in tax revenue will mean no salary payments for the PA's nearly 150,000 employees whose disgruntlement with the economic crises helped fuel protests across the West Bank against Mr Fayyad and his government in September.

"We are trying to prevent the collapse of the Palestinian Authority," Mr Fayyad said in Ramallah on Sunday, admitting that his boycott call violated economic agreements struck with Israel.

But he retorted that "the Israeli government is working against" these arrangements by not handing over Palestinian taxes, adding that his government now needed $240m in monthly funding to function.

The PA has faced intensifying financial and political pressure in the past year because of a shortfall in pledges by donor states and obstacles, such as checkpoints, imposed by Israel's 45-year-old occupation.

Israel's main ally, Washington, also played a role in the financial crisis. It withheld some US$200 million in aid last year after the Palestinians acceded to the UN's education, scientific and cultural organisation, UNESCO. In April, US officials said they would restore most of that money.

The Arab League announced this month it would step in with US$100 million in emergency aid to PA.

Both the International Monetary Fund (IMF) and World Bank warned in September of a worsening crisis in the face of Israeli obstacles and a shortfall in promised aid money, primarily from Arab countries. The PA budget deficit for 2012 reached $1 billion in August.

Nour Odeh, the PA spokeswoman, confirmed the boycott call by Mr Fayyad, himself a former IMF economist, was the first time he had called for a boycott of all Israeli goods, not just ones made in the West Bank. She called it a necessary response to Israel's tax punishment. "This kind of step needs to be confronted," she said.

Ms Odeh also acknowledged the difficulty of a full boycott of Israeli goods, saying it "might not be possible immediately seeing as there are certain products most likely to be irreplaceable".

While Mr Fayyad's call was "voluntary", she said his government was looking at ways to make it obligatory.

In 2010, the PA imposed an obigatory boycott on Israeli settlements and their products, threatening those who work on them or buy their produce with fines and even jail time.

But it never gained much traction because so many Palestinians work on settlements and the boycott lacked enforcement.

Mr Fayyad's boycott may, however, lend credibility to activist efforts in occupied Palestine and abroad for international boycotts, divestment and sanctions, known as BDS, against Israel.

PA officials have stopped short of supporting full-blown BDS measures, which include everything from discouraging companies from working in Israel to putting pressure on musicians to refuse to perform there. Israel considers BDS a threat to its legitimacy as a state.

"We welcome this and any boycott call against Israel," said Halla Shoaibi, a Palestinian activist in Ramallah.

"All of Israel should be held accountable, not only the settlements," he added.

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