Israeli manufacturers worried
International companies are disconnecting from the Occupied Territories A reason to worry for Israeli manufacturers – not only in the South: International companies are disconnecting from the Occupied Territories.
by: Itai Rom, Globes G Magazine (Jan 2, 2009)
http://www.kavlaoved.org.il/media-view_eng.asp?id=2097
MultiLock, Unilever and Soda Club have already withdrawn and they are not alone.
Next target: Jerusalem light rail. Quite a few manufacturers still prefer to work in the territories, although it is hard to ignore the pullout of strong brands which is likely to continue in the coming years.
Jamil Daoud stops the black Mercedes adjacent to the MultiLock factory in the Barkan Industrial Park. He steps out of the car, takes a few steps and observes the area, which according to him, was stolen from his family. "This land has been ours for more than 100 years," he claims. "It belonged to my grandfather's grandfather. Until the very last minute we sowed seeds here, working the land. It is fine to build factories – but why do it on other people's land?"
Daoud is not the only Palestinian that is making such claims in regards to lands that were confiscated by the State. What reopened this very old legal wound was a visit to the area from representatives of Swedish civil society this past June. Their goal was to investigate the MultiLock factory's activities, which is owned by the giant Swedish Group, Assa Abloy. In October, they published their findings, according to which the company is violating international law, and called on the Group to withdraw their investment in the "occupation". Mission accomplished: In just a few days, the company announced the factory would shut down.
Assa Abloy is not alone. Over the past few months, additional prominent companies have announced their departure from the territories: consumer goods giant, Unilever decided to sell its share in the Bagel-Bagel factory located in Barkan, and Soda Club announced that it will stop shipping merchandise to Scandinavia that was manufactured in the Adumim Industrial Park. Over the past few years, the Barkan Winery Company pulled out of the industrial park which bears its name. Two years ago a Dutch bank agreed to the demand to withdraw its investments from the Jerusalem light rail project and the Dutch Foreign Minister demanded that RIWAL stop its participation in the Separation Fence. In terms of organizations working in the field, industrial zones in the Golan Heights have been prohibited to the same extent (Scotland is holding a campaign against Mey Eden), and the extremists of the group are calling for a complete boycott of Israeli industry – although most place emphasis on the West Bank.
These developments, just like the developments in the diplomatic arena, brought the organization Gush Shalom to announce that the "industry in the territories is collapsing." The settlers claim otherwise. They claim that the departure is negligible and the situation is wonderful. Both descriptions are exaggerated; quite a few manufacturers still prefer to work in the territories, although it is hard to ignore the pullout of strong brands which is likely to continue in the coming years. Is there a reason to be concerned for Israeli industry? "Definitely," responds Daniel Barenboim, CEO of Soda Club, "The manufacturers need to organize in order to find a solution. The government, unfortunately, cannot address this suitably."
What needs to be done?
"Prepare alternatives for manufacturers in the territories. I don't see another option. I have seven factories, so it's not difficult to supply Scandinavia with supplies from a different source – but many companies don't have this option. I wouldn't invest in their stocks."
Olmert and the Container
Over the years more than a few industrial areas were built in the territories. Some are having difficulty getting off the ground, especially those relatively deep into the West Bank. Those close to the Green Line have thrived more: Barkan in the center and Mishor Adumim next to Jerusalem. All of the areas, close and far, are considered "national development areas A." An additional factor that has made them more attractive for industrialists, aside lower property tax, is the cost of labor: only about a year ago a Supreme Court ruling instructed that Palestinians must be paid according to Israeli law, and not the Jordanian law. Close to home, far from the law.
The Barkan Industrial Park, for example, is about half an hour from Tel Aviv. Its factories include brands sold as Shamir Salads, Betili and Keteer Plastic, as well as the synthetic fiber factory Ayelet Barkan owned by the President of the Industrial Union, Shraga Brosh. The factories explain that they "don't get involved in politics," although everything in the area is loaded with politics: the Cross Samaria Highway, which has an IDF checkpoint at its entrance, its proximity to Gush Dan, the soldiers at the entrance to the industrial area, the Palestinian arguments of 'stolen land' and the strict restrictions on their movement. In a Machsom Watch report from September, for example, the activists tell the story of a longtime worker at Bagel-Bagel (his name was not revealed), whose guard shift ended at 10:00 pm, the same time as the checkpoint closure. "Sometimes the nice soldiers would allow him to cross," they write, "but not just once he would have to remain outside the fence all night and would sleep in the open air." Unilever responded that "this event is not well known," and did not reply as to whether it would examine the issue.
The success of the area is important to the council not just because of the financial revenues, but also for the strengthening of its political agenda in Israeli public opinion. For the factories, in which 70-80% of their products are for export, global public opinion is no less important, and from the publicity of their locations they are likely only to lose. Some cases are exceptional: the snack factory Achva, for example, announced recently that it would move from Barkan to Israel. According to CEO Jacob Malach, "there is a rise in prices to Europe although it is explicitly written on the product that it is from Barkan."
Most of the factories prefer as much as possible to avoid disclosure. The first place in which the problem comes up is customs: factories from the territories are supposed to pay customs on exports to Europe, while factories from Israel are exempt from payment. "We never found exporters that would make a false declaration" said David Houri, a senior official in customs. Assa Abloy, for example, revealed in its response to the organization's report that that MultiLock products that are exported to Europe enjoy the customs perks that Israeli factories receive, despite being produced in the territories. The firm underplayed the role of its Barkan factory, and argued that "the primary MultiLock factory is in Yavne. The Barkan factory only made use of only specific components." Is that so? Simon Shekel, CEO of MultiLock: "Barkan is the production facility, a highly invested site. In Yavne there is only assembly and offices, it is not a highly invested factory."
"Our merchandise," reveals the factory owner, "arrives with the form that accompanies Israeli products that are exempt from customs. On this form we mark 'Barkan.' Most don't pay attention, and it passes through. One time a customs manager of Arab origin in Europe demanded that we write that the goods are from the 'occupied Palestinian territories.' I answered that I would not do so even if it meant I would lose the container."
And what happened in the end?
"I involved Minister of Industry, Trade and Labor Olmert, and created a diplomatic incident. The customs representative in Brussels and the Embassy got involved, until in the end it passed and we did not pay customs. Olmert called and said, 'I freed the container for you.'"
The Foreign Ministry doesn't help
The fact that Abloy is a public firm with stock holders including pension funds made it especially difficult to deal with the public pressure. The private firms also surrendered to the media blitz, such as the Soda Club incident illustrated.
The Abloy incident prompted Swedish journalists to investigate additional connections between Swedish companies and settlements, and one of them came upon the company that distributes Soda Club from Mishor Adumim. The storm was huge: the story opened news segments and the radio broadcaster who exposed the story called for a boycott on his show. Barenboim tried to get the assistance of the Foreign Ministry: "I asked for their suggestions on how to deal with this. They said they'll get back to me the next day. I am still waiting for their phone call." (From the Foreign Ministry: "We have no legal means in which to act against activities being conducted within the framework of the local law. We hold advocacy activities that are meant to support, among other things, Israeli products")
In the end Barenboim gave in and announced that Scandinavian goods will be shipped from other factories. This led to a cut of tens of percentage points in the Adumim factory, and the layoffs of some fifty workers – despite the popularity of the company's goods particularly in Scandinavia. The company considered transferring the factory to another location, but the cost of doing so was estimated at 25 million Euros, and the idea was scratched.
If there was a similar story in another country – what would you do?
"If they want to see 'Made in Ashkelon' on the packaging, I'll move the manufacture to Ashkelon."
In the crosshairs: The light rail
So who is next in the organizations' crosshairs? Some of them, like the Palestine Solidarity Campaign from Britain call for a general economic boycott of Israeli goods. In September the organization renewed its campaign, using a logo of an orange dripping with blood. Others, says Dr. Jonathan Reinhold from Bar-Ilan University, "use the attack on products from the territories as a basis for negating Israel's right of existence. This is a convenient strategy because it circumvents opposition created when you speak directly against Israel."
Professor Gerald Steinberg, Chairman of Bar-Ilan University's Department of Political Science, who advises the Foreign Ministry and founded a group that monitors the organizations: "The organizations have a lot of influence, power and money – that are not supervised. The information they supply doesn't have to undergo any checks."
Israelis help Europeans get information that is available only in Hebrew. Recently, for example, Belgian organizations heard about the involvement of Bank Dexia, which over two years ago acquired Bank Otsar Hashilton Hamekomi, in the settlements. They approached the organization Coalition of Women for Peace, who located Knesset protocols in which the bank's CEO discussed its activities in the settlements. The organizations established a database in the last two months, based on tours in the territories of companies active in settlements. The organizations' monitoring is far-reaching, going beyond factories to include service providers in settlements and companies that profit in a variety of ways from the control of the territories.
The most prominent campaign currently is being conducted against Veolia, the French energy giants in which Idan Ofer is a partner, and against Alstom, for their collaboration in the light rail project in Jerusalem – designated to pass through East Jerusalem. Since the companies reject the pressure, the organizations employ a different strategy: pressuring the banks to cancel their investments in the companies. Palestinian organizations have even sued the companies in France, claiming their involvement in the projects infringes on local law.
Two years ago the organizations brought ASN, one of Holland's largest banks, to withdraw their investment in Veolia. Now they are trying to get Dutch bank SNS to follow in its footsteps. The bank, whose motto is "The responsible investor," has been placed in a difficult public image dilemma. In August its representatives met with the organizations, among them a Jewish organization named A Different Jewish Voice. "The bank said that it acts with a responsible investment policy, according to which it does not invest in companies that infringe on human rights," said the organization's Chairman, Jaap Hamburger. "We claim that the occupation itself brings exactly such infringements of human rights, at any given moment."
SNS has yet to provide a final answer. According to the activists, the bank requested answers from Veolia regarding the project. Activist Jeff Handmaker, who was present at the meeting, believes the bank will have no option but to meet their demands. "The bank takes this issue very seriously," he said. "If for some particular reason it doesn't withdraw its investment in Veolia, the bank will face a real potential of legal actions, not to mention damage to its reputation as a "responsible investor." I can't imagine a situation in which it would take such a risk."
Licensed Discrimination
It was only ruled a year ago that Palestinians must be paid minimum wage
In recent years, when Palestinians working in the settlements have demanded rights from their employers, the employers have argued otherwise: they did not deny that they were working in violation of the Israeli law, but maintained that in the territories Jordanian law applied, in addition to IDF ordinances. In 2006 this argument was even accepted in a labor court. In 1982 the IDF ordered that minimum wage be paid in the territories, although many did not pay the minimum wage because of the vague legal situation and the low supervision. No one spoke up for full social rights. The result: some of the factories maintained the working conditions of the third world, five minutes from home. A factory from the Barkan Industrial Park even explicitly said in court that factories moved to the territories because "we relied on lower work prices and the application of Jordanian work law."
The NGO Kav LaOved petitioned the Supreme Court, and this past October the court ruled that the preceding situation created "unacceptable discrimination (…) and de facto distinctions which were not ethical." Since then, theoretically, industrialists were meant to substantially increase their wages, which would significantly reduce the discrimination. What has happened in reality? Kav LaOved argues that most of the employers find creative solutions, such as business transactions through unsupervised Palestinian contractors. The Ministry of Industry, Trade, and Labor contends that the Supreme Court ruling "does not expand the criminal enforcement authority of the state, but only applies to civil claims." The enforcement of the minimum wage is implemented "primarily on the basis of worker complaints." Meir Spiegler, manager of the Foreign Workers Unit at the Ministry of Industry, Trade and Labor: "for objective reasons, the very moment we try to find them creative solutions, the enforcement in the territories is weaker."
Holding on to the Land - Who do the factory lands belong to?
"We will never give up," says Suleiman Shamlawi from the village of Haris. "It's a matter of principle: you don't take bread from someone else." We stand in the parking lot of one of the Barkan factories. According to him, the parking lot was built a number of months ago on land without compensation. Olive trees, which according to him were cut down for construction, are left lying on the edges.
This is only the most recent stage in a struggle Shamlawi has waged regarding the land for a quarter of a century. In the beginning of the 1980s the land in the industrial area was announced to be state land, after examinations which, according to the state, showed that the land was not private. Dozens of petitions were submitted. "There were patently fictitious petitions," says Benny Katzover, then head of the local council. "They wanted to push back construction for a year or two, and they succeeded." Almost all the petitions were rejected. Shamlawi joined the effort, and in the end he was recognized as an owner of part of the land. Private land makes up 13% of the industrial zone. Daoud, who claims ownership of the land used by the MultiLock factory, contends that "that every meter here belongs to someone." Assa Abloy abstained from replying to the questions of the organizations concerning land rights. Shekel: "I have a contract for a lease with the management. He argues that it is his? I'm not interested. Talk to the land registry office."
The question of the legal status of the land in the West Bank is incredibly complicated, and the land deeds in the West Bank are not open for examination. In any case, Palestinian testimony is an additional tool that the organizations have at their disposal: they are included in their reports, although they admit that their arguments can not be verified.
The issue of land ownership in the West Bank impacts the basis of legitimization of the settlement factories. One can sense the volatility by reading the writing of the attorney's office in response to a petition on the topic by "Peace Now": this issue, they write, "is extremely complex and sensitive," and involves "considerations of the defense and foreign relations of the state of Israel."