Boycotts and Boycotts

During the past few years attention has been drawn to efforts at several North American university campuses and by some Christian organizations to punish Israel economically through a movement called BDS (boycott, divest and sanction). Students at my university, the University of Waterloo, defeated a BDS referendum in early 2016. More recently, students at the University voted to end financial support for the Waterloo Public Interest Research Group, a campus organization that supports, among other causes, students who continue to push for BDS.

To many, including myself, the selective targeting and demonization of Israel, over all other conflicts and problems  in the world, including such examples as the takeover of Crimea by Russia, the occupation of Tibet by China, the abominable treatment of First Nations, is nothing less than a new form of anti-Semitism.

These developments remind me of another boycott which Israel has had to contend with and which still exists today.  My boycott story begins in 1978 when my family and I embarked on a year away from Canada while I, a young scientist, was on a sabbatical leave.  We (I, my wife and three children, aged one to eight) spent the first three months in London, England and the rest of the time (the bulk of the year) in Haifa, Israel.

Since the research I was to be involved in required the use of specialized and in some cases unique equipment, I arranged to ship several packages of equipment to England with the intention of forwarding the equipment on to Israel toward the end of the England portion of our trip.  I engaged a large international shipping company recommended by my university to ship the material to England.  However, when I contacted the same company in London for the next leg of our journey I was told that the company did not ship to Israel.  This was my first experience of what is known as the Arab Boycott, a trade boycott of Israel adopted by the Arab League in 1945, before Israel as an independent state even existed.  The boycott is not only meant to forbid direct trade between Israel and the Arab countries, but also to prevent any companies anywhere in the world from conducting business with Israel. (There is even another, tertiary boycott level, that is, the boycott of companies that do business with companies that trade with Israel).  After contacting the Israeli embassy in London, I located a small shipping company that did forward goods to Israel.

Once we arrived in Haifa, we realized that a car would be a very helpful asset to deal with daily activities, such as, getting to work (me), getting to daily ulpan (Hebrew) lessons (my wife), getting kids to school/daycare, shopping, etc. Of course, having a car also made it easier to explore the country and visit friends and relatives. We purchased the cheapest new car we could find, a Ford Fiesta with a small (950 cc) engine.

Cars are expensive in Israel. They are expensive today and they were relatively more so in 1978.  A website which examines the cost of living in various countries notes that today in Israel a Toyota Corolla will cost approximately 43,000 Canadian dollars.  According to a website operated by Nefesh B’Nefesh, a non-profit organization that promotes immigration (aliyah) to Israel from North America and the UK, the tax on cars in Israel today is roughly 100%; new immigrants are entitled to a tax break (a tax of roughly 50%) if they buy a car within the first three years.

Our Ford Fiesta cost $3600 (all values in US dollars). As visitors to Israel we did not pay any tax on the car at all. This is referred to as a Passport-to-Passport car.  The purchase of the car was recorded in my passport.  It could be sold to another visitor (hence, Passport-to-Passport) or to an Israeli willing to pay the deferred taxes.  At the end of nine months we sold our Fiesta to an Israeli for $3000.  He had to pay the taxes and customs charges owing and this involved a trip with me to the customs office in the port area of Haifa, together with a maven, a family friend who had retired from a job in the customs office. The maven’s function was to keep the taxes as low as possible, but my recollection is that they amounted to the equivalent of $7000, or a tax level of more than 200%.

The tax levels I mention here are approximations meant to include a mix of tax plus duties and customs charges and these in turn are dependent on the type of car, the size of the engine, whether it is a two door or four door car, etc.  It was the Likud government of Menachem Begin of the early 1980s that lowered taxes on luxury goods, including cars, as described by Zalmanovitch in Policy Making at the Margins of Government (2002).

While the car that we bought in 1978 was a Ford, we soon began to notice that Subaru (Fuji Heavy Industries) was the car of choice for many Israelis.  Most were white or a light shade in colour to reflect the heat of the Israeli sun.  They were so common that one of the jokes that was making the rounds was, “meet me at the white Subaru”, meaning that it would be difficult to find someone without additional information.

We discovered that the primary reason there were so many Subaru cars on the road was the fact that it was the only Japanese car that Israelis could buy.  The other Japanese manufacturers fell in line with the boycott by the Arab League, a decision likely influenced by the dependence of the Japanese economy on imported oil.  According to a comprehensive article in RAND Journal of Economics (1998) by Fershtman and Gandal on the effect of the Arab Boycott on the automobile market in Israel, Subaru began selling cars in Israel in 1968 and it remained the only Japanese car company to sell cars in Israel until the middle and late 1980s.  Two of the smaller Japanese car companies, Daihatsu and Suzuki, began selling cars to Israel in 1983 and 1985, respectively while the larger companies followed suit in 1988 when the boycott became less enforceable.

The Subaru cars were imported to Israel through the Red Sea port of Eilat.  Israelis were attracted to the compact Subaru Leone sedan, a relatively spacious and durable car sold at a competitive price.  The Subaru sedan with a 1.298 cc engine became the most popular car in Israel, in part because cars with engines sizes that were 1300 cc and above were rated luxury models and were taxed at a higher level.  There is even a memoir about the 1973 Yom Kippur War written by Adolfo Neufeld (2009), at the time an Argentinian volunteer in Israel, which is called To War in a Red Subaru.

My family and I returned to Canada in 1979 at the end of the sabbatical.  We visited Israel again for two and three month stays from1982 to 1984 so we had ample opportunity to observe the peak period of Subaru mania in Israel. My late wife and I appreciated the defiance of the boycott by this one Japanese company and we considered buying a Subaru on several car-buying outings in Canada.  However, none of the models we looked at quite suited our family’s needs.  Only recently did I decide to buy a Subaru.  There were a number of factors that led to the decision, not least of which is the Subaru reputation for safety.  However, the decision by Subaru to defy the Arab League boycott was never far from my mind and I confess to more than a small degree of self- righteousness in making my choice.

Subaru cars are still popular in Israel today, but apparently not as popular as other Japanese brands such as Mazda, or Korean cars made by Hyundai and Kea (the Korean manufacturers didn’t sell cars in Israel until the late 1980s either).

Was the Subaru decision to sell cars in Israel an altruistic one or was it purely a business decision?  Clearly, I would prefer to believe that even the hard profit-motivated corporate world can leave room for some moral considerations.  However, the 1998 article by Fershtman and Gandal mentioned earlier on the effect of the Arab Boycott on the automobile market in Israel indicates otherwise.  They note that while the five large Japanese car manufacturers (Honda, Mazda, Mitsubishi, Nissan, and Toyota) sold cars in a number of foreign markets, in 1968 Subaru cars were only sold in Japan and that Subaru chose Israel as its initial export market.  In effect, Subaru had the Israeli car market to itself for about two decades.

In other words, the Subaru decision was based on a business need.  The company needed a small foreign market to begin selling overseas and the Israeli market was just the right place to start.  Or, is it as simple as that?  I don’t think so.  Subaru also started selling cars in the United States in 1968 so the Israeli market was not its only foreign market, even at the beginning of overseas sales.  Moreover, the Arab world was and still is a much larger potential market than that of Israel.  In the early 1960s, the population of the 22 Arab countries was about 100 million (it is approaching 400 million today) while the population of Israel was only 2 million.  Surely any sizable company would think twice about a decision that could affect future sales of its product in such a large potential market, even if it was at the initial stage of an export program.

I prefer to believe that the Subaru decision to sell cars in Israel was made in defiance of the Arab Boycott. The Herzliya Conference is a yearly conference on Israeli national policy that is hosted by the Interdisciplinary Center Herzliya.  The conference has many corporate and government sponsors.  The acknowledgements listed for the 2010 conference includes an acknowledgement of support from Subaru, which notes that the company (called Japanauto in Israel) has imported and distributed 380,000 Subaru vehicles since 1968 and that it was the first manufacturer to ignore the Arab embargo (my italics).

To conclude, the BDS movement is not the first boycott directed against Israel.  Moreover, the Israeli/Palestinian dispute should be viewed through a wider perspective that includes the long-standing animosity by the Arab world (and to some extent the Moslem world) to the existence of the State of Israel.  Efforts to resist an unfair and unjust boycott should be applauded.

Jacob Sivak