Home Money Trade blows on Israel: How global trade is caught in the crossfire of the Gaza war

Trade blows on Israel: How global trade is caught in the crossfire of the Gaza war

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Bad moment? German sportswear giant Puma ended its sponsorship of the Israel national soccer team at the end of last year.

When the Eurovision public vote came around last Saturday, there was a moment of quiet celebration for Israel.

Amidst the chaos, the heckling, the rudeness and the utter ignorance about the events in the Middle East that ruined the occasion, there was sanity.

Viewers around the world, including those in Great Britain, gave brave Israeli artist Eden Golan a strong endorsement, pushing her up to fifth place in the ratings.

The long, brutal Gaza war, intense and exaggerated media coverage, and demonstrations on university campuses around the world have dealt an immense blow to Israel’s reputation.

It has also given encouragement to the Boycott, Divestment and Sanctions movement, which was previously well funded but poorly supported.

Bad moment? German sportswear giant Puma ended its sponsorship of the Israel national soccer team at the end of last year.

Seven months after Benjamin Netanyahu’s attack on Gaza, in retaliation for the murders, rapes and barbarity of the Hamas attacks of October 7, public support for Israel has dissolved.

Even the United States – under political pressure – has flirted with the possibility of cutting off supplies of heavy weapons.

The assertive Palestinian and Islamic populations in the battleground states of Michigan and Pennsylvania are a political concern for President Joe Biden’s White House.

Growing dismay over Israel’s conduct in the Gaza war led the New York Times to headline the risk of Israel losing allies and “becoming a pariah state.”

What is worrying in the long term is the impact on trade relations with the rest of the world. Foreign Secretary David Cameron has stood firm in the face of pressure for a British arms embargo.

Israel is not a big consumer of UK defense equipment, which is much more focused on the Gulf countries. So for the moment, the £7bn bilateral trade between the UK and Israel, made up largely of technology, telecommunications and pharma, is unaffected.

It is suspected that protesters at the UK’s pro-Palestinian demonstrations would be surprised to learn that one in seven of the NHS prescriptions collected at their local pharmacy come from Israeli generic medicines suppliers.

The UK may hold firm, but in the Islamic world Israel’s trading partners are rapidly fading.

Turkish President Recep Tayyip Erdogan has since the start of the war sided with Hamas, denying that they are terrorists, referring to them as freedom fighters, and is believed to have offered refuge to the leadership in his country.

In more practical terms, the country’s Ministry of Commerce this month ordered a complete and immediate suspension of trade between the two nations.

Türkiye has been one of the few countries in the region with normalized trade with Israel. The latest data suggests an act of self-sacrifice for Türkiye’s beleaguered economy.

Exports to Israel of 54 categories of goods amount to $5.4bn (£4.3bn) a year, or 8 per cent of total goods sold abroad. Israel sends $2.34bn (£1.84bn) in the opposite direction.

The suspension came just days after the US Congress approved a $23bn (£18.2bn) deal to sell F-16 fighter jets to Ankara, which has long been seen as a stronghold against Russian expansionism in the Middle East.

Sharp reminder: Hitler's persecution began with boycotts of Jewish businesses whose assets were confiscated by the Nazis.

Sharp reminder: Hitler’s persecution began with boycotts of Jewish businesses whose assets were confiscated by the Nazis.

Elsewhere in Asia, unrest is disrupting trade in Muslim-majority Indonesia and Malaysia. Both booming emerging market countries have been boycotting American brands since Israel launched its retaliation campaign against Hamas.

Fast food groups Starbucks, KFC and Pizza Hut are targets even though the outlets are locally owned franchises. As a result, private equity groups General Atlantic and CVC have suspended sales of stakes in fast food groups.

CVC had intended to sell a 21 percent stake in Malaysia’s QSR brands, which operates KFC and Pizza Hut.

The disruption is symptomatic of the way anti-Israel sentiment has spread around the world. Late last year, German sportswear group Puma announced it would end its sponsorship of the Israel national soccer team, which plays in trans-European competitions.

He says he made the decision to end the sponsorship, which dates back to 2018, a year ago and that the timing of the announcement had nothing to do with Palestinian calls to boycott Israeli goods and trade.

However, activists had been urging a boycott of Puma because the Israel Football Association includes clubs in West Bank settlements.

Critics are unimpressed by the fact that several major Israeli teams include Israeli Arabs and that several Arab players are represented on the national team.

Attempts around the world to isolate Israel by boycotting its athletes, academics and goods have caused distress in the country, which feels it is being treated unfairly.

They find it difficult to understand why so little attention is paid to the victims of October 7 and the plight of the Israeli hostages.

Questions are also being raised about double standards, such as the lack of attention to the civil war in Sudan and China’s persecution of the Uyghurs, a 12 million strong Muslim minority.

Much of this is a sharp reminder to Jews in Israel, including a dwindling number of Holocaust survivors, that Hitler’s persecution of the Jews began with boycotts of Jewish businesses whose assets were eventually confiscated by the Nazis.

There is concern that history could repeat itself. Until now Western democracies have remained firmly on Israel’s side.

But the protracted war and high death toll in Gaza are proving a devastating blow to Israel’s reputation and its long-term economic prospects.

More broadly, it is sand in the wheels of an increasingly fractured global trading system beset by new and complex geopolitics.

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