Steven Sahiounie, journalist and political commentator
A multifaceted global boycott campaign, spanning consumer goods, agricultural exports, arms sales, and academic cooperation, is inflicting substantial and sustained economic damage on Israel. Driven by international outcry over the war in Gaza, this movement has evolved from grassroots consumer activism to formal governmental sanctions, leading to closed businesses, plummeting exports, and unprecedented diplomatic isolation for the Israeli economy.
The Rise of BDS and Consumer Power
The Boycott, Divestment, and Sanctions (BDS) movement, formally launched in 2005 by over 170 Palestinian organizations, has matured into a potent economic force. Initially a symbolic tool against colonial policies, its strength now lies in the tangible financial losses it inflicts on global corporations and, by extension, the Israeli economy. Major international companies are no longer ignoring this pressure; for the first time, giants like Coca-Cola and Starbucks have explicitly cited “boycott” as a material risk in their annual financial reports, acknowledging the direct impact on their bottom lines.
The corporate fallout is widespread:
· Starbucks closed 400 branches in the U.S. due to weak sales linked to the boycott.
· Carrefour exited the Jordanian market, closing three branches in Amman.
· Inditex (Zara) shuttered 188 stores globally amid declining sales.
· Coca-Cola reported a significant 10% drop in sales across the Middle East in Q4 of 2023.
This consumer-led pressure has created a chilling effect, with retailers worldwide quietly instructing suppliers to avoid Israeli goods for fear of public backlash.
Agricultural Exports: A Core Sector Under Siege
Nowhere is the impact more acute than in Israel’s agricultural export sector, which is facing a silent but effective boycott across Europe—its largest market. Reports from Yedioth Ahronoth and Israeli exporters detail a dramatic shift:
· Germany, historically a staunch ally and Israel’s largest market for potatoes, has seen a sharp reversal in sentiment. Retail titan Aldi has unofficially ceased purchasing Israeli goods for over six weeks, with packagers citing difficulty selling products labeled “Made in Israel” due to headlines about “genocide.”
· Co-op chains in Italy and the UK have publicly declared a halt to sales of Israeli products. In a symbolic move, Co-op Italy began selling “Gaza Cola” with proceeds directed toward rebuilding a hospital in Gaza.
· Belgium, Sweden, Norway, and Ireland have effectively closed their markets. Norway did not import a single kilogram of Israeli goods last year, and Belgium’s strict enforcement of EU origin-labeling laws has led consumers to consciously reject Israeli produce.
· Japan is reporting growing sensitivity, with customers becoming cautious about receiving Israeli shipments.
Yaniv Yablonka, CEO of exporter Yapro, notes that most retailers avoid public statements, but privately command packagers: “Don’t bring us Israeli goods. Get them from Morocco or Egypt.” This silent boycott has forced exporters to cancel contracts and seed orders, casting doubt on the viability of future growing seasons.
Settlement Products: A Legal and Commercial Liability
The boycott specifically targets goods produced in Israeli settlements, deemed illegal under international law by a 2004 International Court of Justice ruling citing the Geneva Convention. This focus has had a severe effect:
· Settlement agricultural exports plummeted by nearly 50% following increased EU enforcement of origin-labeling laws.
· An estimated 70 economic facilities in West Bank settlements have closed, costing 10,000 workers their jobs.
· In a landmark move, Ireland became the first EU nation to pass a law banning all imports from settlements, a significant diplomatic blow.
Israel has attempted countermeasures, including a 100 million shekel government fund to fight BDS and rebranding settlement products to obscure their origin. However, these efforts are struggling against a coordinated international front.
Escalation to Governmental and Trade Sanctions
The movement has escalated far beyond consumer activism to include formal governmental sanctions, amplifying the economic crisis:
· Arms Sales: Key European allies have suspended military exports. Germany, Israel’s second-largest arms supplier, halted shipments of equipment that could be used in Gaza. Spain, Belgium, and the Netherlands have implemented similar restrictions or outright bans.
· Trade Agreements: The United Kingdom suspended free trade talks with Israel, a first motivated by humanitarian concerns. The European Union faces growing calls to review its overarching Association Agreement with Israel, which facilitated €46.8 billion in trade in 2022.
· U.S. Tariffs: In a major economic setback, the U.S. withdrew from negotiations on preferential tariffs and instead announced new 15% tariffs on Israeli exports, exacerbating an existing trade imbalance.
· Academic and Financial Divestment: The EU has moved to partially suspend Israel’s participation in the Horizon Europe research program. Norway’s massive $2 trillion sovereign wealth fund is reviewing its Israeli investments on ethical grounds and has already divested from several companies linked to settlements.
Macroeconomic Toll and Domestic Anxiety
The cumulative effect of these pressures is contributing to a broader economic contraction. Israel’s GDP shrank by 3.5% in Q3 of 2020, with business sector output falling 6.2% and consumer spending down 4.1%. The Ministry of Finance has downgraded its 2025 growth forecast to 3.1%.
Domestically, Israeli companies are sounding the alarm. Executives note that a parallel Palestinian boycott of Israeli goods within the West Bank and Gaza—a market worth an estimated 1 billion shekels annually—is causing significant losses during a period of already slow growth. With 70% of food in Palestinian areas originating from Israel, the boycott creates a painful dependency paradox for both sides.
The cost of the war itself, estimated by Finance Minister Bezalel Smotrich at $87.5 billion, combined with this unprecedented wave of international economic pressure, poses a fundamental threat to Israel’s economic stability. As one Israeli exporter warned, the continued expansion of boycott movements promises to deepen these losses and intensify Israel’s global isolation.
According to the Israeli Tourism Ministry, tourist arrivals have plunged by more than 90% since the war on Gaza began. The public broadcaster, KAN, reported that direct and indirect losses in the tourism sector exceeded $3.4 billion.
Before the current Israeli attack on Gaza, the Israeli authorities said about 900,000 Americans visited Israel yearly, with about half reportedly on a Christian pilgrimage. Although specific data is not available, it is thought most of them were Evangelicals.
Israel has been labeled an Apartheid state. South Africa had a long history of Apartheid, and that was abolished by boycotts which eventually were global.
In 1991, President Bush lifted all sanctions, bans and boycotts against doing business with South Africa. The act was in response to the South African government’s repeal of Apartheid laws, and the release of Nelson Mandela.
The international boycotts and the broader Anti-Apartheid Movement were a significant factor in forcing South Africa to end its system of Apartheid. Boycotts against South Africa’s political, economic, cultural, academic, and sports isolation contributed to the dismantling of apartheid.
In 1959 a group of South African exiles and their British supporters appealed for an international boycott of South African products. The UK and the US, among others, played a huge role in bringing down Apartheid in South Africa, and establishing freedom and democracy there.
The De Beers diamond company was founded in the 1800s by Cecil Rhodes in South Africa and represented a sizeable chuck of the export trade in South Africa under the White Supremacist Apartheid regime. Also hit hard was the exports of oranges and apples. The regime admitted that economic pressure was a leading factor in the decision to abolish Apartheid, and move toward democracy and equal rights for all citizens.
There is hope that Israeli citizens, and their businesses, will one day follow the path of South Africa, and realize that equal rights for their Palestinian neighbors is better for business, and security, than occupation, oppression and Apartheid.
Steven Sahiounie is a two-time award-winning journalist.
