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The Forgotten Incentive of Settlement Businesses

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There is a sense of outrage within the Israeli public following the passing of "the boycott law" in the Knesset last week. The law allows any individual or institution who faces possible damage as a result of any person's call for boycott settlement products to sue that person. Evidence of actual damage will not be required. Organizations calling for such boycott could lose their legal standing as non profit organization.

This law has pushed many Israelis to support boycotting the settlements for the first time. In several hours, thousands joined a new Peace Now Facebook page entitled "So sue me, I boycott settlement products." Prior to this law, most Israelis considered a boycott one step too far. However forbidding boycott of settlements seems to delegitimize the very debate over the settlements pushing many to actively boycott settlements' products.
Paradoxically, the boycott law affirms the reasoning behind the anti-Israeli BDS movement, by erasing the differentiation between Israel and the Occupied Territories. The boycott law implies that the settlements are of equal legal and moral legitimacy to Israel proper. If this is the case, those who do not accept Israeli occupation over the territories as legitimate, should by inference see Israel itself as not legitimate as well. For me, like for many other Israelis, such a conclusion is alarming, and therefore we cannot silently accept this law.

The boycott law and subsequent boycotts make the hundreds of Israeli businesses in the West Bank an issue of central importance. Whether the number of these businesses is growing or shrinking is debated by different sources; I know of a few that have left in recent years, but others that have been set up as well. Last week, the government released a tender for six new factories in the settlements. Interestingly, five of these were tendered four years ago, but failed due to a lack of proposals. This implies that, despite what settlers may be saying, investors are reluctant to invest in businesses in the Occupied Territories.

Over the years, the Israeli government created numerous incentives for businesses and factories to be built in the Occupied Territories. Cheap (or some times free) lands, tax deductions and funding of salaries for new employees were only parts of those incentives. Another incentive, provided by the Israeli government, is compensation for settler exporters for loss of tax discounts in the EU, which does not recognize goods from the territories as goods from Israel under the free trade agreement. This spending accounts for NIS 11,160,000 of the Israeli budget in year 2011. These payments are a clear reason for businesses to move to the West Bank, or at least to stay there.

While the boycotts may attribute to this reluctance, there is another, more prosaic, reason for decreased interest in West Bank factories. Building a factory in the West Bank used to mean not only government incentives, but also very cheap Palestinian labor. Some of the Israeli employers would take advantage of the Palestinian workers' dire need for work and paid them disgracefully low wages. However a few years ago, after a long struggle by Israeli worker rights organizations such as Kav La'oved, the Israeli Court ruled that Israeli employers in settlements, although employing Palestinians that are not citizens of Israel (and in fact are based in territories that are not part of Israel), must obey by the Israeli laws of employment and provide all basic labor rights to Palestinian workers (i.e. minimum wage, vacation days, etc.). For law-abiding employers, this ruling means that the opportunity to exploit Palestinian labor no longer exists and therefore having a factory in the settlements became even less attractive.

I've seen discussions prompted by the right wing claiming that boycotting the settlements harms the tens of thousands of Palestinian workers who rely on those factories for work -- as if the idea of building settlements was for the benefit of the Palestinians. That is inherently cynical and nasty. The factories that were built in the Occupied Territories were built on a foundation of exploitation and immorality, as part of the Israeli occupation that controls the lands without allowing the Palestinian residents of those lands any civil rights. Palestinian workers are not wronged by boycotts; they are systematically wronged by the reality of occupation.

The boycott law revitalized the extremely important issue of the settlements. With the momentum it created leading into September, what should be a very important month for Israel on the world stage, this law serves to unite Israelis against the settlements in a way that was formerly taboo. A law intended to prevent anti-settlement activity paradoxically roused the Israeli public against the settlements in a resounding call to action.

This blog was co-authored by Jennifer Kaplan.