What's Made in Israel Should Live in Israel

Tel Aviv: With the ascension of Avigdor Lieberman to foreign minister of Israel, the term "facts on the ground" will take on a whole new meaning. Lieberman's rise, to many, is the logical extension of Israel's self-destructive policies vis-a-vis the ongoing occupation. Not only does Lieberman support the illegal occupied settlements, he lives in one. A resident of Nokdim, a settlement in the south of the West Bank, Israel's prospective foreign minister technically does not live in Israel. So unmovable an exponent of settlements in so powerful a position in Israel may discourage those who are engaged in the peace process about the prospects of curtailing the settlements, which most analysts agree is a sine qua non of any durable peace. But if the political establishment simply chooses to accept the continued existence (and expansion) of settlements, it is incumbent on other sectors -- specifically the corporate and consumer sectors -- not only to refuse to accept the facts on the ground, but to endeavor to change them.

Israeli settlements in occupied Palestinian territory remain a core obstacle to peace between Israelis and Palestinians. Symbolically, they manifest the continuation of the Israeli occupation. Practically, they continue to erode the feasibility of the two-state solution as settlements and the roads and infrastructure servicing them, continue to gobble up Palestinian land. Politically, they demonstrate the unwillingness -- or inability -- of the Israeli government to take the necessary steps to make peace a reality.

The United States was steadfast in its unequivocal position on settlements for decades. Successive Presidents upheld the basic rule of land for peace. A brave George H. W. Bush threatened to withhold $10 bn. worth of loan guarantees to pressure Israel's government into officially 'freezing' settlement construction. Settlements remained a major part of the equation during the Oslo process, and they were never endorsed by the US or any other member of the international community, despite almost unhindered growth. Tragically, however, George W. Bush, while becoming the first President to explicitly endorse the two-state solution, also became the first American leader to tacitly accept the "facts on the ground" and support a solution where Israel would retain control over major settlements. This new stance essentially legitimized Israeli settlement activity, which is illegal under international law. It also emasculated Bush's own 2003 Road Map, which obligates Israel to freeze all settlement activity (including natural growth of settlements), consistent with the 2002 Mitchell Report, and the Annapolis process launched by the Bush Administration in November 2007. Since then, settlement activity has not only continued, but has in fact accelerated once again. Thus, while settlements thrived under George W. Bush, President Obama, Secretary Clinton, and U.S. envoy George Mitchell should now move to immediately and enduringly put an end to all such activity.

One solution to pressure Israel into action is the recent proposal by the United Kingdom for EU-wide measures to ban imports of products made in Israeli settlements. This undertaking is largely symbolic: it's easy to re-classify settlement products as 'Made in Israel,' or re-export them via third-world countries. But the UK's proposal puts forward the idea of a consolidated EU stance on settlements: no longer does the EU engage in rhetoric only, but it also offers measure of substantial symbolic and political value. The UK has even gone so far as to cancel a scheduled embassy move in Tel Aviv due to the fact that the developer, Lev Leviev and his Africa-Israel company, is responsible for constructing thousands of homes and infrastructure projects throughout the occupied Palestinian territory. The London Stock Exchange may follow suit and delist it.

Some effects can already be discerned, as major multi-nationals are ending their operations in the occupied West Bank. Unilever, a maker of household staples such as shampoo and Vaseline, said it would sell its 51% stake in a factory in the West Bank settlement of Ariel, one of three large Israeli settlement blocs that separate the northern and southern parts of the West Bank. The Swedish Assa Abloy Company (known for its Mul-T-Lock brand) closed its lock-smithing factory in the Barkan settlement in the West Bank, and Barkan Winery Company divested from its branch in Barkan Industrial Park after the company entered a partnership with Dutch beer brewers Heineken.

This is a good strategy. Divestment or boycott campaigns against Israel are prejudicial and counterproductive. They de-legitimize Israel as a whole and only fuel the Israeli perception that the world is against the Jewish state. Products, services, and universities in Israel are not illegal or illegitimate; to think so and act accordingly means to undermine the project of creating peaceful coexistence and engagement in the Middle East. Instead, business cooperation should be fostered and promoted. There are remarkable examples of successful cooperation between Israelis, Palestinians, Jordanians and Egyptians, supported by Europe and the United States, which offer incentives such as duty-free or quota-free access to their markets for jointly manufactured products. Europe and the United States should support such business, but should also send the clear message that settlement products will be fair game for divestment and boycott in the meantime. Israel must understand that its settlement policy remains unacceptable, and that there is a price to pay for it. The United States should move to exempt products from Israeli settlements from preferential treatment under the US-Israel Free Trade Agreement. All multinationals should take the step to ensure that their footprint in Israel does not include illegal settlements. Embracing this stance is both ethical, and conveys the right political message: It would encourage Israel to foster economic cooperation and coexistence, rather than build settlements.

Avigdor Lieberman is a long way from Israel's founding foreign minister, Moshe Sharett, whose family had been among the founders of Tel Aviv and who always promoted peaceful coexistence with the Arabs. However, Foreign Minister Lieberman, should not be boycotted either. But it should be made clear at the beginning and at the end of every meeting that Israel's settlement activity is illegal and unacceptable. And that it would really be a good move for the foreign minister to live on undisputed Israeli territory.

Michael Shtender-Auerbach is CEO of Social Risks LLC.