Monday, March 06, 2006

DP World and the Arab League

In theory, any ship that calls in an Israeli port is banned from ports throughout the Arab League. In practice, enforcement has been patchy in the extreme.

But the continued existence of the prohibition — in place for nearly 60 years — speaks volumes about the hostility the rest of the Middle East feels towards the Jewish state.

Now the ban could have a detrimental impact on Dubai Ports World’s efforts to buy Britain’s P&O, which operates six terminals in the US.

Critics of the move have pointed out as a state-owned concern, DP World belongs to a government that on paper supports the boycott.

They also point out that for nearly three decades, US companies have been forbidden by law to do anything whatsoever to bolster such efforts.

The influential pro-Israel lobby in Washington has been quick to press home the issue.
As one aide to Bill Nelson, one of the senators leading opposition to the takeover, put it: “Why should any US port do business with [DP World] when they are so implicated in the boycott?”

Yet, ironically enough, Israeli carrier Zim is an established major customer.

Moreover, lawyers acting for DP World insist that the restrictions will not stop the deal going through.

The transaction will be purposely carried through in a manner that meets with the letter of US regulations, they stress.

Other commentators believe that president George Bush will be only too grateful to seize on the issue as a face-saving get-out clause and scrap the deal.

But how much of a factor is Arab-Israeli enmity in Middle East trade?

The boycott, which covers not just shipping but trade in general, was initiated in 1948, the same year as the birth of the state of Israel.

In 1951, the Arab League established a central boycott office in Damascus to co-ordinate this economic warfare against its enemy.

But just as British companies reputedly supplied France throughout the Napoleonic Wars, Arab concerns systematically breached the embargo for reasons as decidedly un-ideological as making a quick buck.

It was on its last legs by the 1979 accord between the Israelis and the Egyptians.

By the time of the 1993 Oslo Agreement signed by Israel and Palestine, it was virtually a dead letter.

But the second intifadah in 2000 gave the hawks the chance to seize the initiative, and the boycott is once again in the headlines.

As might be expected, the central boycott office is somewhat secretive, and few details of what it does become public.

Among its known activities are the maintenance of a blacklist said to contain some 10,000 named firms.

Arab media reports some 18 months ago suggested that 28 ships are on an official Arab League blacklist for 2004, while 10 had been removed from the document.

Their identities are uncertain. Repeated phone calls to the organisation made by Lloyd’s List at the time failed to elicit any response.

In November last year, it was reported that two ships — one Cambodian-registered, the other Panamanian — had been added to the blacklist.

The US regards Israel as an important ally in the Middle East, and has consistently attempted to undermine the boycott at every level.

Since 1977, it has been illegal for US companies to agree not to do business with Israel, or to certify that their products do not contain any Israeli materials.

They are also required by law to report any requests for such agreement or certification to the US Department of Commerce.

In 2004, the last year for which figures were available, 118 US companies received boycott requests from the United Arab Emirates, of which Dubai forms part. Two firms were last year fined for compliance.

However, the extent to which US and other businesses avoid trade with Israel simply to avoid Arab retaliation cannot be calculated.

• Lloyd's List, 6 March 2006

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