That Arab Boycott

MIDDLE EAST

In their continuing cold war with Israel, the 20 nations of the Arab world since 1951 have imposed an economic boycott not only on Israeli goods but on all those who deal with or help Israel economically. Through a central boycott office in Damascus and 18 regional offices throughout the Arab world, the Arabs have blacklisted more than 600 firms, including 167 U.S. companies (among them Revlon, General Tire and Bulova Watch). Last week the Arabs added to their blacklist a new and prestigious member: the Chase Manhattan Bank, the world's second largest bank, whose 102 offices overseas make it an important presence in many countries. Reason for cutting off Chase from Arab business: its dealings in Israeli bonds, which have been going on for 13 years.

Occasional Winks. Chase took the boycott in stride--and so have most of the firms that have been banned from the 40 million-customer Arab market. The 40 firms owned by British Tycoon Charles Clore were barred last year when Clore and Sir Isaac Wolfson lent Jerusalem $2,000,000 to build a new town hall, and the U.S.'s Witco Chemical was blacklisted after it bought a chemical firm that had an executive who owned a piece of an Israeli oil company. The Arabs offer reinstatement to firms that stop their dealings with Israel, but the Israelis have their own ways of exerting pressure. West Germany's Grundig Radio last month announced plans to pull its operations out of Israel, quickly reneged when Israel said that it would cancel all Grundig import licenses in reprisal.

Some of the holes in the boycott are winked at by the Arabs. Hilton hotels and Trans World Airlines go on operating in Egypt--even though both also operate in Israel--because President Nasser is aware that they bring in tourist dollars. Blacklisted firms are tolerated by some Arab states if their products are badly needed. Though both have been on the blacklist for some time, Continental Motors still ships parts to Jordan, and Fairbanks, Morse goes right on selling water pumps to Arab nations.

No Slowdown. The Arab boycott is a nuisance to Israel, if only because it deprives Israel of the Arab market, a $50 million export area that would normally be its most obvious customer. Israel's other major irritant is the refusal of the international oil companies to defy the Arab trade ban--for obvious reasons. Despite the boycott, Israel's little economy continues to grow. The gross national product has more than doubled, to almost $2.5 billion, since the boycott began; foreign currency reserves have tripled, to $600 million. Most important, foreign investment in Israel goes on unchecked, has increased from practically nothing ten years ago to $110 million last year.

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