The Spreading Boycott Brouhaha

"The boycott of American businesses by the Arab countries because those businesses trade with Israel is an absolute disgrace."

--Jimmy Carter

"I'm against the Arab boycott. I think the affirmative action I have taken ... will be a big deterrent. "

--President Ford

In the closing days of the campaign, the Arab boycott of companies that do business with Israel has suddenly become a U.S. political issue. Both candidates are trying to outdo each other in denouncing it. Their tug of war has shed little light on how the boycott works, but it is spreading confusion and concern among businessmen.

The issue flared hottest in the second television debate between the candidates. Then, Ford declared that he would direct the Commerce Department to make public the names of companies that "have participated" in the boycott. Companies are required to notify the Commerce Department of every boycott request they receive. But Ford's phrasing seemed to promise more than he had meant. The next day, the Administration had to back off. Commerce Secretary Elliot Richardson announced he would release only those Arab requests made to U.S. companies after Oct. 6 --the day of the debate--since earlier reports had been made under a statutory pledge of confidentiality.

Since then, the department has disclosed the reports of over 60 companies. Fearful of the impact on Jewish customers and other supporters of Israel, many businessmen whose firms were named have cried foul; they contend they did no more than fill out routine questionnaires from Arab buyers. Generally, these questionnaires ask a company to certify that goods being exported to Arab countries were not made in Israel or shipped on blacklisted vessels. The Commerce Department itself noted that most of the firms involved "have in no way altered their business practices to gain Arab trade." Indeed, a company could truthfully fill out such a form even if it did trade with Israel.

Cooked Spaghetti. The flap has obscured two issues raised by the boycott: the boycott itself and the mysterious Arab "blacklist" of American firms. The boycott bans from Arab trade any company whose business substantially helps Israel. Complying with it, as the candidates have failed to note, is not illegal; no U.S. law forces a company that sells to Arabs to sell to Israelis also.

On the whole, U.S. businessmen have not found the boycott a serious obstacle. One reason: when Arab states find it in their interest to do business with U.S. firms, their boycott rules become as bendable as cooked spaghetti. Trans World Airlines, for example, flies to both Israel and Egypt in open violation of the ban. The Egyptian government explains that TWA's flights do nothing to "strengthen" the Jewish state.

Generally, the boycott is taken most seriously by Arab states relatively close to Israel. Saudi Arabia is one of the strictest enforcers of the ban. Without the boycott, U.S. officials estimate, American business in Saudi Arabia would increase by 25%. On the other hand, Morocco and Algeria virtually ignore the boycott. In all, despite the boycott, sales by U.S. firms to Arab countries have soared from $820 million in 1970 to an estimated $7 billion this year. At the same time, American sales to Israel have climbed from $594 million in 1970 to an estimated $1.5 billion this year.

The biggest headache for American businessmen and politicians is the Arab blacklist of firms or individuals that supposedly have helped Israel in one way or another. Often, Arab buyers will ask an American company to certify that it does not do business, even in the U.S., with any blacklisted firm. In that way, American companies are pressured to discriminate against other American companies. Compliance with such requests may be morally reprehensible, but its legal status is murky. No U.S. law specifically forbids it, but the Government contends that complying with the blacklist may violate the Sherman Antitrust Act by restricting competition. Its contention has yet to be ruled on by the courts.

In any case, an American businessman who wanted to comply with the blacklist would have trouble finding out whom he was supposed to discriminate against. The list is constantly changing as firms are added--sometimes for unfathomable reasons--and others are dropped, often after paying the right fixer or offering lucrative investments in Arab lands. The only copy of the list that Washington has is dated 1970. Among those on the list: Motorola, CBS, Republic Steel, Kaiser Aluminum, RCA, Xerox, Lord & Taylor, Owens-Illinois, Ford, Coca Cola, Zenith.

Stiffer Laws. Even before the presidential campaign, pressure had been building in the U.S. to take a more active stand against the boycott. In the last session of Congress, both the House and Senate passed antiboycott bills. The version that finally emerged from an informal conference committee would have allowed firms to continue filling out certain boycott forms, but the companies would have been barred from engaging in any discriminatory action toward other U.S. firms, or from changing their business methods to support the boycott. The bill died after extensive parliamentary maneuvering by Republican Senator John Tower of Texas.

Businessmen are afraid that hardliners in the new Congress may press for even stiffer laws against the boycott and blacklist. That, businessmen contend, would only drive Arab business to other countries, and make it increasingly difficult for the U.S. to pay for the growing amount of oil the nation imports from the Middle East. Administration officials also are concerned that a tough stand will cost the U.S. its diplomatic leverage with the Arab states. Such fears are in no way allayed by a California antiboycott law that goes into effect Jan. 1. Under it, all California corporations that cooperate in the boycott against Israel will be subject to prosecution. If found guilty, they could be fined up to $1 million and their managers imprisoned for as long as three years.

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