The BDS movement and economic warfare against Israel

Economic ties as a value in themselves

At the beginning of the conversation, Eyal Hishkes presents the central thesis of his book, “Bridges of Economy.” According to him, economic ties have value in themselves, even in the absence of full diplomatic relations or normalization. He points to Israel’s relations with Egypt and Jordan as an example. Although diplomatic relations are not warm, economic ties, especially in the gas sector, are in good shape. Hishkes argues that economic incentives can positively influence policy, but this depends on the nature of the leadership. In countries with rational leadership, like the United Arab Emirates, the economy carries great weight. In contrast, when dealing with ideological terrorist organizations like Hamas, the economic incentive may prove to be a mistake and even harmful.

Hishkes adds that economic ties also exist without formal agreements. An example of this is a trade route where goods from Saudi Arabia, Iraq, and other Gulf states arrive by truck at the Jordan River crossing, enter Israel, and are exported to the world through the port of Haifa. He calls this a micro-level economic connection, and also includes in this category initiatives like the sale of surplus apples from Druze in the Golan Heights to Druze in Syria via the Red Cross, a connection that existed until the Syrian civil war.

From the Arab boycott to BDS

According to Hishkes, the BDS movement has deep historical roots in the Arab boycott, which began even before the establishment of the state. The Arab boycott included a primary boycott, meaning a ban on direct trade with Israel, and a secondary boycott, which was directed at non-Arab companies and countries that traded with Israel. Companies like Coca-Cola and many Japanese car manufacturers, with the exception of Subaru, avoided marketing in Israel for fear of the boycott. The Arab boycott weakened significantly starting in the 1970s, and especially in the 1990s with the peace agreements. Its decline created a sort of vacuum in the economic warfare against Israel, and its place was taken by the modern BDS movement.

The movement’s more immediate roots, Hishkes explains, lie in the 2001 Durban Conference, where Israel’s economic strength was identified as a strategic vulnerability. The movement was officially founded in 2005, and it operates in a decentralized manner with the goal of harming Israel’s economy, as well as its academic, cultural, and sports ties.

The damage of BDS: economic or reputational?

Hishkes details the meaning of the acronym BDS, which stands for Boycott, Divestment, and Sanctions. However, he notes that in practice, Israel’s economy, and particularly its high-tech sector, has only grown stronger since the movement’s inception. According to him, there is no comprehensive research on the movement’s damage, but it appears that it has not succeeded in preventing the growth of the Israeli economy.

Nevertheless, the movement has had specific successes, such as the cancellation of artists’ performances or the divestment of certain companies. Hishkes, referring to a book by the economist Yossi Zeira, argues that the main damage of BDS is not economic but a “mental burden.” The activity against Israel harms the subjective feeling of Israelis and the country’s image in the world. Similar to terrorism, whose primary goal is to sow fear rather than inflict strategic damage, BDS mainly harms morale and the sense of well-being.

How to deal with the boycott?

Hishkes suggests several ways to respond. First, he believes the state of Israel acted wisely by not making the fight against BDS a top priority, in order not to give the movement the attention it desires. Second, it is possible to use anti-boycott legislation that exists in the United States and other countries, legislation that was originally created to combat the Arab boycott.

Another strategy is to turn the BDS boycott lists into a “double-edged sword” by encouraging Israel’s supporters around the world to specifically buy the products that appear on these lists. Above all, Hishkes emphasizes the importance of building many layers of support for Israel in the world, not only at the governmental level but also in the business sector, academia, and grassroots organizations. Boris adds that another way to respond is simply to be so good that Israeli products cannot be ignored. Hishkes agrees and adds that it is harder to impose sanctions on unique products that have no substitute, like Israeli cyber and security technologies.

The Turkish boycott and the need for a geo-economic strategy

The Swords of Iron war gave a tailwind to the BDS movement, and this was reflected in actions by countries like Turkey and Ireland. Hishkes focuses on the Turkish case, where for years a paradox existed of political hostility alongside trade worth billions of dollars. The trade continued even in the first months of the war, but eventually, following internal political pressure, President Erdogan announced a complete boycott in May 2024.

According to Hishkes, the economic damage to both sides is limited. Turkey’s economy is large enough to find alternative markets, and most of the products Israel imported from Turkey, like cement and iron, are generic products for which substitutes can easily be found. A study by the Bank of Israel indeed showed that the impact on trade and prices in Israel was minor.

In conclusion, Hishkes argues that Israel must formulate a coherent geo-economic strategy, something it has not done to date. Such a strategy should map out economic risks and opportunities, and use economic tools proactively, both to improve relations and to wage economic warfare against terrorist organizations.