The Arab Economic Boycott was initiated in 1946 by the newly formed League of Arab States. The boycott was aimed at preventing the continued growth of the Jewish community in Mandate-era Palestine by boycotting the goods and services produced by Jews in the region. After Israel’s establishment in 1948, the Arab League used the expanded boycott as another form of warfare against the state, in an effort to undermine Israel’s economic viability.
The Arab boycott operated on several levels, targeting not only Israel, but also governments, companies, organizations, and individuals around the world with trade relations to Israel. The boycott weakened through the 1980s due to the decline in Arab economic power. The 1979 Egyptian-Israeli peace treaty also served to further lessen the effects. The greatest change occurred after the signing of the Israel-Palestinian Declaration of Principles in September 1993, the start of the so-called “Oslo Process” where there was significantly less adherence to the boycott by Arab countries.
The United States was the only nation in the world to adopt comprehensive anti-boycott legislation. U.S. legislation prohibits American citizens or businesses from refusing to do business with Israel at the request of a foreign government, and prohibits furnishing information about business relations with Israel or blacklisted companies at the request of a foreign government.
From its initiation, the Arab boycott undoubtedly impaired Israel’s economic growth, but it has never been able to thwart that growth altogether. While the actual cost is impossible to quantify, the Federation of Israeli Chambers of Commerce estimates that due to the boycott, Israel’s annual exports were 10 percent smaller than might otherwise have been expected.
While the scope and power of the official Arab boycott has lessened in recent decades, organized campaigns by pro-Palestinian groups in Europe and the United States calling for “Boycott, Divestment and Sanctions” of Israel (BDS) which promote grassroots economic sanctions and cultural and academic boycotts against Israel and Israelis have gained momentum. Among these efforts are calls for the boycotting of Israeli goods, campaigns to prevent the participation of Israeli professionals and academics in international conferences and projects, calls to prevent cultural exchanges with Israelis, and initiatives to “divest” university, church and city investment portfolios of companies that do business with Israel. To date, these campaigns have been largely unsuccessful. However they serve the public relations goals of anti-Israel activists by publicly demonizing and singling out Israel. Such boycott initiatives are not covered by American anti-boycott legislation.