Behind the Headlines: Japanese Takeover of Mca Raises Concerns About Boycott

The takeover of the Hollywood entertainment conglomerate MCA by a Japanese company has raised questions about Japanese compliance with the Arab-led boycott of Israel, and the extent to which compliance may decline with Japan’s growing role in American businesses.

A leading Jewish organization has charged that Matsushita Electric Industrial Company, which acquired MCA on Monday in a deal valued at over $6 billion, “is a slavish adherent of the Arab-led economic boycott of Israel.”

The World Jewish Congress said Matsushita has refused to open stores or production facilities in Israel because of its adherence to the boycott, meaning that Panasonic products, for example, are only available in Israel through distributors.

“While products manufactured by Matsushita are sold in Israel, we are concerned by the absence of a direct business relationship with the Jewish state,” the Anti-Defamation League of B’nai B’rith said in a statement Tuesday.

Although the anti-boycott laws of the United States make it virtually impossible for Matsushita to halt sale of MCA films to Israel, Jewish organizations see this takeover as an opportunity to educate people about the boycott.

Specifically, they see the need to pressure Japanese companies into breaking the primary boycott, that of an Arab ban on sales to Israel, and the secondary boycott of companies that sell to Israel.

NEED TO MAKE PROFIT

Matsushita is just one of almost a dozen Japanese companies that follow the economic boycott of Israel, along with Toshiba, Casio, Toyota, Nissan, Mazda, Hitachi and Nippon Steel, according to organizations monitoring compliance.

“The two countries that are most open in following the precepts of the Arab boycott are Japan and South Korea,” said Rabbi Abraham Cooper, associate dean at the Wiesenthal Center in Los Angeles.

“The Japanese attitude about the boycott unfortunately has been, by and large, not only zealous adherence to the primary boycott but also the secondary,” he said.

But Cooper and others monitoring boycott compliance said the increasing number of Japanese companies operating subsidiaries here may bode well for the loosening of the boycott of Israel, given both the anti-boycott laws of the United States and the need to make a profit.

Over the past few years, Japanese exports to Israel have almost doubled, from $174 million in 1984 to $318 million in 1989; and imports have quadrupled from $181 million in 1984 to $758 million last year, according to figures supplied by the Japanese consulate.

Still, Japan’s national airline does not fly to Israel, Japanese ships will not drop anchor in Israeli ports and Japanese banks do not provide long-term credit for financing exports to Israel, according to William Rapfogel, executive director for the Institute of Public Affairs, a monitoring arm of the Union of Orthodox Jewish Congregations of American.

“As a government, we don’t encourage or discourage trade with Israel, and if a company doesn’t want to we can’t force them,” said Yoichi Mikami, Japan’s vice consul in New York. “But the reality is that Japanese companies are starting to do business with Israel,” he added.

The economic boycott started in 1951, when the 21 members of the Arab League issued a prohibition on economic activities pertaining to Israel. The boycott is aimed not only at direct economic ties to Israel, but at ending relations with companies that do business with Israel.

While most Arab countries and companies follow the economic boycott, compliance has been less strong among non-Arab companies, leading the Arabs to maintain a blacklist of these companies and boycott them as well.

BOYCOTT BANNED IN 1977

At best, this boycott of firms that trade with Israel has been sporadic. Many U.S. arms contractors that supply Israel with weapons are not on any Arab blacklist, and many companies find that if their product is important enough to the Arab states, selling to Israel will not hamper business relations.

“The enforcement of the boycott through the Arab office is rather uneven,” said Elan Steinberg, executive director of the World Jewish Congress. “When companies resist the boycott, the Arab boycotters generally give in because they need the products.”

In the United States, compliance with the boycott was effectively banned in 1977, with passage of the federal Export-Import Act, which prohibits companies from both upholding the boycott and giving Arab officials information about a company’s dealings with Israel.

The Federal Commerce Department maintains an Office of Anti-Boycott Compliance, through which adherence to the anti-boycott law is enforced by way of fines, denial of export licenses and opening criminal charges against the alleged offender.

During the fiscal year of 1989, the office levied a total of $1.11 million in fines, while this past year the total levied was $830,000, against companies including Ford Motor Company, Continental Bank of Chicago and Dover Corp. in New York, said Mary Martin, acting director of Compliance Policy.

Martin said the office can and does go after foreign companies that have established U.S. subsidiaries, but the law does not permit the parent company to be held responsible if it is not a U.S. company, Martin said.

GOVERNMENT PRIME OFFENDER

People involved in monitoring boycott compliance said the Japanese government is one of the prime offenders primarily because of practical rather than ideological reasons.

Japan has no natural reserves of oil and hence is totally dependent on the Arab countries and the Arab demand for a boycott of Israel, leaving the Japanese government in the ambiguous position of doing nothing to stop compliance.

At the same time, Japanese companies are torn between protecting their access to Arab markets and increasing market share where possible, including Israel.

“More and more Japanese companies are trading with Israel,” said Joshua David, and economist with the Israeli Ministry of Finance in New York. “I remember when we could only get the Subaru car in Israel and now, we have Mitsubishi and soon we’ll probably have Honda,” he said.