U.S. Warns Israel to Crack Down on Piracy of Music and Software

The Clinton administration, under pressure from the high-tech industry, has warned Israel that it must crack down on rampant piracy of music, software and films on disk — or face possible sanctions.

Illegal distribution of what is known as intellectual property in Israel reportedly parallels similar piracy industries in eastern Europe and southeastern Asia.

In 1998, American companies sustained estimated losses of some $170 million in pirated music alone, Israel Radio reported.

Last April, Israel was put on a “priority watch list” by the United States. By April of this year, the administration will recommend whether to put Israel on further alert, giving it six months to reach an agreement to rectify the matter or face sanctions.

American officials have demanded that the government prioritize the issue through legislation, enforcement and tough punitive measures.

“The key to all of this is enforcement action. This means conducting raids, arresting people, putting them on trial and imposing stiff sentences – – sentences that will be a deterrent,” Debra Schwartz, economic counselor at the U.S. Embassy in Israel, told reporters in Tel Aviv.

U.S. Ambassador Edward Walker said it is in Israel’s interest to give top priority to the issue.

“Israel’s fundamental and basic interest [is] to be in the forefront of protecting intellectual property. It’s very difficult to see how you can be moving into the 21st century with this kind of orientation unless you do take those kinds of protections for the future.”

One Israeli high-tech executive quoted by the radio estimated that sanctions could deal a serious blow to the local high-tech industry in Israel.

He estimated that the software industry in Israel generates some $2 billion a year, a large portion of which is exported to the United States. He also said that sanctions could prompt venture capital funds to reconsider investment in the industry in Israel and also damage company evaluations.