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Japan-israel Trade Sharply off As a Result of Persian Gulf War

February 27, 1991
See Original Daily Bulletin From This Date

Japanese banks and companies have sharply curtailed their transactions with Israel as a result of the Persian Gulf war, even though Israel is not a combatant, Israeli and American Jewish officials charge.

The issue was expected to be taken up this week during a visit to Israel by the Japanese deputy foreign minister, who also brought an official condolence message for the victims of the Iraqi Scud missile attacks on Israel, said Israeli officials here.

Information about the disruption in financial and trade relations between the two countries was released by the World Jewish Congress this month.

Officials made public a letter sent to the Japanese ambassador to Israel, in which Japanese banks are accused of withholding funds to be transferred to Israeli companies.

The letter, sent by Elchanan Harel, chairman of the Israel-Japan Friendship Society and Chamber of Commerce, charges that the non-governmental Japanese Bankers Association recommended its member banks suspend dealings with Israeli banks. Harel wrote that banks then advised their client companies to cease trade with Israel.

“It is difficult to understand that Israel will receive the same ‘treatment’ as the countries involved in the war, as Israel is not involved, has not declared war and is not in a state of war,” Harel wrote in the letter.

He pointed out that Israeli companies had always been financially responsible in their dealings with Japanese firms, and he demanded Japan adhere to the “business as usual” policy Israel was maintaining with its other trade partners.

The Israeli deputy consul in New York, Mordechai Yedid, said Japanese businesses decided this so as not to “favor trade with Israel” in the midst of cutbacks to Gulf countries directly involved in the fighting, such as Saudi Arabia.

Referring to the meetings in Israel this week between Japanese deputy foreign minister Hisahi Owada and Israeli officials, Yedid said the issue of Japanese-Israeli trade was No. 1 on the agenda.

“We hope this would bring trade activities back to normal,” he said.


The diminished trade and financial ties between the two countries is of particular concern because of the tendency of Japanese companies to closely follow the Arab-led economic boycott of Israel.

Organizations monitoring compliance have documented at least two dozen Japanese companies — including Matsushita, Casio, Toshiba and Toyota — that adhere to the economic boycott.

Japan, which must import all of its oil, is considered to be particularly dependent on Arab oil producers, and observers attribute the boycott by Japanese companies to this dependence.

American Jewish and Israeli officials would like to see the Japanese government institute an anti-boycott law, similar to one in effect here that is enforced by the U.S. government.

Israeli officials have also complained about a two-week cessation in postal service with Japan, which affected most Middle Eastern countries. Service to Israel resumed Feb. 1 after the Israeli ambassador to Japan lodged complaints with authorities in Tokyo.

In a memo privately circulated to members of his organization, Harel added that since the Aug. 2 Iraqi invasion of Kuwait, Japanese companies have been more hesitant in their dealings with Israel.

He wrote that companies sometimes demand that Israeli letters of credit be backed by foreign banks or that payment be made in advance. Harel charged that many businesses were refusing to ship merchandise to Israel and had stopped ordering merchandise from Israel.


“With very rare exceptions, Japanese banks are not undertaking transactions with their Israeli counterparts and to this day, trade is virtually nil,” said Elan Steinberg, executive director of the World Jewish Congress.

Reports of such an economic slowdown were denied by Yoichi Mikami, the Japanese vice consul here, who said the Japanese government was in fact urging companies and banks to show greater flexibility in their dealings with Israel.

He said that while the Japanese government did not have control over the private sector, financial and trade services between the two countries had not been disrupted.

Trade between the two countries is not considered very large, although it has been steadily growing over the past few years, officials from both countries said. In 1990, Japan imported $682.7 million worth of Israeli goods, while Japan exported to Israel $395 million worth of goods, according to the Japanese Consulate.

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