Fearing large-scale economic sanctions by the European Union (EU) will leave them cut off from their sources of supply, Israeli firms are canceling large orders from European suppliers and looking elsewhere.
The recent decision by the European Parliament to take economic measures against Israel because of the Israeli actions in the Palestinian cities of the West Bank has caused concern and indignation among Israeli firms trading with Europe. Especially hard-hitting was the announcement by German Defense Minister Rudolf Scharping that his country had in effect imposed an embargo on military components that were to be delivered to Israel. This action by a country that had always been perceived as a strong supporter of Israel brought home to the Israelis that the European words might soon be transformed into actions.
Israeli firms have begun canceling large-scale orders with European manufacturers and suppliers. Israel’s second-largest bus company, Dan, announced on Monday that it was canceling an order for one hundred busses, along with an option for additional busses, from German manufacturer Man Group. Israel’s national bus company, Egged, which buys Man busses on a larger scale, is considering a similar move. Israeli shoe store chain Gazit has also cancelled roughly $500,000 worth of orders for shoes from Spanish suppliers, and is considering a similar move with regard to larger orders for shoes from Italy.
The reaction of Israeli businesses is motivated by practical considerations no less then patriotism. The Dan bus cooperative, for example, operates a fleet of some 1,500 busses, nearly all of which are Man products. This exclusive reliance on a German supplier for both complete busses and spare parts can have severe consequences for the Israeli firms if European economic sanctions are imposed. Dan bus cooperative chairman Yoram Sharabi told Israeli newspaper Yedioth Ahronoth he feared that Germany’s sudden freeze on shipment of military-related equipment despite signed contracts could be expanded at any time to civilian companies in Israel, including his own. Sharabi said that in order not to be dependant on a single source of supply, he had instructed the Dan purchasing department to immediately seek alternate sources for the purchase of busses, in Japan, Korea and the USA in addition to Europe.
Gazit shoe chain chairman Eliab Weiner also conceded in an interview to a local newspaper that his company had already begun purchasing shoes from East Asian manufacturers in addition to the European suppliers prior to the recent events in Europe. This alternate source of supply no doubt played a role when Weiner announced: “If the Europeans continue to behave as they are behaving today, we will wipe out all of our (purchasing) activities in Europe. In the short run this will hurt us, but we will bear it and recover”.
Europe is Israel's main source of imports. According to official published figures, Israel’s imports from the European Union account for 43 percent of the state’s total imports, while exports to the European Union amount to 27 percent of total Israeli exports.
The possibility of trade with Israel drying up is already a cause of concern to several European firms. AFP reported on Monday that an internal memorandum from the Swiss state-owned firm RUAG group estimated that a cutback in military cooperation with Israel "would have a direct affect on its enterprises, where it would have grave consequences for personnel”. (menareport.com)
© 2002 Mena Report (www.menareport.com)
