When it comes to the Middle East, the US and France disagree on more than just Iraq. While the US, for example, has officially warned it would fine American companies that cooperate with the Arab economic boycott of Israel, the French attitude towards companies that comply with the campaign seems more tolerant.
A recent court filing in the US against VINCI Airports US Inc., a local subsidiary of French VINCI group, suggests the Arab Boycott may be gaining momentum with European corporations.
VINCI was quick to recognize the immediate and pressing need for increased airport security in the aftermath of the September 11 attacks. In September 2001, VINCI acquired the US-based Worldwide Flight Services Inc., which provides cargo and passenger handling services, including security services, to more than 300 airlines and airport authorities in over 100 locations in the US and around the world.
VINCI Airports US entered into a strategic joint venture with Israeli company, SpaceLogic Ltd., to provide much-needed airport security systems. SpaceLogic, an experienced producer of airport baggage handling systems, had just completed the development of a breakthrough security system for airports that dramatically increases the level of baggage security at airports.
On February 14, 2002, SpaceLogic and VINCI signed the joint venture agreement, forming a new company known as SecureHandling, Inc. to develop and market SpaceLogic’s proprietary solution. While Israeli companies enjoy a good reputation in the US for high-quality security products, in the Arab market their reputation is preceded by the region’s political issues, and working with Israeli companies can invite retribution from potential Arab clients.
A court suit, filed by SpaceLogic, claims that on June 11, 2002, without basis or warning, VINCI unilaterally withdrew from the joint venture. As court proceedings commence, SpaceLogic is investigating the possibility of a link between VINCI’s joint venture pullout and the resurging Arab boycott.
VINCI Airports US Inc. is a subsidiary of French company VINCI, one of the world's leading companies for concessions, construction and associated services. Paris-based VINCI has conducted extensive business dealings across the Middle East for many years. Its projects include Baghdad’s sewer system, a large-scale project that VINCI completed in the 1980s.
On June 1, 2002, only 10 days before VINCI’s US subsidiary abruptly withdrew from its joint venture with Israel’s SpaceLogic, VINCI signed a major new contract with the Egyptian government. The deal, worth €225 million, was soon followed by another contract to the tune of €28 million.
VINCI’s withdrawal from the Israeli venture took place at a time when anti-Israeli and anti-US sentiments were running high in Egypt and the rest of the Middle East. Throughout the region, calls to boycott US and Israeli companies and products have been intensified since the outbreak of the Palestinian uprising in September 2000.
The Egyptian government, party to a peace agreement with Israel and the recipient of massive US aid, does not officially support the Arab boycott. However, high profile organizations associated with the government, such as the Federation of the Egyptian Chambers of Commerce and the Egyptian Businessmen Society, actively encourage their members to boycott Israel and the United States.
In the first half of 2001, for example, the UK-based supermarket chain Sainsbury's decided to phase out a $143 million investment after only two years of operations in Egypt. This was after earlier declarations about Sainsbury's plan to completely withdraw from the Egyptian market. A campaign, led by Islamist activists in Egypt, called for a boycott of Sainsbury's over allegations that the company supports Israel. Sainsbury's has denied these allegations.
Claiming the “blatant breach of agreement” caused them significant damages and missed opportunities in the current marketplace for airport security systems, including a mission-critical project at New York’s JFK Airport, SpaceLogic filed suit in the New York Civil Court for a sum of over $50 million. Far wider implications for US businesses may become evident during the course of this court action. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
