Arabs fuel a boycott of U.S. goods

Executives fear long-term damage to brands

By Hugh Pope
THE WALL STREET JOURNAL
April 19 2002

Calls for a boycott of U.S. products are spreading in the Middle East amid anger over U.S. policies that many Arabs say favor Israel.

So far, boycotts havent cut noticeably into sales, say U.S. companies doing business in the Middle East. Still, the persistent appeals differ from past boycott efforts, which were often organized by governments. The current efforts arise from womens groups, citizen committees, trade unions and other grass-roots organizations sources some executives fear will inflict longer-lasting damage to U.S. franchises and brand names.

We expect that it will have an impact, says Ahmed Linjawi, manager of Procter & Gamble Co.s joint venture in Saudi Arabia. The biggest concern is our image.

Consumers shunning U.S. products could eventually hit sales, contributing to a projected 10% to 15% fall in U.S. exports to Saudi Arabia this year, diplomats say.

U.S. companies, from Coca-Cola Co. to McDonalds Corp., sold $6 billion worth of goods and services to Saudi Arabia in 2001 and $3.7 billion worth to Egypt two of the regions biggest economies. Overall, exports to the Arab world make up about 3% of the U.S. total.

Violence between Israelis and Palestinians has caused an uproar across the Middle East, where many Arabs accuse the U.S. of bias toward Israel. Calls to shun U.S. products stem from the frustration many Arabs feel. Its not organized, says Saudi businesswoman Suzan al-Dakhil. I felt it from inside. It spreads by word of mouth.

Ms. Dakhil says she wont buy U.S. goods in supermarkets or eat at Kentucky Fried Chicken outlets. When her son wanted to buy a car two weeks ago, she steered him away from the GMC Yukon he was considering, she said. He chose a Toyota.

Despite boycott calls in newspaper columns, Internet forums, pan-Arab television programs and gatherings with friends, many U.S. companies and distributors say their Mideast business has not been affected. Coca-Cola said it had seen no dip in sales by last weekend. Businesses that have seen sales dip blame the regions poor economic performance overall.  

Sales of some U.S. companies are highly resilient, particularly in industries where few alternatives exist. Graham Parker, Hewlett-Packard Co.s Middle East marketing manager, said the company saw sales rise 17% in 2001. Some [Arab] journalists say we should stop buying U.S. products. he says. But what alternatives do they have?

Arab states boycotted Israel when it became a state in 1948, and after its victories in the 1967 Six Day war. Egypt broke Arab ranks with its peace treaty in 1979, and the boycott fizzled in the 1990s as Palestinians and Israelis began negotiating for peace. The Arab Boycott office in Damascus, Syria, once at the center of the boycott efforts, is now a marginal force. Calls to its offices this week went unreturned.

Most Arab governments arent encouraging a boycott this time around, fearing it would hurt their own economies. Syria, for example, remained silent as private groups demonstrating in the streets of Damascus called for a boycott of U.S. goods. The government of Jordan also has distanced itself from boycott calls.

Islamic clerics led boycotts of U.S. products when the Palestinian uprising started 18 months ago. But todays protests draw on a new anti-Americanism among traditionally pro-American, secular elites in Jordan, Egypt and Saudi Arabia. We went to school in America, we are Uncle Sams representatives. But its an unpopular stand, says Sultan bin Saleh, distributor in Saudi Arabia of Bristol-Myers Squibb Co. pharmaceuticals. I cant go on defending [America]. People dont listen to us any more. Mr. bin Saleh says his 11-year-old son now insists the family not eat at McDonalds.

Abdullah Zeinel Alireza, U.S.-educated head of the Chamber of Commerce in the Saudi port city of Jidda, says he wrote to President Bush on Monday to warn of a time bomb of Muslim and Arab anger.

Participants and callers on For Women Only, a chat show on the popular pan-Arab television station al-Jazeera, were unanimous this week on Arab womens duty to boycott Israeli and American products. Women must break with American capitalist culture, said Amuza Ghabbash of al-Quds University in the United Arab Emirates.

U.S. companies have struggled to deliver the message they have long used to counter such calls: that boycotts threaten thousands of Arab jobs and investors. Many U.S. companies operate in the Middle East through local franchisees or joint ventures. We no longer have a lot of allies in media or government or academia, says Mr. Linjawi, the Procter & Gamble manager. They say its hard to help. They are staying quiet.