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Europe colludes in Israeli trade scams

The EU bans trading with 'illegal' Jewish settlements, but accepts their goods under Israeli guise

By Brian Whitaker

The Guardian UK
, 23 April 2001


Last Wednesday, a fax arrived at the Guardian - and no doubt, other British newspapers - from the foreign office. It was deemed so important that an official even phoned to check we had received it. The fax was a statement from the foreign secretary, Robin Cook. "I have today spoken to Israeli and Palestinian leaders to urge both sides to do all they can to avoid confrontation," it began.

You can guess the rest: "negotiations... restraint... an end to violence... return to peace talks... restraint... negotiating table... restraint... peace talks" and so on. All very reasonable and British, but hopelessly ineffectual.

On the same day, the European Union joined in the chorus. Everyone agreed with the US secretary of state, Colin Powell, who in a rare outburst the previous day had condemned Israeli action against the Palestinians as "excessive and disproportionate".

The only difference between the Americans and the Europeans was that it took the Europeans an extra day to get around to saying it.

This helps to explain why the US has dominated the Middle East peace process for so long (with disastrous effects), while Europe, which might play an important and useful role, has been left dithering on the sidelines.

Europe, unlike the US, does not have a single foreign policy but its 15 member states try establish common ground where they can. That leads to the sort of vacuous statements issued by Britain and the rest of Europe last week, without any serious prospect of action to back them up.

In the recent UN security council vote on sending an international observer "force" (terrifyingly armed with notebooks and pencils) to the Middle East, the four European members - Britain, France, Ireland and Norway - abstained. Although the US vetoed the plan anyway, Europe's abstention, in the view of many people, encouraged the Israeli prime minister, Ariel Sharon, to believe he could escalate the violence with impunity.

Surprising as it may seem, Europe has as much economic muscle in the region as the United States. European money keeps the Palestinian Authority alive and Europe is Israel's most valuable trading partner. Israel earns around $14bn (9.7bn) a year from Europe - one-third of its total exports. Europe could use this influence towards achieving a just peace - if only the member countries agreed on a course of action.

Last week, France hinted at economic measures to show European disapproval of Israel's policies and EU foreign ministers may discuss it further when they meet in Brussels on May 14.

One option would be to cancel or suspend the trade agreement which, since 1975, has allowed Israeli goods to enter Europe on preferential terms. Any decision to do that would have to be unanimous and, on past form, there is no chance of it happening.

There is, however, an interesting alternative which does not require a political decision, merely an administrative decision of the kind that no reasonable person can disagree with: to clamp down on fraud.

One of the great unpublicised scandals of the EU is that Israel has been cheating on the trade agreement for years and depriving the EU of revenue in the process. It is known, for example, that Israel has imported Brazilian orange juice, labelled it as Israeli and sent it on to Europe - thus allowing the Brazilians to evade European taxes.

The preferential terms under the agreement apply to goods produced wholly or substantially in "the territory of the state of Israel". Europe has a similar agreement with the Palestinians, but by controlling exports from the occupied territories, the Israelis bar the Palestinians from making use of it.

Jars of Palestinian pickle, for instance, are handed over to the Israelis who stick a "Made in Israel" label on them and export them to Europe. Flowers grown by Palestinians in Gaza, strawberries, oranges, lemons and aubergines are all sent to Israel, mixed with Israeli produce and exported to Europe with Israeli certificates of origin.

In 1998 a Palestinian grower told the European commission that he allowed his flowers to change their nationality in order to avoid the risk of damage and delay "as a result of Israeli treatment of Palestinian produce". This was a polite way of referring to the Israeli authorities' practice of thrusting metal spikes through boxes of Palestinian flowers, rendering them unsaleable. Ostensibly this is done for security reasons.

Israeli companies import leather from Europe and pass it to Palestinian companies, who turn it into shoes and jackets. The Palestinians pass the goods back to the Israelis, who then send them to Europe as Israeli products. The point of this is that Israeli importers and exporters cream off a percentage that would otherwise have gone to Palestinians.

Another - politically more serious - fraud arises because produce from Jewish settlements in the occupied territories is not covered by trade agreements with Europe and is therefore not entitled to preferential treatment.

Europe has made its view of the settlements extremely clear. "Settlements change the physical character and demographic composition of the occupied territories. All settlement activities are illegal and constitute a major obstacle to peace," a statement from EU presidency said recently.

But what Europe says and does are two different things. By allowing settlement products to be imported under an Israeli guise, Europe helps to keep the settlements in business.

The more farsighted Israelis recognise this as an obstacle to peace. The Gush Shalom organisation, for example, urges Israelis themselve to boycott settlement produce, under the slogan, "A penny to the settlements is a penny against peace."

In some cases there is no attempt to disguise the origin of these products. The Golan Heights Winery exports 38% of all "Israeli" wine - from vineyards on occupied Syrian land. It markets them under the labels "Yarden", "Gamla", and "Golan", and the company's website lists distributors in nine European countries, including House of Hallgarten in Luton.

Ahava produces bath salts and cosmetics from the Dead sea on the occupied West Bank. Its website lists outlets in Belgium, Germany, Italy and the United Kingdom (including Selfridges in London). Other products would not be difficult to track down: a long list is published on Gush Shalom's website.

The EU has known about this for a long time but it held off taking action on the grounds that there was no point in making a fuss while peace seemed imminent. But in the last few months that has changed and peace seems further away than ever. Action now could help to get it back on course.

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