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Copyright © 2019 The American Israel Public Affairs Committee

PepsiCo’s Purchase of SodaStream: From Boycotter to Investor, Pepsi Sends a Message to BDS

A Palestinian woman works at SodaStream’s plant in Mishor Adumim, February 2, 2014. Many Palestinians lost their jobs due to the BDS pressure, as SodaStream moved its production to the southern Israeli Bedouin town of Rahat. (Nati Shohat/Flash90)

PepsiCo’s Aug. 20 announcement that it had purchased SodaStream for $3.2 billion sent a strong message to the boycott, divestment and sanctions (BDS) movement and other detractors of Israel. PepsiCo affirmed that it, like so many others in the business community, sees the value of doing business with the Jewish state—a strong peace-loving democracy whose citizens enjoy equality, religious freedom and the rule of law.

The purchase of SodaStream—which is best known for its at-home water carbonation machines—provided a strong rebuff to the BDS movement’s ongoing efforts against this progressive Israeli company. In 2015, BDS pressure forced SodaStream to close its factory in the West Bank, which had employed some 1,300 workers, including 350 Israeli Jews, 450 Israeli Arabs and 500 West Bank Palestinians. Many Palestinians lost their jobs due to the BDS pressure, as SodaStream moved its production to the southern Israeli Bedouin town of Rahat.

PepsiCo’s purchase of SodaStream contained a bit of irony for those with a historical bent. Until 1991, Pepsi Cola was not even sold in Israel, in accordance with the Arab boycott of Israel.

The original Arab boycott dated back even before Israel’s founding, as the Arab world sought to make it impossible for a successful Jewish state to emerge. During the first 30 years of Israel’s existence, Arab states boycotted Israel, those doing business with Israel, and even companies working with companies dealing with Israel. The Arab boycott reached its peak with the growth of Arab oil and economic power following the 1973 Yom Kippur War. To enforce its boycott, the Arab League compiled a “blacklist” of companies and individuals violating the boycott, who were then barred from doing business in the Arab world. These Arab efforts—while failing in the main—did successfully persuade some companies not to do business with the Jewish state.

After years of congressional expressions of concern about the Arab boycott—including its discrimination against American companies and individuals—Congress finally passed, and President Jimmy Carter signed into law, anti-boycott provisions as part of the Export Administration Act of 1979 (EAA). These provisions made it illegal for American companies to cooperate with the boycott. The law also saw the establishment in the Commerce Department the Office of Antiboycott Compliance (OAC). These actions dealt a major blow against the Arab League’s boycott.

As Israel reached peace agreements with Egypt (1979), the Palestine Liberation Organization (PLO) (1993) and Jordan (1994), the acceptance of Israel—either de jure or de facto—in a number of Arab countries grew, further weakening the boycott.

But the decades-long campaign by Israel’s detractors to delegitimize and isolate the Jewish state with political and economic warfare has not disappeared. In recent years, nongovernmental organizations (NGOs) and international governmental organizations, like the United Nations, have risen to the fore in promoting BDS efforts against Israel.

In March 2016, the U.N. Human Rights Council (UNHRC) ordered the preparation of a database to identify companies conducting business with Israelis beyond the 1949 Armistice line, including in East Jerusalem and the Jewish Quarter of the Old City. Companies appearing on the blacklist could be stigmatized and punished for commercial activities that are completely legal under U.S. law. Some companies might avoid Israel entirely to avoid international censure. By blacklisting companies and threatening Israel with economic penalties if it does not accept Palestinian positions, the U.N. would directly support the objectives of the BDS movement.

In the last few years, members of Congress have introduced several bipartisan measures to combat these new efforts to economically isolate the Jewish state. One of those measures is the Israel Anti-Boycott Act (H.R. 1697 and S. 720), which would expand existing anti-boycott laws to also include boycotts by international governmental organizations like the UNHRC. Current legislation—passed in response to the Arab League boycott—only addresses boycotts initiated by foreign countries. Congress is also considering the Combating BDS Act (H.R. 2856 and S. 170), which would provide federal authorization for state and local governments to restrict business with entities that promote BDS against Israel. A number of U.S. states have already passed such anti-BDS legislation.

The United States has long opposed efforts to economically isolate the Jewish state. Recently, Congress mandated that U.S. negotiators give high priority in negotiating trade agreements to protecting U.S. companies doing business in Israel from boycotts unauthorized by U.S. law.

Today, Congress must continue to fight the delegitimization of Israel and insist that the United Nations end its anti-Israel bias. Congress should pass the Israel Anti-Boycott Act and the Combating BDS Act—bipartisan bills that would protect Israel from economic warfare and protect U.S. businesses from unsanctioned international coercion. Further, the United States must push back against U.N. efforts to create a blacklist that could be used to boycott companies that do business with the Jewish state.

The story of PepsiCo and SodaStream demonstrates the ongoing value of the U.S.-Israeli partnership in the commercial arena. Congress must act to ensure this opportunity remains open for all U.S. companies as the United States and Israel work today to furnish the best products, services and technologies to the world.

Type: Near-East-Report Near East Report