Arab boycott taking a bite out of U.S. firms

The boycott fever has nevertheless unnerved investors and politicians.

The Washington Post
February 4, 2001

Arab boycott taking a bite out of U.S. firms
Howard Schneider

CAIRO — Caroline Shaheed's religious leaders told her that eating at McDonald's was against God's law in these days of Israeli-Palestinian fighting, and she obeyed them as long as she could.

But when she found herself one night in a neighborhood with no other open restaurants – well, obedience goes only so far. She ordered a Big Mac, fries and a hot apple pie, and she felt guilty about every bite.

"This is the first time in two months I have eaten in an American place," said the veiled university student, convinced that avoiding American products will help curb U.S. support for Israel and help bridle Israel's use of force against the Palestinians.

The latest round of violence between Palestinians and Israelis has been fought with the tools of propaganda as well as with weapons. Internet sites on both sides have been sabotaged – including a breach of the Israeli Foreign Ministry's server by a pro-Palestinian hacker and the planting of an Israeli flag on Hezbollah's Web site. Arab satellite television channels have blanketed the region with calls for resistance.

In that environment, the idea of a boycott against American products took root quickly as a way for Arabs to show their backing for the Palestinians. Advocated through traditional channels such as Friday sermons and modern links including mobile phone messages, the boycott has cost the most prominent U.S. restaurant chains as much as 20 percent of sales compared to last year, according to Business Monthly, published by the American Chamber of Commerce in Egypt.

Other targeted brands, such as Coca-Cola, have also reported a drop in sales. Diplomats and corporate officials throughout the region say the boycott has taken root across a wide demographic and economic spectrum. In Qatar, one Western diplomat said, support was strong even among politically aloof, upper-middle-class teenagers for whom fast-food restaurants are a social spot as well as a place to eat.

"The situation is born out of frustration," Hisham Fahmy, the Chamber of Commerce's executive director, was quoted in Business Monthly. "There just aren't many options for people to vent their anger… . They go for the easy symbols."

Those symbols are plentiful throughout most Arab countries, as once-closed economies have begun to open and hundreds of U.S., European and other foreign franchises have arrived. An estimated 80,000 Egyptians now work in Western fast-food restaurants, where they serve everything from the "All American Food" of A&W to Nathan's Hot Dogs.

The movement has not been just economic. In Cairo, anti-Israeli protests at one university ended with the ransacking of a Kentucky Fried Chicken franchise in the center of the city. Other attacks were directed against the British Sainsbury's grocery chain because of rumors that its owners were Jewish. In Damascus, crowds gathered to burn what few American products could be acquired in Syria, where finding Coke can be a challenge.

With the Egyptian economy in particular trying to court foreign investment, such events have not been universally welcomed. Sainsbury's was already reviewing its presence in Egypt after incurring losses far greater than expected during its first year of operations. Speculation that the company was preparing to make a quick exit led Egypt's prime minister to intervene and meet with corporate officials recently. For now it appears the company will stay.

The boycott fever has nevertheless unnerved investors and politicians. In Saudi Arabia and Egypt, a portion of the revenue from every McDonald's meal now goes to a fund to help wounded Palestinians, countering boycott calls with dollars for the cause. Restaurants such as Chili's have made similar pledges and adorned their buildings with pictures of the al-Aqsa mosque, the East Jerusalem holy site that has become a symbol of Palestinian and Arab hopes.

Business advocates such as Fahmy argue that boycotting fast-food franchises does little to hurt the United States and a lot to hurt Arab franchise owners: The U.S. parent companies are paid their fees regardless, while declining sales could mean Egyptian or other Arab employees are laid off.

Egyptian President Hosni Mubarak has tried to cool tempers, noting that while it was reasonable to refuse to buy Israeli goods, it was a different matter to boycott the United States, which sends around $2 billion a year in aid to Egypt and supplies wheat, military equipment and other necessary goods.

"The decision to boycott foreign commodities should be guided by the public interest and not romantic notions," Mubarak said.

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