Israeli Milk Company Re-Conquers the Territories

by Assaf Adiv

Tnuva, a dairy firm, is thought to be the largest food concern in Israel. It has just inaugurated a sweeping ad campaign in the areas controlled by the Palestinian Authority (PA). Bringing together Israeli and Palestinian investors, it is about to build a plant in the new industrial area at the Carni checkpoint between the Gaza Strip and Israel. From here it will market its dairy products, not only in the Territories, but - it hopes - beyond them to the entire Arab world.
The ad campaign had its official commencement on October 24 at a press conference in Ramallah. Starting in November, Tnuva commercials will appear on Palestinian television. Refugee children from Khan Yunis, a juice vendor from Jericho, and denizens of the Nablus casbah will all join together in a Tnuva jingle. Soon after that, billboards will go up in the Territories, enhancing the pristine landscape.
Tnuva manager Arik Reichman came to the press conference with Musa Hasadiyyah, who heads an advertising firm called al-Bustani (owner of a Nazareth-based newspaper, Kul al-Arab). This firm promotes Tnuva among the Arabs in Israel, and now it has taken upon itself the task of penetrating the Palestinian market.
According to Ha'aretz (October 1), the advertisers have had the full cooperation of the PA's Ministry of Information. "Sky", a Palestinian firm that dominates the entire publicity market in the PA areas, worked shoulder to shoulder with the Tel Aviv-based al-Bustani in filming the commercials.
I asked Hasadiyyah about PA involvement. He denied it. According to the Ha'aretz piece, however, there was involvement, and it went far beyond the merely formal. The Hebrew daily cites Asnat Tarbalasi, who produced the commercials: "The assistant producer on the Palestinian side was Mustafa Dahalan, nephew of Muhammad Dahalan, the head of Palestinian security services in Gaza. Thanks to his connections, Mustafa managed to get all the permits we needed in order to shoot the films in the urban and village streets of the West Bank and Gaza. The Palestinian police accompanied the film crew throughout the project, and at times they even stopped traffic to help us."

A Mortal Blow to Local Producers

The dairy market is one of the basic components of a national economy. A family can do without a great many things, but it will not do without milk for its children. In Israel, therefore, as in many other lands, the dairy market is founded on local production, and customs duties protect the industry from foreign competition, guaranteeing producers an annual return for quotas prescribed by the government.
What is true for the market of Israel, a developed, industrialized country, is all the more so for the Palestinian market, which suffers from severe underdevelopment following years of exploitation. In 1997, Dr. Mahmoud Ja'afari wrote: "The structure of the Palestinian economy in the West Bank and Gaza is like that of most underdeveloped nations. Traditional sectors like agriculture and public services contribute a significant share of the Gross Domestic Product."
The PA, it seems, ignores this basic fact. It fails to defend the local farmers. Dr. Ja'afari again: "Since 1994, the PA has signed two economic and commercial agreements with Israel and Jordan. The terms are such that Israeli goods enter the Palestinian market without restraint, while the Israeli market is almost hermetically sealed to Palestinian goods. The result has been a rise in the PA's commercial deficit from $402 million in 1994 to $1,050 million in 1996. An increase of imported goods leads directly to contraction of the job force in the local market." NOTE 1
On October 16, in a written response to my questions, Dr. Manus Gharaba of the Palestinian Agricultural Relief Committees (PARC) gave me the following data. Out of 160 million liters of milk consumed yearly in the PA areas, local firms produce 97 million (61%), while 63 million are imported from Israel and elsewhere. The Palestinians, he said, do not export dairy or meat products to Israel; this is due to the standards imposed by the Israeli ministries of health and agriculture, together with the difficulties Israel makes at the checkpoints.
"Among 35 dairies in the PA areas," said Dr. Gharaba, "30 are small and five are considered big. Taking the agricultural sector as a whole, it employs 87,000 people: 13% of the Palestinian work force." Yet instead of defending the Palestinian dairy market and local jobs, the PA paves the way for firms such as Tnuva, against which no local company can compete.

A one-way street

The Palestinian market is so conveniently close that Tnuva cannot resist taking a goodly chunk. According to figures that Reichman supplied at the press conference on October 24, Tnuva's annual sales to the PA areas amount to 140 million shekels (about $34 million). That is more than any other Israeli firm makes. (Cited in al-Quds, Oct. 25.) During my interview with adman Musa Hasadiyyah, he claimed that Tnuva's goals are positive. On his view, one should aim for open borders, with free passage of goods and persons.
The problem, however, is that the goods flow in one direction only. Ader Avishar, spokesperson for Israel's Ministry of Agriculture, confirmed the statement of Dr. Gharaba: Palestinian meat and dairy producers export nothing to Israel. I then asked Hasadiyyah for his response. "I don't know what your sources are," he said. "In any case, many companies in today's world establish plants in other countries - Nestle, for example - and in this way they create jobs. Can you accuse these companies of exploiting the Third World?"
In order to stress the humanitarian aspect of Tnuva's campaign, its manager visited the government hospital in Ramallah before the press conference and donated $10,000. (If we consider that Tnuva rakes in about $1.5 billion yearly overall, this was not the widow's mite.) Kul al-Arab, the newspaper of Hasadiyyah's firm, contributed an additional $5000. There remains a question, however, as to whether such generosity suffices to change the character of a brash attempt to penetrate the Palestinian and wider Arab markets?

The Economic Boycott is Broken

S. is the head of a European non-governmental organization in the PA areas. He recently told me that three years ago; a European organization specializing in agriculture turned to the corresponding PA ministry, proposing to invest funds in a plant for manufacturing dairy products. The ministry declined, saying, "Existing production suffices to supply the needs of the market." Tnuva got a different answer.
The boycott on Israeli goods was a pillar of the intifada. In Jordan, Egypt, and the other Arab countries, it continues to be a major issue in the struggle against normalizing relations with the Zionist State. The breaking of that boycott is a fateful step.
Dr. Fahad Fanaq, an influential Jordanian economist, told Joel Bainerman of The Jewish World Review ("The Economics of Peace" Nov.13, 1998) that "the solution for Jordanian industry, if peace happens and the Arab boycott is canceled, is for the Jordanians to protect their market from an invasion of Israeli products." In the same article, the deputy director of the Central Bank of Jordan is quoted as saying, "Jordan must guard against Israel's expected use of Palestinian middlemen as a covert channel for entry into the Jordanian economy."
These concerns are not without warrant. For here we have the case of Tnuva, which not only invades the PA market, but also builds a plant in partnership with Palestinian investors in order to sell its products to neighboring Arab lands. Through its relations with Israel, the PA has reversed the role of its people: Instead of remaining the central factor in the struggle against Zionism, the Palestinians have become the fig leaf Israel needs in order to develop its economy at the expense of the Arab world.
Endnote
1. "The Globalization of the Economy and its Influence on the Palestinian Labor Market," published in English by the Center for Democracy and Workers' Rights, Ramallah, West Bank, 1997.