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Israel Spars With Kerry on Boycotts Ahead of Peace Plan

Photographer: Abir Sultan/Pool/Getty Images

Israeli Prime Minister Benjamin Netanyahu’s comments follow international steps to boycott or sanction businesses operating in the West Bank and east Jerusalem. Close

Israeli Prime Minister Benjamin Netanyahu’s comments follow international steps to... Read More

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Photographer: Abir Sultan/Pool/Getty Images

Israeli Prime Minister Benjamin Netanyahu’s comments follow international steps to boycott or sanction businesses operating in the West Bank and east Jerusalem.

Israeli ministers sparred with U.S. Secretary of State John Kerry over peacemaking, suggesting he’s giving implicit support to a global campaign to sanction the Jewish state for its settlements.

A day after Kerry warned Israel of the economic damage sanctions could cause, Israeli Minister of Intelligence and Strategic Affairs Yuval Steinitz, a close ally of Prime Minister Benjamin Netanyahu, called the top U.S. diplomat’s remarks “offensive, unfair and intolerable.” Israel, he said, “can’t be expected to negotiate with a gun to its head.”

Kerry, speaking at the Munich Security Conference, had referred to an “increasing delegitimization campaign” that includes “talks of boycotts” as a risk for Israel if there’s no peace accord with Palestinians. He said the relative calm and prosperity that Israel now enjoys is “illusionary.” Kerry has consistently opposed sanctions against Israel and was only making a “statement of fact,” the State Department said today.

It’s the latest sign of tension between the longtime allies over Kerry’s efforts to prod Israel and the Palestinians toward a peace agreement. He has promoted the plan in several visits to the region in the year since he took the job, drawing criticism from members of Netanyahu’s cabinet who say the Jewish state is being pushed into abandoning core interests.

‘Proponent of Israel’

The boycott debate comes after pro-Palestinian activists scored several successes in a campaign to blacklist businesses operating in the West Bank and east Jerusalem, land occupied by Israel since 1967 and claimed by Palestinians for a future state. Targets include Israeli banks and companies such as SodaStream International Ltd. (SODA), a maker of home soft-drink machines.

Netanyahu called proposals to boycott Israel’s economy “immoral and unjust,” and told his cabinet yesterday that such measures would encourage the Palestinians “to adhere to their intransigent positions and thus push peace further away.”

After Netanyahu spoke, Kerry’s office issued a statement saying he “expects all parties to accurately portray his record and statements.” Kerry “has been a proponent of Israel, of Israel’s security against efforts to boycott Israel, for decades,” State Department spokeswoman Jen Psaki told reporters in Washington today.

‘Messianic’ Kerry

It is the second time in less than a month that Israeli ministers have disagreed publicly with Kerry, who is preparing to present Israel and the Palestinians with an outline for an accord to help steer negotiations. In January, Defense Minister Moshe Ya’alon apologized to Kerry after he was quoted deriding his peacemaking mission as “messianic.”

Israeli Finance Minister Yair Lapid, who has expressed concern over the danger posed to his country’s economy from the boycott movement, today defended Kerry’s remarks.

“John Kerry himself is working to prevent a boycott of Israel,” Lapid said on Army Radio. “He understands that boycotting Israel is something bad, he’s just pointing out a fact.”

Lapid, who has been more supportive of a two-state solution than most of Netanyahu’s coalition partners, was brought into the government last year after his party finished a surprise second in elections behind the premier’s Likud-Beitenu ticket.

The campaign to economically punish Israel for its West Bank settlements has gained a higher global profile in recent weeks.

Oxfam Split

Actress Scarlett Johansson publicly split with Oxfam last week after the U.K.-based charity criticized her role as a celebrity spokeswoman for SodaStream, which has a factory in the West Bank outside Jerusalem.

Sodastream Chief Executive Officer Daniel Birnbaum defended his company to journalists yesterday during a press tour of the plant, which employs 500 Palestinians, 450 Israeli Arabs and 350 Israeli Jews.

“We’re not a settlement, we’re a factory,” Birnbaum said. “We do not sustain the settlement economy, we sustain the Palestinian and Israeli economies, so shutting this factory down will have no benefit to the Palestinian people or the peace process.”

Dutch asset manager PGGM, which oversees more than 150 billion euros ($203 billion), announced last month it would stop investing in Israeli banks because of their financial operations in the settlements. Norway’s sovereign oil fund last week renewed an investment ban on two Israeli construction companies that build in the West Bank, Africa Israel Investments Ltd. (AFIL) and Danya Cebus Ltd. (DNYA)

To contact the reporter on this story: Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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