More Intifada Fallout

The Palestinian uprising against Israel continues to cast its shadow over the Jewish state's trade and tourism. On May 21, the European Union is expected to launch talks with Israel to restore customs duties on goods imported from the occupied territories. These duties were eliminated a year ago when the EU and Israel ratified a free-trade agreement. Until now, goods from the occupied territories have been accepted as Israeli.

The move, which has been demanded by the Palestinians, would be a symbolic warning to Israel that its trade with Europe is at risk if it keeps up the harsh clampdown on the territories. Only $150 million of the $31 billion in Israeli-European trade last year would be affected. But the implied threat is that duties could eventually be imposed on all Israeli goods.

Israeli officials in Brussels are lobbying against any EU move. Many imports come from Israeli-owned industrial parks located in Jewish settlements in the occupied territories. France and Denmark have suggested scrapping the free-trade agreement, but Germany, Holland, and Britain oppose such a step.

Meanwhile, Israeli companies dependent on tourism are suffering. El Al Israeli Airlines, the national carrier, is soon expected to report a $109 million loss in 2000 on sales of $3 billion. That's largely because travel to Israel has dropped more than 50% since last October. To stem losses, the state-owned carrier plans to stop flying to as many as 10 destinations.

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