The Impact of Boycott towards the ongoing Israel and Palestine conflict 

Authors: Aziz Basyarahil, Raden Mohammad Rangga F. Editor: Teuku Muhammad N. Fadilah

Background

On 7 October 2023, Hamas led a strategic coordinated attack on Israeli territory, the attack began around 6:30am with a barrage of at least 2,200 rockets fired into Israel, the barrage reportedly defeating Israel’s Iron Dome system. As the rockets rained down on Israeli territory, at least 1,500 militants from Hamas invaded Israeli territory. During the attack, around 1,200 people were killed.[1]

Following the attack, the IDF declared a state of war alert and began mobilisation. The IDF also began helicopter strikes inside Israeli territory against the terrorists. At the same time, after hours of fighting inside the settlements, the Israeli air force began a series of increasingly intense strikes on the Gaza Strip. These strikes were directed at command and control centers, communications and reconnaissance facilities, ammunition storage sites, and other strategic sites, as well as Hamas authorities, among other objectives .[2]

The impact of the Boycott on the Israeli economy

Boycotting products affiliated with Israel has become a global form of protest against Israel’s policies towards Palestine. The movement, often referred to as Boycott, Divestment and Sanctions (BDS), aims to pressure Israel to stop what it considers to be genocide and attacks on Palestinians. 

The BDS movement itself was launched in 2005 by Palestinian civil society organisations initiated by Omar Barghouti and Ramy Shaat. Its main goals are to end the occupation and colonisation of Arab lands by Israel, recognise the basic rights of Arab-Palestinian citizens in Israel, and respect the right of Palestinian refugees to return to their homes. The boycott of products affiliated with Israel includes agricultural products, technology, and various other consumer goods. 

In 2024, the boycott movement was reinvigorated after a series of incidents deemed as genocide and attacks carried out by Israel into the Palestinian territories. This prolonged conflict continues to trigger international reactions, including the boycott of products affiliated with Israel. The boycott aims to pressure Israel to change its policies and actions towards Palestine.  

The boycott movement against Israeli products dates back decades, but its intensity increased significantly in 2024. Countries in Europe, Latin America and some Asian countries officially supported the boycott. The most affected products are agricultural products, high technology, and everyday consumer goods. 

The boycott has cost Israel dearly, especially in terms of declining Exports. Data from CEIC Data shows a US$0.7 billion drop in profits from March-April 2024. In March 2024, the reported export profit was USD 5.4 billion while in April 2024 it was USD 4.7 billion. Agricultural products such as fruits and vegetables saw the biggest drop in demand from the European market, which is one of Israel’s main export markets.

Israel, often referred to as the “Startup Nation”, has an economy that relies heavily on the high-tech sector. A boycott of technology products developed in Israel could affect investments in startups and large technology companies. The high-tech sector, which is the backbone of the Israeli economy, is also feeling a significant impact. Several large technology companies reported a 10-12% drop in international sales. Start-ups that depend on international funding face difficulties in attracting new investments. 

There have even been significant cases of multinational companies and financial institutions withdrawing their investments from Israel or companies affiliated with activities in the occupied territories. For example, in 2014, security company G4S announced that it would withdraw from contracts in Israel following an intense BDS campaign. While the impact on Israel’s macro-economy is not large, cases like this demonstrate vulnerability to international pressure. 

Indirect economic impacts were also felt by Israel in 2024, such as foreign investment declining by around 20 per cent in the first half of 2024. Foreign investors expressed concern about reputational risk and the potential for additional sanctions from their home governments if they continued to do business with Israel. In addition, the tourism sector, which previously accounted for around 6% of Israel’s GDP, saw a 25% decline in international visitors compared to 2023. Hotels and tourist destinations in Israel reported a drastic drop in reservations, especially from European and North American travellers. 

In addition to the economic impact, Israel is also affected in the social and political sectors. The boycott movement strengthened international public opinion against Israel’s actions against the Palestinians. Campaigns on social media and global mass media further influenced negative perceptions of Israel, which in turn affected consumer and investor decisions. There are many hashtags condemning Israel and supporting Palestine, such as the recently trending #EyesOnRafah. 

The Israeli government is also facing increasing political pressure both at home and abroad. Demonstrations and protests in various countries have prompted some governments to review diplomatic and trade relations with Israel. The Israeli government has tried various ways to mitigate the impact of the boycott. A strategy of market diversification and increased trade relations with countries that do not support the boycott, such as some countries in Asia and Africa, was undertaken to stabilise the economy. In addition, a massive public relations campaign was launched to improve Israel’s international image. 

The boycott of products affiliated with Israel in 2024 has had a significant impact on the country’s economy. The decline in exports, foreign investment and tourism shows that the boycott is more than a symbolic act, but has real economic consequences. Although Israel is trying to mitigate the impact through market diversification and PR campaigns, international pressure remains high, signaling that the Israeli economy will still have to face major challenges in the future if the conflict with the Palestinians does not find a peaceful solution soon. The long-term impact of the boycott remains to be monitored, but preliminary data from 2024 suggests that it has succeeded in creating significant economic pressure on Israel.

Changes in International Attitudes and Policies

The demeanor of the White House toward the Israel and Hamas conflict has seen a slight change in recent days compared to its firm position to only guard Israel’s “right of self-defense” at the very beginning, as Washington presently calls for “humanitarian pauses”. US President Joe Biden said he thought there ought to be a humanitarian “pause” within the Israel-Hamas war.[3]

Not just the attitude of countries that changing, but the people attitude are also changing, from Jakarta to San Francisco, hundreds of thousands of individuals have taken to the roads over the past two months to protest Israel’s continuous attack and genocide on Gaza against the Palestinian, from October 7 to November 24, there were at approximately 7.000 pro-Palestine protests that took place in more than 118 nations and regions. Many more have chosen to express their condemnation utilizing their purchasing power, choosing to boycott items and services that bolster Israel.[4]

Boycott Impact on the Peace Process 

The boycott of Israeli products that took place in 2024 had a significant impact on the peace process between Israel and Palestine. The boycott was triggered by various incidents that were considered acts of genocide and attacks by Israel on Palestinian territories. The boycott movement, which involved many countries and international organizations, not only affected the Israeli economy but also impacted the political dynamics and diplomatic efforts in this long-standing conflict. 

The economic impact of the boycott could have caused very significant losses for Israel. Although there is no recent report on the total losses suffered by Israel, an Al Jazeera report in 2018 revealed that the boycott movement has the potential to cause losses of up to US$11.5 billion or around Rp177.91 trillion (assuming an exchange rate of Rp15,471/US$) per year for Israel. This decrease could be more than the data obtained in 2018 because in 2023-2024 the boycott will be increasingly massive by the International Community against products affiliated with Israel and will have an impact on the labor sector and increase unemployment in the affected sectors. 

Meanwhile, the tourism sector has also experienced a sharp decline. Data from Israel’s Ministry of Tourism shows a 25% drop in international tourist arrivals compared to the previous year. This decline not only impacts direct revenue from the tourism sector but also on supporting sectors such as hospitality, restaurants, and transportation. 

The boycott has also affected the domestic political process in Israel. The government led by Benjamin Netanyahu is under immense pressure, both from the domestic opposition and from the international community. Domestic protests against the harsh policies towards the Palestinians increased, with many Israelis demanding a change in approach to the conflict. This political pressure makes it more difficult for the government to maintain its aggressive policies without facing significant opposition.  

On the diplomatic side, the boycott strengthened the Palestinian negotiating position in international forums. Support from European countries and several countries in Latin America strengthened Palestinian demands for wider recognition and greater pressure on Israel. Increased humanitarian and economic aid from these countries helped the Palestinians to survive in difficult conditions. 

However, the impact of the boycott was not entirely positive for the peace process. While the boycott succeeds in putting economic and political pressure on Israel, it also hardens the position of the Israeli government which tends to become more defensive and violent in response to external pressures. Retaliatory policies such as access closures and increased military operations in the Palestinian territories can worsen the security situation and hamper dialog efforts. 

Boycotts also trigger strong reactions from Israel’s supporters in various countries, which can complicate diplomatic relations and prolong the conflict. Some countries with close ties to Israel, such as the United States, have shown stronger political and economic support for Israel in response to the boycott, potentially reducing the effectiveness of international pressure on Israel.

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