Backlash at the Boycott

As the financial power of the Arab oil states has grown, so has their muscle in world trade. But in using their new strength, some Arab governments have been pursuing a policy that is deeply inimical to the legal and "social principles of the industrial democracies. Financial and political capitals were shocked by the revelations last month that Arab bankers in Libya and Kuwait had threatened to pull their money out of major international bond issues unless certain U.S. and European banking houses with Jewish ties were barred from participation. Now the economic issues raised by such tactics are rapidly becoming a major diplomatic concern as well.

During his press conference in Hollywood, Fla., last week, President Ford made the U.S. position clear. "Such discrimination," he said, "is totally contrary to the American tradition and repugnant to American principles." Ford asked the Justice, Commerce, State and Defense departments to investigate, suggesting that the U.S. may take some economic counteractions against those who discriminate.

A day earlier, the Anti-Defamation League of the B'nai B'rith accused a number of private companies and U.S. agencies of discriminating against Jews, and also provided part of an Arab boycott list that extended beyond the banking community into the ranks of American business. And only a few hours after the President's Florida press conference, Idaho Democrat Frank Church, chairman of the Senate Subcommittee on Multinational Corporations, produced a copy of the entire blacklist.

According to the B'nai B'rith, four private firms* and two U.S. Government agencies had violated U.S. civil rights laws by excluding Jews from employment in Arab countries in order to do business or carry out aid programs there. Not all the companies responded immediately to the charges, but those that did so denied them. So did one of the federal agencies: the Overseas Private Investment Corporation, which promotes U.S. trade projects abroad. The other agency, the U.S. Army Corps of Engineers, which manages construction projects in Saudi Arabia for the U.S. Government, acknowledged tacit compliance with the boycott.

Going Along. At a hearing of Senator Church's subcommittee two Army colonels, William L. Durham and Joseph D. Bennett, explained that in deference to Saudi wishes, the Corps of Engineers made a practice of not assigning Jewish personnel to Saudi Arabia and also saw to it that its civilian contractors did the same. But both denied ever having seen the Arab boycott list.

Until last week, few Americans had. At the hearing, Church showed off a copy of the 1970 edition, which he had obtained from the State Department. Published in Damascus, the volume contains the names of 1,500 American companies, individuals and organizations with which the Arabs refuse to do business, supposedly because they are or have been involved with Israel in one way or another. But in many ways the list is baffling. The entries range from giant firms with worldwide presence like RCA and Coca-Cola to local U.S. department stores like Lord & Taylor. Some companies were unaware that they were on the Arabs' enemies list until it was published in the newspapers last week. For example, the American Electric Power Co. turned up on the list, even though the utility holding company has no interests anywhere in the Middle East. The Ford Motor Co. and Xerox Corp., both boycotted since 1966, are only two of many firms that have been trying to have their names removed from the blacklist.

The President's denunciation of Arab discrimination and the Church hearing, both of which took place on Ashland Chemical Co., Bendix Field Engineering Corp., Dresser Industries Inc. and International School Services. the same day, were clearly intended as a signal of bipartisan U.S. concern about the boycott. In Cairo, where the Arab boycott committee is currently holding its semiannual review of the blacklist, Mohammed Mahgoub, commissioner general of the boycott office, defended the list as "a legitimate means of legitimate self-defense." At the boycott committee's opening session last week, Mahgoub insisted that companies are listed only if they "play a role in helping Israel's economic, industrial or military efforts."

Legal Tools. Washington has only begun to explore what legal tools are available to combat the boycott. Many antitrust law experts believe that Section 1 of the Sherman Act, which forbids contract combinations or conspiracy in restraint of trade, could be used against, say, an Arab bank that refused to deal with U.S. companies that have ties with Israel; but enforcement would be impos sible unless the bank had assets located within the jurisdiction of a U.S. court.

Some Justice officials are discussing an other approach: a threat of action under civil rights laws against U.S. companies that bow to the blacklist by deliberately excluding Jewish employees from their Arab operations.

Ultimately, the argument that is most likely to force the Arab govern ments to reconsider their policy of eth nic economic discrimination is that they run the risk of a backlash against the boycott when they begin to invest their oil billions in Western countries in a big way. As President Ford put it bluntly last week: "Foreign businessmen and in vestors are welcome in the United States when they are willing to conform to the principles of our society."

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