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Why Sanctions Are Pointless: Or, How Nathan’s Famous Hot Dogs and Coca-Cola Broke the Arab Boycott

A first-hand account of the 1960s maneuvers that quenched Israel’s thirst for soda—and investment

by
Yuval Elizur
January 11, 2016
Photo illustration: Tablet Magazine
Photo illustration: Tablet Magazine

Everyone loves sanctions. But privileged Russians still enjoy imported French cheeses, and Iran’s Republican Guard is profiting handsomely from running a black market in sanction-busting imports. Even BDS may not be the dire threat that both its fevered proponents and its enemies like to imagine. Why? Because the truth is that sanctions are not really that hard to evade, and boycotts are not that hard to break. I know, because I helped to break the Arab boycott of Israel with the reluctant leverage of the Coca-Cola Corp. and the enthusiastic support of Nathan’s Famous Hot Dogs.

I was trained as an economist, and in 1964 the government of Israel asked me to take a leave from the daily Maariv, then Israel’s largest-circulation newspaper, to serve at our consulate in New York City on finding ways around the refusal of any Arab country to trade with our new nation. It had been almost a quarter of a century since I had enjoyed “The pause that refreshes” while visiting Beirut with my parents, so a thirst for Coca-Cola was hardly a habit with me or my countrymen. We all lived on short rations. Supplies of imported food and other essentials were limited during the struggle to build our nation, defend ourselves, and absorb millions of immigrants. When Coke first applied to open a bottling plant only a year after we gained our independence in 1948, it was refused as an unnecessary luxury.

But our soft drink companies yearned for a local franchise to bottle and sell Coca-Cola. This was regarded worldwide as a license to print money and usually ended up in the hands of someone with a great deal of political pull—in Hebrew protexia, or in the vernacular “Vitamin P.” Thus I became aware of the taste for Coca-Cola only after I arrived in arrived in New York to join the Israeli Economic Mission with the rank of consul.

Our mission was to convince American businessmen to ignore the Arab threat to seal off their much larger market from any company that did business with us. We also tried to drum up foreign investment in Israel, another move that would trigger the boycott. We asked Jewish-American importers to pressure their foreign suppliers to sell to Israel by warning that they would offend their customers if they refused to do business with Israel.

Japanese automakers especially were targeted with the threat of losing their growing American market, but they had already figured out a way around the boycott. Back in Japan the manufacturers carved up the Middle East market and designated only one company, Subaru, to sell to Israel while the others sold to the Arabs. We wanted all of them to sell in Israel, not only for political reasons but to encourage competition, which has never been a high priority for Japanese industry.

I soon realized that my mission had another important goal: convincing large American companies that by boycotting Israel they were not only missing an important foreign market but endangering their sales at home. Before I arrived, a number of American Jewish organizations led by the Anti-Defamation League and its vociferous General Counsel Arnold Forster had established a Boycott Committee. One of its goals was to bring Coca-Cola to Israel.

It did not take me long to join that campaign. As I saw it, the Arab boycott’s economic damage extended to what we called “the shadow effect”—fears of some firms to do business with Israel mainly because of the shadow cast by larger and better-known companies. I imagined myself a potential foreign investor visiting Israel and almost ready to do business there, and then quickly backing away when informed by the waiter at his hotel the Coca-Cola he had ordered with his meal was unavailable because the parent of one of America’s best known products was afraid to get involved in Israel because of the Arab Boycott.

But first I had to overcome a number of obstacles. As an official of a foreign country I understood that I should not jump into an internal American debate (a constraint that does not seem to concern the Netanyahu government). I also had to convince the Israeli Foreign Ministry that the availability of Coca-Cola in Israel would be beneficial to the Israeli economy and not only to the lucky bottler who would obtain the franchise. The Foreign Office in Jerusalem green-lighted me, but that was just the easy part.

Coordination with the various Jewish organizations, each of them eager to grab maximum publicity in the campaign against Coca-Cola, proved more difficult. But the toughest task was persuading my immediate superior, Israel’s Ambassador in Washington Avraham Harman, that the campaign was really necessary. Abe Harman had grown up as a devoted Labor Zionist in England and could not understand why Israel’s hardy pioneers needed Coca-Cola to quench their thirst when they already grew some of the world’s sweetest oranges and other delicious fruit to flavor their soft drinks. (Years later, after he became President of Hebrew University and Israelis in the millions were drinking Coca-Cola, he admitted to me I had probably had been right.) I admired Harman and struggled with my conscience before I gave Israel’s support and leadership to the American Jewish organizations.

***

My own economic convictions about the people involved in seeking the franchise also gave me pause. The most outspoken was Moshe Bornstein, a tough survivor of the Warsaw Ghetto and the producer of Tempo, Israel’s most popular soft drink in those years. He won the backing of Forster, who chaired a press conference to accuse Coca-Cola of refusing to grant an Israeli franchise for “political reasons.” A photograph of Forster, pointing an accusing finger at Coke’s American soft drink factory, made the news.

American Jewish organizations quickly followed with tough statements of their own. The campaign reached its peak when Nathan’s Famous Hot Dogs, a fast-food chain that had spread from Coney Island to Times Square, announced late one Friday afternoon that by 5 p.m. it would stop serving Coca-Cola to its customers. I was bewildered by the timing of the ultimatum. Bornstein had called on Friday to inquire whether he could safely spend the Sabbath with his rabbi in Lakewood, New Jersey. I told him I did not think that anything important need keep him in the city.

Early in the afternoon I realized how wrong I was. Around noon my phone rang: Arthur J. Lelyveld, the father of legendary former New York Times editor-in-chief Joseph Lelyveld, was on the line. Although we had never met I knew who he was, a reform rabbi who served as the president of the American Jewish Congress. Our conversation was short. He told me that the president of Coca-Cola, whom he had known for many years, had asked him to contact me and relay the news that the Coca-Cola company had decided to authorize production in Israel and would give the franchise to Abraham Feinberg, who was known as Big Abe and was absolutely brimming with Vitamin P. My role was to obtain the ambassador’s blessing.

As I expected, my next phone call was most unpleasant. “You see what you did!” Abe Harman howled at me. “Of course we have to say yes. We cannot dictate to Coca-Cola who it will franchise. It is their business. But why do we need the whole business? I still say that our orange drinks are so much better.”

So, I called Lelyveld and soon afterward I called Forster and other Jewish leaders, who immediately must have told Nathan’s to cancel its boycott. They were all elated at their victory but I was blue. I hated the fact that Abe Harman was mad at me, and we both disapproved of Abe Feinberg as Coca-Cola’s choice. Yes, he was a highly prominent Jewish leader—a textile magnate who mixed business with helping Israel. His influence in the Democratic Party and contacts with President Lyndon Johnson are said to have been decisive in obtaining U.S. government permission for Israel to buy Skyhawks, the first American-made planes in the Israeli Air Force and an essential weapon following the Six Day War.

But Feinberg also knew how to demand and receive compensation for his efforts on the behalf of Israel—not only tribute from Israeli leaders but additional concessions for his investments such as in Jerusalem Hilton hotel. That evening my gloom intensified when I arrived at a party and realized from the gossip that Feinberg had no intention of investing in any bottling plant in Israel. Moreover, his Israeli partners, despite their reputation as reputable businessmen, were almost bankrupt. Their plan was to gradually transfer control of the Israeli Coca-Cola franchise to a third group that would bail out the original franchisees.

These predictions soon came true. While the deal most likely profited Feinberg and his Israeli partners, the new investors earned far more from the growing demand for Coke in Israel. The drink came on the market soon after the Six Day War and was introduced by the Minister of Finance, Pinchas Sapir at an international investors conference as a “business success that accompanied the military success.” I had returned to journalism and covered the conference for my newspaper, but when Coca-Cola was toasted no one even offered me a glass of the stuff. Needless to say, my thoughts were far from the diplomatic utility of sanctions: Israel prospered, and they eventually withered away.

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Yuval Elizur, author of several books on Israeli politics, retired as deputy editor of the newspaper Maariv and served as Jerusalem correspondent for the Washington Post and Boston Globe.

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