November 28, 2023
ISLAMABAD – Empty restaurants or products being taken off shelves should not be seen as the end goal of boycotts.
Recently, McDonalds Pakistan found itself in the line of fire when the fast food chain’s Israeli franchise announced it was giving away thousands of free meals to the Israeli army, stirring debate on whether certain brands are culpable for the humanitarian catastrophe in Gaza.
The BDS — Boycott, Divest, and Sanction — movement is inherently a non-violent movement that calls for the boycott of corporations “complicit in the oppression of Palestinians.” One such example is that of Hewlett-Packard (HP), which has been accused of aiding Israel’s surveillance of dissidents and Palestinians in general through a biometric ID system. The BDS is a tactic more so than an organisation and “works to end international support for Israel’s oppression of Palestinians and pressure Israel to comply with international law”.
Of late, the BDS movement has been gaining traction in countries like Pakistan, Turkey and Egypt due to the support of the Palestinian cause among citizens.
Consumers in countries such as Saudi Arabia, Qatar, Turkey, Egypt, the UAE, Malaysia and Pakistan, among others, have spurned brands that are allegedly complicit in the oppression of Palestinians. In Pakistan, there have been calls to boycott various brands such as Dominos, Carrefour, McDonalds, Coca Cola and PepsiCo on social media.
Certain retail stores, like the Imtiaz superstore chain in Karachi, have actively taken what were believed to be Israeli products or products by companies linked to Israeli conglomerates off their shelves. Local restaurant chain Kababjees took beverages such as Pepsi and Coca Cola off its menu. Celebrities like Ushna Shah and Usman Khalid Butt have been increasingly vocal about the crisis and the importance of boycotting products that have been identified by the BDS movement.
Why are boycotts used?
The idea of boycotting as an act of activism stems from the efficacy of such tactics during the South African apartheid regime, where sanctions were employed until it led to its eventual downfall. What is important to note here is that South African exports were consumer-oriented and could be substituted.
Boycotts have been a popular choice when it comes to getting a state or a corporation to change their stance. The second case of boycotts used in the Muslim world was in 2005 when a Danish newspaper decided to publish a controversial cartoon, prompting a global boycott of the Danish brand ‘Arla’ by Muslim countries. Although ineffective on the newspaper itself, it did take Arla two years to rebuild its image in Muslim countries.
According to Harvard Business Review, for boycotts to be effective, they must fulfil these four factors:
- Customers care passionately
- The cost of participation is low
- The issues are easy to understand
- Mass media is correctly utilised
Are boycotts really effective?
Even if these factors are met in the current scenario, one should not expect boycotts to hurt Israel’s economy or change its stance directly— when it has already displayed its readiness to weather such pressure time and again. This is primarily because Israel’s economy relies on its technological exports more so than consumer goods. According to Brookings Institute, the Israeli economy is less vulnerable to boycotts today than it was at the beginning of the regime. What this means is that Israeli exports are highly differentiated and not as consumer-oriented as one might think. In short, Israeli products are difficult to be replaced.
Per Dr Akbar Zaidi, political economist and executive director at the Institute of Business Administration (IBA), “Israel is a major exporter of software, spyware, drones and military ammunition. No country that buys from them will boycott them, they will vote against them in the United Nations General Assembly but they won’t ever boycott them.”
“Money and war go hand in hand, where there’s war, there’s money to be made.” He cited the example of Russia’s invasion of Ukraine and the fact that Russia was able to withstand sanctions given Europe’s reliance on its gas. “Money is the most powerful ideology. People compromise whatever faith or belief they have when it comes to money,” Dr Zaidi added.
The recent Russia-Ukraine war is one such example of why boycotts have an indirect impact rather than a direct one. During the initial stages of the Russian invasion, companies such as McDonald’s, Starbucks, Coca-Cola, Nike, Apple, BP and Shell pulled out or temporarily put a halt to their operations in Russia. However, Russia was able to sustain its invasion.
But there is another side to this. Even if boycotts do not pose a direct threat to the state’s economy or a company’s sales, they still communicate discontent among stakeholders, and investors may see this discontent as a threat to a firm’s standing.
David Vogel, in his book, ‘The Market for Virtue’, notes that the satisfaction of labour and consumers is crucial to uphold successful production and distribution practices. When either one of these becomes unhappy with the services of or their treatment by the firm, resource flows may be disturbed. These issues are likely to have more weight than others.
Another study published in the Academic Management Review argued that certain corporations may be more vulnerable to boycott influence because they do not have other information to offer investors that would ease concerns about the financial health of a company. The image of a business is a crucial indicator — if tarnished, it can adversely impact investor confidence.
The other argument is that the threat posed by movements to a company’s finances is indirect; it is through reputation and opinion of consumers. For example, researchers Bartley and Child found that corporations boycotted by anti-sweatshop protesters were more likely to receive concerned ratings from MSCI (Morgan Stanley Capital International), which in turn diminished financial returns.
Boycotts are effective in other ways, according to Brayden King, an IPR associate. He finds that while boycotts rarely hurt profits, they can damage a company’s name, especially by generating negative media attention which can ultimately lead to changes in corporate policies.
In the past, the BDS movement has effectively divested pension funds in Luxembourg, New Zealand, and Norway from Israel.
In 2018, Adidas stated that it would no longer be supporting the Isreali Football Association(IFA), following an international boycott and a petition of over 16,000 signatures. BDS demands on Puma to follow the same trajectory.
However, King cautions that due to short attention spans, the momentum is often short-lived. There is still no long-term impact on a company’s revenues.
Dr Huma Baqai, professor and rector of the Millennium Institute of Technology and Entrepreneurship (Mite), speaking to Dawn.com said, “I completely understand the desire for people to do something, because in the present situation, the powerful international community and international organisations that are responsible for humanitarian law and human rights — acting the way they are — there is discontent across the globe.”
She added, however, “From a purely statistical point of view, grand boycotts appear to exert minimal influence on the target nation’s economy or conflict behaviour.”
“So a judgement call is: yes, the boycott makes you feel good, but I don’t see it impacting Israel’s economy or conflict behaviour.”
She asserted that even though the efforts may be a drop in the ocean, the fact that the streets are so alive against Israel’s incursion of Gaza, it can’t entirely be in vain.
Boycotts are useful when they are sustained and enough media coverage is given. Most large firms tend to lie low during such boycotts. Moreover, the reasons for why certain boycotts may not be as effective today is that corporations today have an intricate structure which is shrouded from the public eye. Consumers get confused about what to boycott, what company is complicit with Israel, and who exactly benefits from their money.
Regarding the structure of multinational corporations, Dr Zaidi explained it has become difficult to identify ownership of corporate structure now, unless they say they are an Israeli company. Today, anyone can be a shareholder of a company. So the notion of ownership and eventual culpability in capital is now a very grey area; it is difficult to determine.
Do boycotts hurt the local economy?
So should Pakistanis boycott goods and products by companies that are believed to be somewhat linked to Israel? According to Dr Zaidi, Pakistanis can boycott to their own disadvantage since such companies not only provide employment but also are the largest tax contributing sector to the economy.
Dr Adil Nakhoda, an economist and associate professor at the Institute of Business Administration (IBA), who frequently comments on Pakistan’s economy, agreed with Dr Zaidi, stating that expecting massive economic disruptions to various stakeholders may be far-fetched for a small economy like Pakistan, without analysing the whole chain of ownership and investors and the impact on them.
“The targeted stakeholders may not feel the financial impact as intended; rather boycotts may hamper economic activity and reduce the current demand of goods in Pakistan.”
Another argument put forth by those in favour of boycotts is that if one were to use local products, it would even help the economy. Dr Nakhoda disagrees, arguing that local products by and large lack the quality due to the non-existent certification and standards regimes involved in production.
Moreover, multinational chains also buy local and therefore, local industries are affected. One example is of McDonalds fries which are a specific type. In order to not import, they went ahead and developed that technology in Pakistan.
Dr Nakhoda highlighted that Pakistan already has import restrictions in place that should encourage local producers. However, such restrictions have often failed to create local alternatives to cater for the needs of the population.
Dr Baqai too noted that boycotts in Pakistan can be a double-edged sword as with other Muslim countries such as Turkey. “In our economies, this investment means employment. It also means options, choices, and alternatives in the market. Can we really afford to lose them? There has been an effort to come up with counter products, but we all know that is kind of a compromised way forward.”
As far as boycotts go in Pakistan, Dr Akbar Zaidi noted that they are rather like gimmicks, which work for a short while. He gave the example of Saudi Arabia and the UAE, who have not outright banned anything that comes or goes to Israel. They have made a lot of noise about it but nothing ever happens.
To note, the conflict has been ongoing for the past 75 years, it only receives occasional attention. He pointed out that countries bought Israeli products before and they will buy Israeli products once there is a ceasefire — which there will be eventually.
“I don’t think this has any impact except on social media,” said Dr Zaidi. “They are making a point but it will last a really short time.”
Dr Zaidi’s point about the short attention span of such movements is reflected in the search entries from Pakistan about these products. The graphs show how interest in these products suddenly spiked on Google Search entries from Pakistan — as people sought to know more about them — and then tapered off, soon after.
When it comes to Pakistani boycotts making a difference, Dr Zaidi minced no words: “We are nothing in this world, we don’t even have self-importance. We are a nation that has completely decimated and crashed in its potential and in its economy.
“We beg and borrow from Saudi Arabia every day — and from the IMF — we don’t have any standing, we have no sovereignty, we have no freedom, we have no independence. We should not talk about things we can’t do, we can’t challenge even Afghanistan, let alone Saudi Arabia or Israel.”
Dr Zaidi was of the opinion that it is very important to show solidarity but it is ineffective. Protests do not have a massive impact because different governments have their own agendas.
States that could have had an impact — such as the US and Canada — were the ones who voted against a ceasefire. This provides Israel enough leeway to do what it wants to do and to stop whenever it thinks it needs to stop.
As far as the intent behind boycotts, he admitted that “it is good to protest; it shows that there is concern. It shows that there is some odd, weak notion of solidarity. Beyond that, there is nothing.”
The essence of boycotts lies in the fact that they garner sympathy for the cause, they remind people of the cause and that they play into people’s conscious. And perhaps public opinion may get politicians and corporations to react if it is sustained and collective enough and it is not just for a moment of people hopping onto the social media bandwagon.
Boycotts work when they are sustained and enough coverage is given to them. Most large firms tend to “wait out” such boycotts. Moreover, one should also bear in mind that Israel has over the years mastered the art of navigating restrictions placed by the Muslim world.
To rejoice at empty restaurants or products being taken off shelves would, therefore, be ill-advised. Hampering economic activity in one’s own country should not be seen as the end goal of boycotts, keeping in mind Pakistan’s own economic standing. The end goal of boycotts should be to raise awareness about the growing crisis in the Middle-East.
As people become more aware of the humanitarian crisis in Gaza globally, civil voices against Israel’s actions grow stronger but the momentum should be sustained and it shouldn’t just be companies that are held accountable.