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Tokyo Stock Exchange Photo: AFP
Tokyo Stock Exchange Photo: AFP
 
 

Japan threatens economic sanctions on Israel

Israeli decision to freeze special budget for encouraging exports to Japan infuriates Tokyo officials, prompting Jerusalem to reconsider. Volume of trade between countries in 2008 totaled $3.1 billion

Naama Sikuler, Calcalist
Published: 03.13.09, 19:55 / Israel Business

A Foreign Ministry delegation which recently visited Tokyo was told by Japanese officials that they are considering imposing sanctions, delaying and even freezing new trade deals with Israel.

 

The threat was made on the backdrop of a recent Israeli decision to freeze a special budget allotted for encouraging exports to Japan.

 

Several weeks ago, the Israel Export and International Cooperation Institute's plenum – attended by Boaz Hirsch, director of foreign trade at the Industry, Trade and Labor Ministry, and a representative of the manufacturers – decided to freeze the budget due to the global financial crisis which badly hurt Japan and because of trade barriers.

 

The decision was made after the IEICI had searched for seven months for an Israeli company which would be responsible for encouraging the trade relations between the two countries.

 

As part of the process, the IEICI negotiated with 15 companies. One of them, DECAGON, claimed that its advanced negotiations with the IEICI even included a draft contract.

 

The Japanese were infuriated by the decision, particularly in light of the fact that in the past two years Japanese businesspeople have visited Israel several times, and Israeli businesspeople have visited Japan.

 

Outgoing Prime Minister Ehud Olmert visited Japan a year ago and conveyed the message that he plans to increase the business cooperation between the two countries.

 

The offended Japanese informed Foreign Ministry representatives who visited Japan in the past few weeks that they found the decision to freeze the budget unacceptable and that they would consider imposing sanctions.

 

Calcalist has learned that Israeli businesspeople have experienced a standstill in their ties with the Japanese in recent weeks. Israeli officials fear that the sanctions will develop into an official "boycott" statement, and are therefore considering returning the disputed budgets.

 

'No legal possibility to impose sanctions'

Japan is Israel's ninth largest trade partner. According to IEICI figures, the volume of trade between Israel and Japan totaled $3.1 billion in 2008, a 17% growth compared to 2007. More than 1,300 Israeli exporters work with the Japanese market, most of them in the software field.

 

The Foreign Ministry refused to comment on this report.

 

The IEICI said that the decision to freeze the plan was initiated by the Industry, Trade and Labor Ministry.

 

The Industry, Trade and Labor Ministry said in response, "The Japanese Embassy in Israel was in contact with us on the matter, and the talks were positive and sympathetic. There is no legal possibility to impose sanctions.

 

"And why should they impose sanctions? Because during such a serious financial crisis striking the world and Japan we called off an operation aimed at increasing the Israeli exports to Japan?"

 

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