Thursday 19 April 2012

The Deliberation on Canadian Economic Relations to Israel

Imane Drissi El-Bouzaidi 
November 8, 2010
              This document presented by the Department of Foreign Affairs and International Trade (DFAIT) is a deliberation on Canadian-Israeli economic relations and how best to deal with the Palestine-Israel conflict.  Canada’s involvement in the conflict is important to analyze because one way to lessen Israeli-Palestinian tensions would be to stop increasing them,” which happens when diplomatic, military, and economic support is offered unconditionally to Israel[1]. The fact that Israel is a small and trade-dependent country makes it important to analyze whether or not we need to diminish our economic ties to Israel. Two policy options will be presented to deal with this issue. One policy is to continue trade with Israel without restrictions, while the other policy is to implement economic sanctions on the country. This paper proposes that Canada should choose to implement economic sanctions because it is a method of protesting international human rights violations, it reduces domestic threats, it allows pressure to be put on the peace talks, and it resolves issues over certain trade agreements.
Importance of the Issue:
            The Palestinian-Israeli conflict is an important issue for Canada to discuss due to a variety of reasons. Firstly, it is a possible factor as to why Canada lost the bid against Portugal for a UN Security Council Seat on October 12th, 2010. A Canadian foreign policy analyst commented that “we have followed policies that are frankly and strongly in support of the government of Israel” and this has affected relations with Arab and Islamic states in the UN[2]. There are 57 countries in the UN that make up the Organization of Islamic Conference, who tend to object to a strong pro-Israel stance.    
            The second reason is that the conflict has potential threats to Canadian domestic security. Many terrorist organizations, such as al Qaeda, the Palestine Liberation Front, and the Popular Front for the Liberation of Palestine (PLFP) claim to be motivated by the Palestinian cause. In the twelfth 9/11 Commission Hearing Report, FBI Special Agent Fitzgerald explains that the 9/11 Hijackers “feel a sense of outrage against the United States” and they “identify with the Palestinian problem”[3]. Canada may continue to suffer terrorist threats as long as it affiliates itself strongly with Israel. These threats are as recent as August 25th, 2010, when three men in Ontario were arrested for allegedly conspiring to commit a terrorist attack. Noam Chomsky states that “those who want victory against terror without addressing underlying grievances want an unending war”[4]. Therefore, Canada’s policies in the Middle East are important to analyze because it inextricably affects domestic security.
Lastly, the Palestine-Israel issue is important to Canada because of the scale of the conflict. Countries from all over the world have been involved and it has sparked more than seven major wars. Resolving this issue is a necessary condition for ensuring stability across the Middle East, which is of geopolitical importance due to its access to oil and natural resources. Canada has economic ties to the region, which means that Canadian businesses suffer if there is instability. Before Canadas economic relationship is analyzed, it is important to explore the historical context of the conflict.
Historical Context:
            The Arab-Israeli conflict began with a mandate by the League of Nations giving Britain control of Palestine as an aftermath of World War I. In 1947 the UN passed a resolution to partition this area in order to create the Jewish state of Israel. The Arab League opposed the partition, which was responsible for the displacement of 711,000 Palestinians[5]. In 1948 when Israel declared its independence, the first Arab-Israeli war erupted with Arab states invading the region. Hostilities did not cease following this war, but rather wars and conflicts have occurred frequently, such as the Suez Canal Crisis in 1956, the Six-Day War in 1967, the War of Attrition in 1969, the Yom Kippur War in 1973, the 2006 Lebanon War, and the Gaza Crisis in 2008. 
            The current context of the conflict is that although there is a present cease-fire between Palestine and Israel, tensions and hostilities remain prevalent among not only the two states but also between the Arab and Western world. Direct peace talks began on September 2, 2010 and are currently taking place between Palestinian leader, Mahmoud Abbas, and Israeli leader, Benjamin Netanyahu[6]. The negotiations are now being threatened by both parties involved. Israel enacted a ten month moratorium on settlements, which expired on September 26, 2010. The recommencement of settlements in the West Bank and East Jerusalem has derailed negotiations because Abbas refuses to continue until the building freeze is reinstated. Palestinian militancy is also threatening to derail the negotiations. Hamas is leading a coalition of thirteen Palestinian militant groups who have used actions, such as rocket attacks and drive-by-shootings to disrupt the talks[7].
Canada’s Position:
            Canadas current position on the Palestinian-Israeli conflict is based on what Stephen Harper calls a principled approach[8]. Canada supports Israels right to live in peace with its neighbors, while recognizing the Palestinian right to self-determination[9]. Although Canada tries to portray an image of evenhandedness, many argue that Canada is not, nor has it ever been an honest broker in the Palestine-Israel conflict[10] and that Canadas approach has in fact long tilted in favor of Israel[11]. Historically Canada’s position has showed strong diplomatic, military, and economic support for Israel.
            Diplomatic support can be seen with the UN voting pattern. In 2006, Canada voted against the Palestinian Refugees Right of Return at the UN; during the Lebanon War the government supported postponing a ceasefire, allowing Israel to expand; and Canada does not recognize the democratically-elected, Hamas. Canada’s military position on the Palestine-Israel conflict is through intelligence cooperation, and financing. Canadian weapon-makers sell their products to the Israeli security forces and in 2009 it was determined that Israel imported goods from more than 140 Canadian weapon-makers[12]. Economically, Canada’s position in the Palestine-Israel conflict is to trade, give credit, and provide aid through charities to both Palestine and Israel. Numerous economic agreements have been signed, such as the 1997 Canada-Israel Free Trade Agreement (CIFTA). Bilateral trade now amounts to 1.8 billion dollars annually, while direct investment between the two countries is about 3-4 billion dollars[13]. However, in 2006 aid and trade was cut off to Hamas when it was elected and many Palestinian organizations are labelled as terrorist groups, which makes trade and financial support illegal. Whether or not Canada should maintain this economic relationship with Israel is the issue of contention. The first policy option is to continue enhancing trade with Israel.
Policy Option #1: No Sanctions
This policy suggests that rather than implementing sanctions, Canada should enhance economic relations with Israel. This may be of benefit to Canada because of the economic interests involved from trading with Israel. The Middle East contains a large supply of resources and it may lead to other markets in the Middle East opening up for Canada. Israel’s economy is inextricably linked to the United States; therefore, increasing trade with Israel may lead to more ways of accessing American markets. Another reason for continuing trade with Israel is because if sanctions are implemented solely on Israel and not on Palestine then there will be a perception that we are biased towards Palestinians.
            In analyzing these arguments, it is evident that there are negative aspects to continuing trade. Firstly, the argument about increasing trade with the U.S. is unnecessary. Canada already has a free-trade agreement and in 2009 bilateral trade amounted to more than 1.2 billion dollars per day[14]. Especially since the 2008 financial crisis Canada should think more about creating counterweights to U.S. trade. Also the idea that trade with Israel is beneficial to Canada is not necessarily true, especially if considering the Arab League’s boycotts in 1954. These boycotts targeted not only direct Israeli businesses, but they had secondary boycotts with those that do business with Israel, and tertiary boycotts with businesses that shipped or flew to Israeli ports[15]. Although the boycotts have diminished greatly, it is important to note that “although [Israel] is an important trading partner, it does not compare to the Arab states”[16]. Israel only has seven million inhabitants; whereas, there are more than twenty-states in the Arab League with a combined population of more than 317 million people calculated in 2008[17]. Having Arab support is important not only for economic reasons but for diplomatic objectives, which was evident with Canada’s 2010 loss of the UN Security Council seat.
The second argument about not wanting to seem bias towards Palestinians should not be an issue because our trade with Palestine is what the Canadian government describes as “modest”[18]. There is no free trade agreement exclusively with Palestine; whereas, Israel has the Canada-Israel Free Trade Agreement (CIFTA). Although Canada agreed to the 1999 Joint Canadian-Palestinian Framework on Economic Cooperation and Trade with the Palestinian Liberation Organization, this is an inactive document and bilateral trade with the Palestinian Authority has been extremely limited. Since the election of Hamas in 2006, Canada has frozen economic relations with the Palestinian Authority and was the first to do so. Bill C-36 lists many Palestinian political parties as terrorists, which make it illegal to give Palestinian organizations, such as Hamas financial support[19].
In addition, Canada’s only significant source of aid to Palestine is a five year agreement signed in 2007 to give $300 million in aid[20]. Canada distributed some of the funding to the UN Relief and Works Agency (UNRWA), which provided aid to Palestinian refugees; however, in 2010 Canada cut off this funding and redirected the money to bolster Palestinian security. This aid was used to “support U.S./Israeli moves to create a Palestinian security/government apparatus to oversee Israel’s occupation”[21]. Creating stability in the region would be in the best interest of Israel because having militant groups suppressed would mean diminished security threats. Therefore putting sanctions on Palestine would not be a way to be more evenhanded and unbiased but instead it would cause further harm to Israel.
Policy #2: Sanctions
The second policy option is to implement sanctions on Israel, based on the Boycott, Divest, and Sanction campaign (BDS), which entails stopping Canadian trade, military support, and foreign investment with Israel. The BDS movement has gained popularity among people all over the world, including Israelis. During the Gaza Crisis, letters were sent to foreign Ambassadors in Israel by 500 Israelis, which called for “the adoption of immediate and restrictive measures and sanctions” and numerous Israelis supporting the boycott have done so under the label “Boycott from Within”[22]. These sanctions should remain in place until Israel recognizes its obligations to Palestinian people under international law, such as the dismantling of the Wall, the recognition of the “fundamental rights of the Arab-Palestine citizens of Israel to full equality,” and an end to settlement expansion[23].
 There are many reasons to support this policy of sanctions. Firstly, sanctions need to be implemented because Israel is not complying with international law and universal principles of human rights. This Canadian support of Israel is a method of complicity and acceptance of Israeli actions. There are political implications for Canada supporting Israel because if it is “supporting a security force that’s carrying out widespread human rights abuses, legally in international law before the International Criminal Court, Canada is participating in war crimes”[24].
An illustration of Israeli violations is reported in the UN Fact Finding Mission on the Gaza Conflict. The report determined that Israel conducted “deliberate attacks on civilian objects in violation of the rule of customary international humanitarian law whereby attacks must be strictly limited to military objectives”[25]. There were grave incidents where Israel destroyed infrastructure, water instillations, such as the Namar Wells, housing developments, sewage treatment, and food production[26]. The only flour mill, the Al Bader flour mill, was also bombed “for the purpose of denying sustenance to the civilian population, which is a violation of customary international law and may constitute a war crime”[27]. The Mission found numerous other examples of violations of international law, yet Canada still was the sole country to vote against a motion condemning Israels January 2009 massacre in the Gaza strip at the UN Human Rights Council.
Another issue is the construction of a wall that was built surrounding the Gaza strip as well as the West Bank. The International Court of Justice stated that “the construction of the wall being built by Israel, the occupying power, in the Occupied Palestine, including in and around East Jerusalem, and its associated regime, are contrary to international law”[28]. It says that Israel needs to stop building the wall and that “all states are under an obligation not to render aid or assistance in maintaining the situation created by such construction”[29] Canada has violated the advisory opinion by not pressuring Israel to dismantle the wall. It is crucial that Canada’s trading partners respect International law and it is obvious that Israel does not.
Canada’s support of Israel also damages our values of nuclear deterrence. Although Canada has implemented sanctions on Iran because of its developing a nuclear program, it still supports Israel, which has an undeclared stockpile of nuclear weapons. An example of this support is with Canada’s attempt to stop the UN nuclear assembly from making Israel open its nuclear facilities to UN inspection and sign up to the non-proliferation treaty.
The second reason to implement sanctions on Israel is because it would also work to reduce the threat of terrorism in Canada. If the government focuses on “addressing the roots of the campaigns of hatred, not only can we reduce the threats we face but we can also live up to ideals that we profess[30]. Therefore, ending our financial support of Israel would be a way to end complicity in the conflict, thus giving terrorist groups less motivation to target Canada.
The third reason is that sanctions could be a valuable tool to pressure Israel in the peace talks. Since Israel has refused to reinstate the freeze on settlement construction, taking away financial support could lead others to do the same. Diplomatic pressure has not been effective; therefore, “the reason the BDS strategy should be tried against Israel is practical: in a country so small and trade-dependent, it could actually work”[31]. The threat of economic pressure could be enough incentive to lead to a continuation of the talks.
The last reason supporting economic sanctions is because of the problems with the current economic agreement, namely the Canada-Israel Free Trade Agreement (CIFTA). A major issue with CIFTA is that it legitimizes Israel’s control of the entire region because it includes the Gaza strip and the West Bank in the agreement as a part of Israel. The European Union’s agreement makes distinctions and follows internationally recognized borders, which do not include the territories with settlements, such as the West Bank, East Jerusalem, or the Golan Heights. The goods produced in these settlements do not receive preferential treatment and they are even required to provide a certification of origin so that consumers are aware about the origins of the product so that a distinction could be made between goods produced in Jewish settlements in the Occupied Territories and goods produced in Israel. This is a way that the EU discourages these settlements through economic policies and Canada is lacking. These agreements need to be removed and sanctions need to be put in place in order to act in accordance with Canadian values.
There are still arguments as to why putting sanctions on Israel is not an effective and realistic policy. Sanctions may have a limited effect on Israel because of the strong role of the U.S. In 2009, bilateral trade between the U.S. and Israel amounted to 28 billion dollars; whereas, Canada-Israel trade only amounted to 3-4 billion dollars. Therefore, it is doubtful that Canada can enact change because Israel is not dependent on Canadian trade but rather “any real chance for a political settlement…depends on the United States”[32]. The second issue is the difficulty in passing the legislation on sanctions because the Israeli lobby has a strong hold on the Canadian government. This policy may strain Canada’s relationship with its allies, such as the United States, who have significant trade with Israel.
Despite these arguments, putting sanctions on Israel is the optimal policy choice for a variety of reasons. Overall, it is true that the effects will be minimal because of the role the U.S. has played; however, focusing primarily on American support for Israel…are other ways of shirking our responsibility”[33]. Although Canada’s actions most likely will not result in the resolution of the Palestine-Israel conflict; this does not mean the policy is not worthwhile. It would be symbolic and effective on Canadian policy because by refusing to be complicit in violating international human rights and laws, Canada will be able to reestablish its identity as a peacekeeping state. Canada’s role as a mediator may be enhanced as a result of this policy, which shows that “there are small and middle-sized players in addition to large players in the diplomacy game and that Canada’s role need not be compared to that of the United States”[34]. This policy is a contribution and a way to show the world that Canada is supportive of an Israeli state, yet not to the extent that it violates our values.
Secondly, passing the legislation may not even be an issue because there has been evidence that the “Jewish Lobby has had little influence in the development of Canada’s Middle-East foreign policy” and rather that national and economic interests are a major factor[35]. Despite this argument, it is still evident that “decision-makers are no longer shielded from the pressures and preferences emanating from civil society”[36]. There are certain steps that Canada can take to counter a strong pro-Israel lobby in Ottawa. Canada throughout the years has cut funds to pro-Palestinian groups, such as Kairos Canada and the Canadian-Arab Federation. Funding needs to be reinstated for groups such as these becausewe need to create a political climate where supporting the killing of Palestinians and stealing their land is no longer acceptable[37]. The changing of public opinion makes passing legislation easier.
The policy could still have a significant effect on Israel, especially if other countries reinstate the BDS movement. Economic actions may be a way to influence Israel and the multiple forms of aid this country provides Israel, and that countrys dependence on foreign support, make it important to devote significant political energy to weakening Canadas support for Israeli belligerence[38]. Canada’s economic interests, international reputation or fear of retaliation by different actors, such as the United States, should not be enough to allow Canada to violate its values and principles. Fear of reaction is not necessary because Canada is America’s largest supplier of energy; therefore it not an adequate excuse for not taking a strong stance on the issue[39].
In conclusion, this paper has presented two options for Canada to deliberate on concerning its economic position in the Palestine-Israel conflict. The proposed and recommended policy option is to implement sanctions on Israel, based on the BDS movement and until Israel fulfills its obligations to Palestinians under international law. This policy is beneficial because     it allows Canada to not contradict its own values, it improves domestic security, and it resolves issues with agreements, such as CIFTA. The implementation of this policy is important because Canada and “those outside can help substantially to ease the way, though not until they are willing to face honestly their own roles and responsibilities”[40]. The policy of economic sanctions is instrumental to allow Canada to address legitimate grievances and to adhere to international law.


[1] Noam Chomsky, Interventions (New York: City Lights Books, 2007)  3.
[2] “Tories Blame Ignatieff for Losing UN Seat” CTV Globe Media. Tues. Oct.12 2010. http://www.ctv.ca/CTVNews/TopStories/20101012/security-council-vote-101210/
[3] Thomas H.Kean and Lee H. Hamilton, Without Precedent: The Inside Story of the 9/11 Commission  (New York: Random House, 2006)246
[4] Chomsky 38
[5] Yves Engler, Canada and Israel: Building Apartheid (Vancouver: Fernwood Publishing Company, 2010) 9.
[6] CBC News, “Mideast Clashes Erupt as Peace Talks End” The Canadian Press, 15 Sept.2010. <http://www.cbc.ca/world/story/2010/09/15/middle-east-peace-talks-abbas-netanyahu-clinton.html>
[7] CBC News
[8] Paul Heinbecker, Bessma Momani, Canada and the Middle East: in Theory and Practice ( Waterloo: Wilfred Laurier University Press, 2007) 3.
[9] Canadian Policy on Key Issues in the Israeli-Palestinian Conflict, Foreign Affairs and International Trade Canada, <http://www.international.gc.ca/name-anmo/peace_process-processus_paix/canadian_policy-politique_canadienne.aspx?lang=eng>
[10] Engler 9
[11] Peyton Lyon, Canada’s Middle East Tilt (International Perspectives, 1982) 3.
[12] Engler 61
[13] Foreign Affairs and International Trade Canada, “Canada’s International Market Access Report – 2008 Chapter 10 Opening Doors in Other Markets” 14 July. 2009. <http://www.international.gc.ca/trade-agreements-accords-commerciaux/cimar-rcami/2008_10_08.aspx?lang=eng>
[14] Congressional Research Service “Canada-US Relations” 3 Sept. 2010. <http://www.fas.org/sgp/crs/row/96-397.pdf> 21.
[15] Constance A. Hamilton, Effects of the Arab League Boycotts on US businesses (Washington: Diane Publishing Company, 1994) 2.
[16] Engler 136
[17] Cris E. Toffolo, The Arab League (New York: Infobase Publishing,2008) 8.
[18] Canada-West Bank/Gaza Strip relations, Government of Canada. 2009 http://www.canadainternational.gc.ca/west_bank_gaza-cisjordanie_bande_de_gaza/bilateral_relations_bilaterales/canada-wbg-cg.aspx?lang=eng
[19] Engler 52
[20] Engler 104
[21] Engler 105
[22] Naomi Klein, Israel: Boycott, Divest, Sanction (2009) 1.
[23] Engler 143
[24] Matt Gardner, “Jon Elmer Slams Canadian Policy on Israel-Palestine” Kingstonist <http://www.kingstonist.com/2010/03/06/jon-elmer-slams-canadian-policy-on-israel-palestine/>
[25] Human Rights Council, Human Rights in Palestine and Other Occupied Arab Territories: Report of the United Nations Fact Finding Mission on the Gaza Conflict <http://www2.ohchr.org/english/bodies/hrcouncil/specialsession/9/docs/UNFFMGC_Report.PDF> 11.
[26] Human Rights Council 17
[27] Ibid
[28] International Court of Justice, Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory,  9 July, 2004 <http://www.icj-cij.org/docket/index.php?pr=71&code=mwp&p1=3&p2=4&p3=6&case=131&k=5a>.
[29] Ibid
[30] Chomsky 5
[31] Klein 2
[32] Chomsky 63
[33] Engler 142
[34] David Taras, The Domestic Battleground:Canada and the Arab-Israeli Conflict (Montreal: Queen’s University Press,1989)  4.
[35] Adam Cutler, Canada’s Middle East Policy and the “Jewish Lobby,” Canadian Jewish Journal, <http://web2.concordia.ca/canadianjewishjournal/pdf/adam_cutler.pdf>  2.
[36] Taras 5
[37] Engler 10
[38] Engler 142
[39] Congressional Research Service, “Canada-US Relations,” 3 Sept.2010  <http://www.fas.org/sgp/crs/row/96-397.pdf>  20.
[40] Chomsky 33

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