VZCZCXYZ0001
PP RUEHWEB

DE RUEHCP #0352/01 0800527
ZNR UUUUU ZZH
P 210527Z MAR 06
FM AMEMBASSY COPENHAGEN
TO RUEHC/SECSTATE WASHDC PRIORITY 2128
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS COPENHAGEN 000352 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
E.O: 12958: N/A 
TAGS: ECON PREL ETRD PHUM IS DA
SUBJECT: ANTI-ISRAEL CLAUSES - LESS THAN MEETS THE EYE 
 
¶1.  (U) Summary:  In the context of domestic Danish politics 
following the Mohammed cartoon crisis, it has become known 
that some Danish firms accept the use of anti-Israel clauses 
in trade agreements with certain Muslim countries.  The 
government of Prime Minister Anders Fogh Rasmussen, despite 
considerable irritation with Danish business for pressing 
the government to distance itself more clearly from the 
publication of the cartoons, joined the business community 
in downplaying the use and significance of anti-Israel 
clauses.  Unlike the United States, Denmark has no 
legislation explicitly prohibiting the use of such clauses 
in trade agreements.  End Summary. 
 
¶2.  (U) Jyllands-Posten, the Danish newspaper which 
published the Mohammed cartoons, reported in late February 
that a handful of Danish firms have signed anti-Israel 
clauses when doing business in the Middle East.  The story 
surfaced just when domestic political wrangling over the 
Mohammed cartoon crisis was escalating.  On February 27, PM 
Fogh Rasmussen publicly accused broad circles in Danish 
corporations, culture and media of failing to support 
freedom of expression during the controversy.  This opened a 
broad fissure between the government and business leaders, 
and exacerbated tensions between Fogh Rasmussen's Liberal 
Party and its junior coalition partner, the staunchly pro- 
business Conservative Party.  In this context, the 
allegations of craven Danish business practice, and the 
implication of government acquiescence, generated 
considerable public attention. 
 
¶3. (U) The dairy producer Arla admitted having active 
contracts with clauses that no ingredients produced in 
Israel are used in the production of Arla's exports to Arab 
countries and that shipments are not sent through Israel. 
Furthermore, it is clear that at least four Danish firms 
agreed to participate in some form of boycott of Israel in 
return for trade with Iraq in 2000-2001: 
 
-- Bruel & Kjaer, a manufacturer of sound and vibration 
equipment, signed a clause that its goods did not include 
any parts, raw materials, labor or capital of Israeli origin 
and that the goods did not pass through Israeli ports; 
 
-- The pharmaceutical producers Maquet and Leo Pharma signed 
clauses prohibiting trade or transport through Israel; 
 
-- Bukkehave, a firm supplying vehicles and spare parts to 
international organizations and companies working in 
developing countries, signed a clause to "abide by and 
comply in all respects with the rules and instructions 
issued from time to time by the Israel boycott office in 
Iraq." 
 
¶4. (U) These companies downplay the significance of the 
clauses.  Arla states that despite signing the clauses, it 
has never boycotted Israel and trade with Israel has been 
increasing.  Leo Pharma no longer maintains these clauses 
but says they were previously a condition for selling 
medicine in the Middle East.  Leo Pharma has maintained 
regular trade with Israel despite the clauses.  Bukkehave 
states that the agreement was signed at a local level. 
 
¶5. (U) Post approached some of the main business 
organizations in Denmark for their views on the prevalence 
of anti-Israel clauses.  According to the Confederation of 
Danish Industries (DI), the use of such clauses is limited 
at present and is diminishing in line with increasing Arab 
WTO membership.  DI Director Joergen K. Hansen said that 
"the boycott has on several occasions been discussed in 
parliament.  DI has always been opposed to this form of 
special restriction and has supported attempts to find a 
solution at the EU level."  DI paints a picture of an 
unofficial policy in some parts of corporate Denmark to sign 
the anti-Israel clauses but disregard them and continue 
trading with Israel, often through other subsidiaries in the 
group.  Danish Shipowners' Association official Ren Pihl 
Pedersen says the Danish shipping industry does not sign 
anti-Israel clauses and that "the problem has been on the 
decline for years and is almost non-existent at present." 
 
¶6. (U) Ambassador Svend Roed Nielsen of the MFA's Danish 
Trade Council says that the anti-Israel clauses have a long 
history but are rarely used at present except in trade with 
Syria and Libya. "We have informed companies that the 
boycott is clearly violating international trade standards 
but there is no Danish law prohibiting the companies from 
signing the clauses," Nielsen states. 
 
¶7. (U) When asked by the Danish press for a public comment 
on the acceptance of anti-Israel clauses by Danish firms, 
 
the American Israel Public Affairs Committee (AIPAC) 
provided the following standard reaction: "Agreeing to 
boycott Israel in exchange for business in the Arab world 
reinforces Arab racism against Israel, demonstrates highly 
unethical business practices. and may be in violation of WTO 
rules.  Danish companies should be particularly sensitive to 
this at a time when they are being targeted as well with 
unfair boycotts." In a follow-up comment to post, AIPAC's 
Director of Media Affairs Joshua Block stated that "AIPAC 
sees the response as a pretty minor thing: a comment on 
something so basic as the Arab boycott." 
 
¶8.  (SBU) Comment: It may not be wholly coincidental that 
this story of questionable Danish business practice in the 
Middle East emerged just as political waters were roiling 
over the Mohammed cartoon crisis.  Post's inquiries support 
the view that the acceptance by the Danish business sector 
of anti-Israel clauses in trade agreements is limited and 
diminishing.  In cases where they have been signed, firms 
appear to ignore these clauses in practice.  Despite the 
absence of legal prohibitions, neither the government nor 
the Confederation of Danish Industries offers support or 
comfort to firms that have entered into such arrangements. 
Post will continue to monitor the issue. 
 
CAIN