At the turn of the 20th century, Jews began to flee Europe to escape persecution that would eventually escalate into genocide. Many of them sought refuge in the ancient homeland of the Jewish nation – which the Romans had re-named “Palestine,” and which Great Britain was authorized to administer under a mandate from the League of Nations. Many Arabs, both in Palestine and in neighboring countries founded following the collapse of the Ottoman Empire, opposed Jewish immigration despite the fact that the territory was sparsely populated.

During the Fifth Palestine Arab Congress in 1922, Arab leaders encouraged an official boycott of Jewish businesses, as they would at subsequent conferences. Palestinian groups launched attacks against Jewish businesses and immigration in 1929 and again from 1936-1939 during what later became known as the “Great Revolt.” In 1938, Jews in Germany also became the targets of pogroms, violent attacks on Jews and Jewish-owned businesses, known as Kristallnacht (“The Night of Broken Glass”) for the smashing of glass windows. In 2019, the German parliament passed a resolution charging that the BDS campaign had revived the Nazi motto “Don’t buy from Jews.”

On December 2, 1945, three years before Israel’s founding, the newly founded League of Arab States sought to address “the Zionist danger” by enacting a general boycott of the Jewish presence in Palestine. After the creation of the State of Israel in 1948, the Arab League intensified its efforts, launching a three-pronged campaign. The primary boycott forbade Arab states, including their businesses and citizens, from trading with Israel. This campaign expanded in 1950, adding a secondary boycott that banned Arab countries from engaging with companies that did business with Israel. The League even created a blacklist for companies caught doing business with Israel. Finally, a tertiary boycott forbade commerce with companies that engaged with corporations on the blacklist. To oversee implementation of the boycott, the Arab League created a Central Boycott Office in Damascus, Syria, in 1951. Egypt’s embargo on Israeli maritime trade passing through the Suez Canal and the Gulf of Aqaba proved the most effective element of the boycott prior to 1979, when Egypt and Israel signed a peace treaty.

International corporations varied in their responses to the boycott. While Japanese companies including Bridgestone, Fuji-Telecommunications, Hitachi, Kawasaki, and Toshiba adhered to the boycott, Sony and Subaru continued their operations in Israel. In 1966, the Arab League blacklisted the American firm RCA Records for granting a license to the Israeli record company Hed Artzi. RCA consequently lost 90 percent of its business in the Arab world. In July 1964, the Central Boycott Office threatened to exclude Chase Manhattan Bank for facilitating Israel’s bond issues in the United States, but Chase withstood the pressure and went on to operate in both Israel and the Arab world. American Express and French automaker Renault vacillated between compliance and non-compliance with the boycott.

Angered that the Arab world was trying to dictate how America did business, the U.S. Congress eventually stepped in. Members especially resented the Arab League’s demand that companies doing business in the Middle East not employ Jews. Notably, in December 1963, Arab League pressure forced the resignation of Lord Mancroft, a Jewish director of the Norwich Union Insurance Society of England. A Damascus-based spokesperson for the boycott warned of consequences for “companies which had Jewish money.” Congress passed various resolutions that opposed the boycott but lacked specific penalties. Several state legislatures and municipalities also passed laws prohibiting compliance with the Arab League boycott. A 1965 amendment to the Export Control Act went a step further, declaring it to be U.S. policy to oppose anti-Israel boycotts and requiring companies to report boycott requests to the U.S. Department of Commerce’s Office of Export Control. Successive administrations opposed more forceful anti-boycott legislation.

The Arab League boycott reached its zenith with the 1973 Arab oil embargo, initiated after Washington sent military equipment to Israel that helped turn the tide of the Yom Kippur War. Afterwards, several oil-rich Arab states refused to sell oil to the United States, Israel, or other countries perceived to be friendly to the Jewish state. Though the embargo lasted only five months, it caused a global financial crisis.

The embargo left Washington little choice but to fight back. In January 1976, the U.S. Department of Justice filed a civil action against Bechtel Corporation for violating the Sherman Antitrust Act by taking part in the Arab League boycott. Bechtel agreed to settle in 1977. In May 1976, the Securities and Exchange Commission filed a complaint against General Tire and Rubber Company for violating federal securities law by failing to disclose payments the firm had made to be removed from the Arab League blacklist. The company settled the lawsuit and acknowledged that it paid $150,000 to end its exclusion from Arab countries.

The Arab League boycott became a major issue during the 1976 presidential campaign, with challenger Jimmy Carter complaining that incumbent President Gerald Ford was not doing enough to counter it. True to his pledge, President Carter supported measures such as the Ribicoff Amendment to the Tax Reform Act of 1976 and the Export Administration Act (EAA) of 1977, which penalized American companies complying with the boycott. The EAA created the Office of Antiboycott Compliance within the Commerce Department’s Bureau of Industry and Security to oversee the U.S. response to boycott attempts. After the EAA lapsed in 2001, its anti-boycott and other provisions were kept in force for 17 years by an executive order issued pursuant to the president’s authorities under the International Emergency Economic Powers Act. In 2018, Congress passed, and President Donald Trump signed into law, the Export Control Reform Act, which contains anti-boycott provisions nearly identical to those contained in the EAA.

The Commerce Department has levied fines on companies for complying with the Arab League boycott. In 1983, Citibank agreed to pay a fine of $323,000, while Sara Lee and Safeway settled in 1988 for $725,000 and $995,000, respectively. The Commerce Department continued anti-boycott enforcement in the 1990s, with settlements of $1.4 million by L’Oreal and $6 million by Baxter International.

The Arab League campaign ultimately petered out because each member state determined the extent of its own participation and because the League had no enforcement mechanism. Moreover, the boycott included many loopholes that allowed businesses to sell both to Arab countries and to Israel. And when the boycott did succeed, it prompted resentment among the affected countries.

The overall impact of the Arab League boycott is exceptionally difficult to assess. It is hard to discern which companies left the Israeli market for legitimate economic reasons unrelated to the boycott pressure. It is even harder to gauge which companies avoided the Jewish state altogether because of the boycott. In the end, the boycott clearly failed to prevent the growth of Israel’s economy, which registered double-digit annual growth over many years. The value of Israeli exports rose at a similar rate, although they could not keep pace with Israel’s imports. One historian of the boycott concludes, “All one can say with any certainty is that in the absence of the boycott, Israel’s balance of trade problems would probably not have been so severe.”

Ultimately, the optimism surrounding Arab-Israeli peace ventures proved to be the boycott’s undoing. In 1980, shortly after signing the Camp David peace agreement with Israel, Egypt left the boycott. As one of the most powerful Arab states and the one responsible for enforcing restrictions on Israeli commerce in the Suez Canal, Egypt’s departure represented a major blow to the boycott. In 1994, after the signing of the Oslo Accords, several Arab Gulf states stopped enforcing secondary and tertiary boycotts. In 1995, Jordan and the Palestinian Authority left the boycott as a consequence of U.S.-brokered peace with Israel. As the United States pursued additional peace agreements, Israel expanded commercial and diplomatic ties with Arab countries. Today, Israel’s quiet engagement with countries such as Saudi Arabia, Bahrain, and the United Arab Emirates has all but killed the Arab League boycott.