The United States Commerce Department is enhancing penalties for companies engaging in the Arab League’s boycott of Israel, a fading remnant of the Arab world’s isolation of the Jewish state.

Matthew Axelrod, assistant secretary of commerce for export enforcement, unveiled the Biden administration’s new rules at a meeting of the American Jewish Committee (AJC) in Washington last Thursday.

In addition to increased penalties for boycott participation, companies and individuals will have to admit to violations before attempting to settle charges. The new rules also subject U.S. companies to fines if their foreign subsidiaries participate in the boycott

“Anti-Semitism too often manifests itself in attempts to delegitimize Israel through conspiracy theories and through discourse that dehumanizes Jewish people,” Axelrod said. “I want to ensure that we in the Commerce Department are doing what we can to have the strongest possible anti-boycott enforcement program.”

The U.S. Congress made compliance with the boycott illegal in 1977. U.S. companies and individuals face criminal and civil penalties for participating in it. Additionally, companies are required to inform the Commerce Department if they are asked to participate in the boycott. The law covers any foreign government-imposed boycott of a U.S. ally but has generally been applied to instances involving Israel. 

“Despite warming relations some Arab nations have with Israel, the Arab League needlessly persists in this boycott, which has done nothing to hinder Israel from becoming an economic powerhouse in the Middle East,” said former congressman and new AJC CEO Ted Deutch. 

The Arab League boycott dates back to 1945, before the establishment of the State of Israel, when the League organized a boycott of the Yishuv, the Jewish community in British Mandatory Palestine.

Starting with Egypt in 1979 and continuing through the Abraham Accords, the great majority of the 22-member Arab League either developed relations with Israel or don’t actively enforce the boycott, which experts say costs the Arab world as much, if not more, in lost trade and investment value than Israel.

Syria, Lebanon and Iraq are the only active observers of the boycott, with the Iraqi parliament in May passing a law that criminalizes normalization of relations with Israel. Syria still enforces secondary and tertiary penalties against any entity worldwide that does business with Israel and prohibits its nationals from doing business with any company that deals with companies that have been blacklisted by the Arab League.

“This recent doubling down on anti-Israeli sentiment by countries like Syria and Iraq comes at a time of shocking growth in anti-Semitism—what AJC notes as the world’s oldest hatred—more broadly, both here in the United States and around the globe,” Axelrod said.

He clarified at Thursday’s AJC event that the new rules would not generally apply to companies participating in the BDS movement. Existing federal anti-boycott laws apply only to boycotts enforced by foreign governments targeting U.S. allies.

He added that the Commerce Department has yet to be presented with a case of a foreign government enforcing a boycott only of Jewish communities in Judea and Samaria, rather than within internationally-recognized Israeli territory, and would not reveal how his department might process such a case.

“We applaud the Commerce Department’s efforts to sanction American firms that bow to the demands of, or seek to curry favor with, boycotting nations,” said Deutch. “They must be held accountable for activities that help spread anti-Zionist sentiment.”

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