Occupation Profiteering: The SodaStream Model for Success

January 21, 2014 IMEU
Occupation Profiteering: The SodaStream Model for Success
  • SodaStream International Ltd. is an Israeli company that produces carbonization devices and syrup for making soft drinks at home. In recent years, it has become the target of human rights activists because its main production facility is located in an industrial park, Mishor Edomim, in the Israeli settlement of Ma'aleh Adumim on Palestinian land in the occupied West Bank.
  • According to international law, as an occupying power Israel is forbidden from altering the occupied territories in any way, including through the construction of settlements and industrial parks, except for reasons having to do with military necessity or to benefit the occupied population specifically.
  • Although SodaStream officials and their defenders often claim that the company benefits Palestinians economically, SodaStream pays taxes to Israel, not to the Palestinian Authority. SodaStream and other companies located in settlements also directly support Israel's illegal settlement enterprise by paying taxes to local municipal settler governments, which are used exclusively for the growth and development of those settlements. Ma'aleh Adumim, where SodaStream's main factory is located, is of particular strategic importance to Israel's plans for the occupied territories, forming part of a ring of Jewish settlements around occupied East Jerusalem that sever it from the surrounding West Bank, and jutting deeply into the latter, effectively cutting it into two parts more easily controlled by the Israeli military. (See here for map of settlements around East Jerusalem, including Mishor Edomim.)
  • While, technically, Palestinians who work in settlements are largely covered by Israeli labor laws, there is little enforcement of labor regulations in settlements. As a result, Palestinian workers, including women and children, are frequently exploited by Israeli employers.
  • SodaStream’s Mishor Edomim factory has been the subject of numerous complaints by Palestinian workers over the years, having to do with low wages, discrimination, and poor working conditions. In 2008, Palestinian workers staged a protest at the factory after the contractor that hired them refused to improve working conditions or raise their pay, which amounted to less than half the legal minimum wage at the time. Seventeen workers were fired before they were rehired following unflattering press coverage and pressure from NGOs. However, in a 2010 report, Israeli NGO Kav LaOved, which works on labor issues, noted that Palestinian workers at SodaStream’s Mishor Edomim plant continued to be “at the bottom of the hierarchy in the factory and remain fearful of dismissal.”
  • Palestinians who work for SodaStream and other companies that operate in settlement industrial parks also face severe restrictions on their movements and their ability to organize to protect workers’ rights. They have to be approved and obtain special permission from Israel's General Security Service (Shabak). As noted in a report issued by Israeli NGO Who Profits?, “Their dependence on these permits limits the workers’ employment choices and makes organizing almost impossible.”
  • In addition to a pool of cheap Palestinian labor and minimum enforcement of labor regulations, SodaStream and other companies that operate in settlement industrial zones enjoy low rent, tax incentives and other forms of government support, as well as lax enforcement of environmental laws. All settlement industrial parks are defined as Priority Area A by the Israeli government, which qualifies them for special tax deductions. As noted by Who Profits?:
    “These tax deductions are usually offered as incentives for the development of businesses in areas of the country which are far from the major Israeli urban centers; but the main settlement industrial parks are a short driving distance from Israel’s urban centers, and this gives them a competitive advantage over industrial areas inside the State of Israel.”
  • SodaStream has a history of mislabeling its products as “Made in Israel,” to avoid controversy and boycotts of settlement products.
  • SodaStream stock has been billed as a hot property since the company went public on the NASDAQ in November 2010. However, in January 2014 the price of SodaStream shares plunged after the company reported preliminary earnings that failed to achieve analysts’ estimates.
  • The drop in stock price came shortly after SodaStream announced that it had hired actress Scarlett Johansson as a spokesperson. In response to Johansson’s endorsement of SodaStream, Mark Goldring, the chief executive of Oxfam UK issued a letter stating that, while Johansson has been an Oxfam “celebrity ambassador” since 2005:
    “Oxfam is opposed to trade from Israeli settlements, in which Sodastream is engaged. Israeli settlements are illegal under international law and have a devastating effect on the lives and livelihoods of the Palestinian communities that Oxfam works with. Trade with businesses operating in settlements exacerbates the ongoing poverty and denial of Palestinians’ rights that Oxfam addresses in its work.”
    “We have made our concerns known to Ms. Johansson and we are now engaged in a dialogue on these important issues.”

BY THE NUMBERS

  • SodaStream opened its Mishor Adumim facility in 1996.
  • Mishor Adumim is one of 17 Israeli industrial zones in the occupied West Bank.
  • SodaStream employs 442 Palestinians from the occupied territories and 237 Palestinian citizens of Israel at its Mishor Adumim factory.
  • Ma'aleh Adumim has a population of about 40,000 settlers, making it the largest settlement in the occupied West Bank.
  • On January 13, 2014, SodaStream reported preliminary results for its 2013 earnings, which included revenue of $562 million, adjusted net income of $52.5 million, and net income of approximately $41.5 million.
  • Overall, SodaStream's stock dropped 11% on the NASDAQ in 2013.

MORE INFORMATION

  • SodaStream opened its Mishor Adumim facility in 1996.
  • Mishor Adumim is one of 17 Israeli industrial zones in the occupied West Bank.
  • SodaStream employs 442 Palestinians from the occupied territories and 237 Palestinian citizens of Israel at its Mishor Adumim factory.
  • Ma'aleh Adumim has a population of about 40,000 settlers, making it the largest settlement in the occupied West Bank.
  • On January 13, 2014, SodaStream reported preliminary results for its 2013 earnings, which included revenue of $562 million, adjusted net income of $52.5 million, and net income of approximately $41.5 million.
  • Overall, SodaStream's stock dropped 11% on the NASDAQ in 2013.
  • SodaStream: A Case Study for Corporate Activity in Illegal Israeli Settlements (Report by Who Profits?, January 2011)

photo: Mishor Adumim Industrial Park (Wikipedia)