Cola wars on the Gaza Strip

Each franchise is supposed to be restricted to serving its own set of customers on either side of Israel’s pre-1967 border known as the Green Line. But business is far from that simple. Coke trucks from each franchise cross into each other’s territory daily. The Palestinian plant needs supplies from Israeli ports and warehouses; the Israeli plant has to deliver to Jewish settlements in the West Bank and Gaza. The blurred border enables a small blackmarket of private contractors who sell their products to merchants on opposite sides.

Competing versions of the same product are readily available at a small Arab grocery store in East Jerusalem, hidden away on stockroom shelves. The owner, Imad Ghaith, said he drinks Palestinian Coke at home, but acknowledges that most of his customers prefer the Israeli product, even though it is more expensive. ‘‘People think that the Israeli Coke is western and therefore better than ours,’’ Ghaith said. ‘‘They are the same. I think people are crazy.’’

Jorg Hartmann has spent the past two decades managing cigarette factories and distributors in conflict zones. He took over as general manager of Coke’s Ramallah plant in April 2003, and describes the conditions he knew in Bosnia and West Africa as easier than here. His fleet of vehicles has to include trucks licensed for Israelis, who use yellow car tags; other vehicles licensed for Palestinians, who use green tags; others for drivers who are Israeli-Arab, who can travel on Israeli roads. The licenses are issued to specific pairings of trucks and drivers, and have to be renewed every few months.

Hartmann’s counterpart in Tel Aviv, Ofer Yanku, general manager of Central Bottling Company, declined comment about the difficulties. His spokesman, Paul Solomon, said only, ‘‘We try to stay away from the political situation.’’ Yanku and Hartmann report to managers at Coke’s regional offices in Greece and Germany. Those managers too were reluctant to talk, saying in written statements that Coke was scrupulously neutral in the Israeli-Palestinian conflict, citing as evidence the fact that ‘‘we are present in Israel and the Palestinian territories.’’

The Coca-Cola Co. began operating in Israel in 1968, setting up a franchise called Central Bottling Co., which bottles Coke, Nestea, Fanta and Sprite. It employs about 2,000 workers, and until 1998 served Israelis and Palestinians. The Arab League led a boycott of American products after the 1967 Arab-Israeli war, effectively banning distribution of Coke in Arab countries. The boycott lasted until 1990, but was extended for two years in the West Bank and Gaza.

Palestinians drank a locally produced soft drink called Club Cola, which was made in the same plant that Coke now uses in Ramallah. The Palestinian Coke plant, called National Beverage Company, opened in 1998 after an interim peace accord granted the Palestinian Authority autonomy over several West Bank cities and parts of Gaza. In addition to Coke, it produces Fanta and Sprite and employs 200 people. It is owned by a consortium of Palestinian businessmen led by Zahi Khouri, who took a chance that peace could lead to profit.

‘‘There was a political agreement between two powers to end a conflict,‘‘ Khouri said. ‘‘The idea was to set up two economic entities. That is how one builds a nation… The Palestinians don’t need faint business owners. They need bold ones.’’ He said that two weeks before the US invaded Iraq, men he described as ‘‘hoodlums’’ threw a firebomb at a Coke billboard in Ramallah. The next day, an Islamic group condemned the attack and praised Coke and other American companies in the West Bank. ‘‘The Palestinian society is very mature,’’ Khouri said, noting that the incident has been the only act of violence against his company. ‘‘They know that we employ over 200 people and indirectly support thousands.’’

Coca-Cola’s Internet site — managed by officials at corporate headquarters in Atlanta — has a section devoted to dispelling ‘‘Middle East rumors’’, such as that Coke ‘‘is a Jewish company’’, or that the company once donated a day’s worth of salaries to victims of attacks by Palestinian militants. It also has faced criticism by sponsoring events in the West Bank, seen as an expression of support for Palestinian militants. The Israeli franchise appears careful about what events it promotes. Activities listed on its Internet site include after-school programmes for the children of abused women, computers in classrooms and basketball tournaments.

— (LAT-WP)