Why Seven-Up bottled out of the Gaza franchise: A Palestinian family's soft-drinks enterprise was built up and cast down by the fortunes of war. Dependence on Israel exacted a cruel price
Friday 14 May 1993
Mohamed Yazegi, manager of the Seven-Up Bottling Company, the largest and oldest factory in the Israeli-occupied Gaza Strip, says people should know and should care if they want to find peace in the Middle East.
Israel's peace efforts have recently begun to focus on Palestinian business. In a big policy shift, the state is promising to promote economic self-sufficiency for Gaza and the West Bank, investing pounds 50m in infrastructure. But to Mr Yazegi such promises are as idle as the lines of green bottles whose contents fizz quietly beside him in the sun. He knows what is needed to bring life to the Palestinian economy: an end to lawlessness and an end to the occupation.
He points to destroyed machinery, the work of Israeli saboteurs. And on his desk sits an affidavit, filed in a New York court: Seven-Up Bottling Company vs Pepsi Cola International Ltd, of New York. The parent company is pulling out of Gaza, refusing to renew Mr Yazegi's franchise.
Levering the top from his bottle of pop, the Seven-Up manager tells his tale. The family have lived in Gaza for generations. Citrus is Gaza's natural bounty and, in the early 1950s when Gaza was under Egyptian control, Mohammed's father, Tawfiq, started bottling juice. 'He used a hand-operated machine - a British one,' he says. The family launched its own 'Gaza Cola', and in 1962 Seven-Up International approached the enterprising Yazegi family and offered them a fizzy-drink franchise. 'In the 1960s, business was good here,' says Mr Yazegi, summoning up unfamiliar images from the past, of another Gaza bustling with commerce. 'The seas were open and ships bringing raw materials docked at Gaza port.'
With the advent of Israeli military rule following the 1967 war, the factory was crippled. But in 1975, Seven-Up International renewed the franchise again and new markets were found. Seven-Up had spotted potential for profit in Israel and seen how to use the Gaza bottlers to exploit it. An Arab trade boycott, in force against Israel since 1967, meant Seven-Up could not offer a franchise to an Israeli company for fear of being blacklisted in the Arab world. But because the Yazegi family was able to trade across the Israeli lines, Seven-Up could circumvent the boycott.
The entire Palestinian economy began to depend on Israel during the 1970s and 1980s as more and more Palestinians were encouraged to work in Israel. In the 1980s one-third of Gaza's income was generated though earnings in Israel, one-third through money sent back to relatives from Palestinians working in the Gulf, and one-third through the citrus trade. Israeli occupation discouraged the growth of indigenous Palestinian industry, and with its international franchise Seven-Up Bottling became one of few factories of any size operating inside Gaza.
But the Yazegis too became dependent on Israel. All materials were imported from Israel and by the mid-1980s 40 per cent of the factory's trade was done in Israel.
When Pepsi bought Seven-Up in 1986 the Gaza factory was in profit and the franchise was renewed. Then began the decline. First, in 1987 came the intifada, the Palestinian uprising. 'We never knew when the strikes or the curfew would come. It was very hard,' says Mr Yazegi. Next came the Gulf war and the eviction of Palestinian workers, lopping one-third off Gaza's earnings. The Gulf war was responsible for a further blow to the Yazegis: it weakened the power of the Arab trade boycott. In December, Pepsi decided to end the unprofitable Gaza franchise and offer the deal to an Israeli company.
Betrayal hangs in the air at Seven-Up Bottling Company. But it is not only the US parent that is severing ties: Israel is trying to cut and run. Last month, following a rise in Palestinian attacks, Israel closed itself off to Palestinian workers and another third of Gaza's income has been lost.
Rising debt brought about a new dependency - on loans from Israeli banks, which have a way of calling in debts with brute force. Three weeks ago, with the Strip under curfew, Mr Yazegi was called to his factory at 11pm to find 20 Israeli soldiers and a number of unidentified civilians armed with massive cutters and six trailers. They had broken down the gate and locked up the elderly guards. 'They did not even ask for the keys,' says Mr Yazegi. They cut electric connections, removed computer disks, spilt files and removed machinery.
'They took the new line for non-returnable bottles. There was a big demand for this in the market,' said Mr Yazegi. 'They took sugar. They took the concentrate. They even took a textile machine which belonged to a friend. He was starting a new business and had left it here until the curfew was over.' The Israeli army provides 'security' protection to Israeli debt- collectors.
'I welcome all investment in Gaza,' says Mr Yazegi, who is chairman of Gaza's industrialists' committee. 'But no investment will work before the political situation is changed. Israel must let Gaza go free. Let it have its own leadership and open the seas again. Then it could be a new Hong Kong. It is a virgin area full of cheap labour. The Israelis must realise that they built an economic situation to be dependent on them. They cannot just tell us to go to hell.'
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