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Cablegate: Jordan: Update On Boycott of U.S. Products

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS AMMAN 007535

SIPDIS

SENSITIVE

USDOC/4520/ITA/MAC/ONE/COBERG

E.O. 12958: N/A
TAGS: ECON BEXP PGOV PREL IS JO
SUBJECT: JORDAN: UPDATE ON BOYCOTT OF U.S. PRODUCTS

REF: A. AMMAN 3648
B. AMMAN 7312
C. AMMAN 3394

Sensitive but Unclassified.

1. (sbu) Summary. Business contacts say that an abiding
affinity for U.S. consumer products, marketing strategies
that played up local connections, and a crackdown by the
government on political activities by professional
associations blunted the impact of calls for boycotting
American products following the expanded Israeli operations
in the West Bank and Gaza earlier this year. With sales
mostly back to normal, U.S. franchisees and importers are now
preparing themselves for a new boycott cycle if there is any
U.S.-led coalition confrontation with Iraq. End Summary.

2. (sbu) According to American franchisees and purveyors of
American products, the impact of calls earlier this year for
boycotts of U.S. products has faded. Burger King, Pizza Hut,
and Popeye's franchisees, Coke and Pepsi, and supermarkets
and other stores that stock U.S. products all say that
business has returned to normal since September. The only
pocket were business appears to continue to be affected is in
U.S. fastfood restaurants located near university campuses in
Amman and Irbid. Some restaurants in these areas could
close, but according to our contacts poor management by one
franchisee is more responsible for lost business than the
boycott calls.

3. (sbu) Businesspeople with whom we discussed the subject
cited four explanations for the short lifecycle of this most
recent boycott episode:

-- Short local memories and an abiding affinity for U.S.
products and culture.

-- Aggressive pricing and promotion strategies, particularly
on the part of the soft drink companies.

-- A low-key public affairs campaign loosely coordinated by
the AmCham that highlighted the local origin of
franchise-related investment, local sourcing of products,
Jordanian jobs that depend on U.S. trade and investment, and
charitable and other good works engaged in by these companies.

-- The aggressive stance the government has taken against
"anti-normalizers" associated with the professional
associations (ref b), as well as the high-profile
Jordan-First" campaign that asks Jordanians to place Jordan's
interests -- including economic -- ahead of non-Jordanian
interests (read Palestine and Iraq).

4. (sbu) Several businesses dealing in American-branded
goods alleged that local competitors tried to take advantage
of the boycott calls to promote non-U.S. products. This was
particularly the case in the soft drink market, which has
been flooded with low price, low quality Syrian products
since the entry into force of a Jordan-Syria trade agreement
in April 2002. While Coke and Pepsi continue to push the
Jordanian government for safeguard protection under the
agreement (ref c), they have recovered some of their market
share through aggressive promotion and pricing of their
products.

5. (sbu) Comment: Our business contacts stressed the
cyclical nature of the boycott calls. Boycotts come and go,
but the real difficulty is that each cycle is harder to deal
with than the last. This, they say, is the greatest
long-term threat to franchise businesses and to the American
market presence. The Pizza Hut franchisee, for example, told
us of his fear that a U.S.-led military operation against
Iraq would almost certainly provoke a new boycott cycle. He
was confident that his businesses would survive, but at a
greater cost than in previous episodes.
GNEHM

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