HP’s role in Israel could lead to political pressure
Sunday, June 29, 2014
But given the volatile nature of conflict, appearances can quickly change.
Unbeknownst to many Americans, the Palo Alto computing giant makes the high-tech identification cards Israel uses to operate checkpoints in the disputed West Bank, territory Israel captured in 1967 but Palestinians claim as their own country.
Until recently, none of this attracted much attention, partly because information technology is kind of boring but also because the United States is a strong ally of Israel.
Yet an international campaign has emerged to pressure Israel by persuading investors to dump shares of companies that do business with the government or operate in the disputed territories.
The divestment effort has found more sympathetic audiences in Europe, but as peace talks between Israel and the Palestinians flounder, the issue has been getting some attention in America.
“Companies like HP need to continually look at their risk profile” when operating in countries that attract controversy, said Ernest DelBuono, a senior vice president at Levick, a communications consulting firm in Washington. “What is the likelihood of getting public reaction when you do business with a particular government?”
Actress Scarlett Johansson broke from Oxfam after the human rights group criticized her for appearing in a Super Bowl commercial for SodaStream, which operates a factory in the West Bank. Supporters of divestment are pressuring California’s pension funds to pull money from companies that they say allow Israel to occupy Palestinian lands.
The church took its action to protest “the building and security of illegal Israeli settlements … and the construction and maintenance of walls and fences that illegally encroach upon Palestinian lands, destroying Palestinian rights to own property and pursue livelihoods,” the organization said.
Operating overseas, especially in countries with questionable human rights records like Russia and China, is a fact of life for companies these days. But I wonder if HP fully considered the implications of its business in Israel. The company’s technology sits at the heart of the conflict.
In 1999, HP subsidiary EDS Israel won an initial contract worth $8 million to $10 million to develop “the Basel System” for the Ministry of Defense and police. The technology consists of biometric cards that use facial, fingerprint and retinal data to verify the identities of Palestinians wishing to obtain permits to enter Israel.
“The Basel System was developed to expedite checkpoint passage in a secure environment, enabling people to get to their place of work or to carry out their business in a faster and safer way,” HP spokeswoman Kelli Schlegel said in an e-mail.
According to Coalition of Women for Peace, Israel still uses the Basel System at 12 checkpoints throughout the disputed territories, including two locations that separate the West Bank from East Jerusalem, which the Palestinians claim as their future capital.
In some ways, HP is a less noticeable presence in Israel than, say, Caterpillar, which makes heavy construction equipment used by the Israeli Defense Forces.
“The visibility of software is relatively minimal,” DelBuono of Levick said, “unlike watching Caterpillar bulldozers on Al Jazeera” television in the Middle East.
But companies must also consider whether their operations jibe with social responsibility policies, he said.
“Is the use of the product somehow directly opposed to the companies’ value statements?” DelBuono said.
In its Global Citizenship Report, HP says that the company “takes an uncompromising view on human rights: we must always respect them ourselves and work tirelessly to influence others to do the same. Due to our scale and scope, our business can impact a wide range of human rights.”
Statements like that put HP in a tough spot. The company must effectively reconcile those principles with its operations in one of the word’s most polarizing conflicts.
Ticking time bomb
Whether you side with Israelis or Palestinians, this much is true: A Silicon Valley titan has parked itself on top of a ticking public relations time bomb.
The divestment movement hasn’t really caught on in the United States, and studies focusing on South Africa during apartheid found little fiscal impact on companies that were the target of similar protests.
Perhaps HP, which generates about 64 percent of annual revenue overseas, thinks the risk is worth it.
The thought of anybody in America dumping stock to protest Israeli policies would have been absurd just a few years ago. That’s what makes the Presbyterian Church’s decision so momentous.
HP would be wise to take note.