US embassy cable - 02AMMAN7535

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