Coca Cola to build plant on stolen Palestinian land

Innovative Minds
www.inminds.co.uk
19 July 2002

Coca-Cola, in return for millions of dollars in tax breaks, is to build a new plant on land stolen from the Palestinians. The new plant will employ 700 israelis.

The land in question is Qiryat (Kiryat) Gat. Intel is already facing possible legal problems for building its chip plant on the same stolen land.

Please refer to the news article:

Intel chip plant located on disputed Israeli land - Intel could face political, legal problems with chip plant in Israel

If contains details on Qiryat Gat:

Qiryat (sometimes spelled Kiryat) Gat is close to the geographical center of Israel, along a major north-south rail line and the route of the planned Trans-Israel Highway. It's on land that would have been part of Arab Palestine under the partition plan adopted by the United Nations in 1947, but within the larger Israel that emerged from the 1948 war between that country and its neighbors.

In other words, it's on land the United States and most of the world's governments consider a legitimate part of Israel, not in the territories Israel conquered in the 1967 war, from which the United Nations has demanded its withdrawal.

But from a legal and historical point of view, Qiryat Gat happens to be an unusual location: It was not taken over by the Israeli military in 1948. Instead, it was part of a small enclave, known as the Faluja pocket, that the Egyptian army and local Palestinian forces had managed to hold through the end of the war. (Among the Egyptian officers was Gamal Abdel Nasser, who became his country's president six years later.)

The area was surrounded by Israeli forces, however. When Israel and Egypt signed an armistice agreement in February 1949, the latter agreed to withdraw its soldiers, but it insisted that the agreement explicitly guarantee the safety and property of the 3,100 or so Arab civilians in the area.

Israel accepted that demand. In an exchange of letters that were filed with the United Nations and became an annex to the main armistice agreement, the two countries agreed that "those of the civilian population who may wish to remain in Al-Faluja and Iraq al Manshiya (the two villages within the enclave covered by the letters) are to be permitted to do so. . . . All of these civilians shall be fully secure in their persons, abodes, property and personal effects."

Within days, the security the agreement had promised residents of the Al- Faluja pocket proved an illusion. Within weeks, the entire local population had fled to refugee camps outside of Israel following a campaign of ethnic cleansing by the israeli military. This terrorising of the civilian population of Al-Faluja until they fled is documented in the memos of then Israeli foreign minister Moshe Sharett.

In substance, what happened to the people of Al-Faluja and Iraq al Manshiya isn't very different from what happened to the residents of hundreds of other Palestinian villages.

Only a few things make this case unique: the legal agreement that was supposed to guarantee the residents' security, the Sharett memos recording what happened to that guarantee -- and the fact that 40 years later their land, having been converted by the Israelis into an industrial park, became the site of an Intel, and soon Coca-Cola plants.

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The original article from Ha'aretz:

Coca Cola, Indigo, Tzabar to get tax breaks for new Kiryat Gat plants

By Ora Coren
Ha'aretz
July 19, 2002

Coca Cola, Indigo and Tzabar will probably get special government contribution in excess of $55 million for the establishment of plants in Kiryat Gat, sources connected to the Industry and Trade Ministry's Investment Center told Ha'aretz. Instructions to approve the allocations came from Industry and Trade Minister Dalia Itzik and Finance Minister Silvan Shalom, despite explicit objections by the staff of both ministries, arguing that there is no valid reason to grant these companies special preference.

The value of the tax breaks that Coca Cola and Tzabar are asking for is around $55 million. The value of those sought by Indigo is still unclear.

Indigo plans to establish a $25 million ink plant in Kiryat Gat that will employ about 70 workers. The staff at both ministries has argued that since this is not a high-tech plant, it does not deserve benefits earmarked for this sector, such as recognizing depreciation. In addition, the number of jobs to be created by the plant does not merit exceptions.

Moreover, the plant in Kiryat Gat is to do the same thing as the existing Indigo facility in Nes Tziona, which makes it an expansion rather than a new plant. Therefore, legally the plant does not deserve the tax breaks given to new plants. Also, the treasury is now checking whether under the trade agreement between Israel and the Netherlands a company operating from Holland, like Hewlett Packard, Indigo's parent company, can pay less taxes on dividend distribution.

Shalom and Itzik, on the other hand, hold that multinational companies should be encouraged to make investments in Israel.

The main benefit sought by Coca Cola is that the tax authorities recognize 50 percent depreciation. Coca Cola has pledged to employ 700 workers in Kiryat Gat, and the Industry and Trade Ministry is pushing for an immediate relocation from Bnei Brak to unemployment-stricken Kiryat Gat.

The depreciation and other benefits that Tzabar has applied for total NIS 10-23 million ($2-$5 million).

The two ministries will soon decide whether to extend the grants as a one-time decision or to change the standards of the Investment Center altogether. The Finance Ministry staff advocates an ad hoc decision, so that in the future the government would not be obligated to provide any other such benefits. The Ministry of Industry and Trade, on the other hand, would like the Investment Center's criteria to be changed.