Starbucks closed all of their outlets in Israel because they support Arab countries

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In April 2003 Starbucks Corp. ended its operations in Israel by closing the six stores it had in that country. The coffee giant had first placed outlets in Israel in August 2001, creating a joint venture with Delek Group, the publicly-traded Israeli conglomerate, for this

 

purpose.

As evidenced by the e-mail quoted above, Starbucks drew criticism in the U.S. for the closure. In the U.S. anything that smacks of preference bestowed upon Arab interests or short shrift given to Israeli interests is perceived as something that needs be protested. This simplified world view reduces complex matters to ones of good guys versus bad guys, and that this system proves wholly useless when other factors interfere does little to lessen its comfort value.

Starbucks didn't remove itself from Israel because it was pro-Arab or anti-Israeli; it did so because this was the business decision that appeared to make the best sense. Although the corporation gave somewhat muddled explanations for its pull-out from Israel — sometimes citing the danger of terrorist attacks, sometimes making passing mention of "operational challenges" — the reasons for the retreat were Starbucks' difficulties in dealing with its Israeli partner and the underperformance of its six stores in that country. (Starbucks was a latecomer to an already-saturated Israeli market, didn't adapt well to local market conditions, and offered little to distinguish itself from its competition except higher prices). As Chief Financial Officer Michael Casey said about the cessation of Starbuck's operations in Israel, "It's a difficult place to do business, as you can imagine. And we've had some disagreements of philosophy with the partner. You put those two together and we just decided it was a good time to stop."

As Starbuck now says of the decision on its "Facts about Starbucks in the Middle East" web page:

Q: Is it true that Starbucks closed its stores in Israel for political reasons?

A: We decided to dissolve our partnership in Israel in 2003 due to the on-going operational challenges that we experienced in that market. After many months of discussion with our partner we came to this amicable decision. While this was a difficult decision for both companies, we believe it remains the right decision for our businesses.

Starbucks continues to perform well in Arab countries. Though one might suppose anti-American sentiment would undercut the coffee maker's business there, its product has proved popular even in countries where Americans are not well loved. Since Starbucks opened its first overseas outlet in 1996, it has developed into an international presence with more than 23,000 stores worldwide in 65 countries outside North America such as Kuwait, Lebanon, Qatar, Bahrain, Oman, and the United Arab Emirates.

All of this has led to additional opposing rumors, that Starbucks either supports Israel through financial contributions (to that country's military) or that it is a "Muslim operation" whose CEO has bragged about his hatred for Israel:

For Starbucks CEO Howard Schultz, Israel has always been a fraught topic. Raised in a Brooklyn Jewish family, he’s been accused of supporting Israel and also of not supporting Israel, although in general he keeps his religious sentiments and committments very private.

The recent Israel-Palestinian conflict in Gaza has brought the hullaballoo to an all-time high, getting Schultz in trouble with both sides. Activists using the boycott app Buycott called for consumers to stop buying Starbucks coffee, saying Schultz is a “propagandist for Israel.” The effort mentioned that he was honored by Aish HaTorah, an Orthodox organization, in 1998, and said that the company "sponsors fundraisers for Israel," although it didn't provide specifics to support that claim.

Starbucks responded to the accusations that it's somehow on Israel's side by updating and reposting policy on the Middle East, which explains that it supports neither the Israeli government, nor the army, nor, indeed, any political or religious cause. At which point, wouldn't you know it, pro-Israel activists took umbrage, calling in their turn for their own boycott.

“If he’s so concerned that anti-Israel boycotters will hurt his business, let’s show him what pro-Israel folks can do!” authors of the counter-boycott petition wrote about Schultz.

Neither is correct: although Starbucks CEO Howard Schultz may have personal sympathies for Israel, the company does not contribute money to that country, nor does it support (either morally or financially) other countries in that region:

Regardless of [our partners'] spectrum of beliefs, Starbucks has been and remains a non-political organization. We do not support any political or religious cause. Additionally, neither Starbucks nor the company’s chairman, president and ceo Howard Schultz provide financial support to the Israeli government and/or the Israeli Army in any way.

Q: Is it true that Starbucks or Howard Schultz provides financial support to Israel?

A: No. This is absolutely untrue. Rumors that Starbucks or Howard provides financial support to the Israeli government and/or the Israeli Army are unequivocally false. Starbucks is a publicly held company and as such, is required to disclose any corporate giving each year through a proxy statement.

Q: Has Starbucks ever sent any of its profits to the Israeli government and/or Israeli army?

A: No. This is absolutely untrue.

Barbara "coffee to go" Mikkelson
 

Anthony-Claret Ifeanyi Onwutalobi

About Post Author

Anthony-Claret Ifeanyi Onwutalobi

Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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