STARBUCKS AND THE GAZA EFFECT

C O N F I D E N T I A L KUWAIT 000112 SIPDIS STATE TO PUBLIC AFFAIRS; AMMAN TO PAO; BEIRUT TO PAO; CAIRO TO PAO; RIYADH TO PAO E.O. 12958: DECL: 02/07/2019 TAGS: PROP EINV XF KU SUBJECT: STARBUCKS AND THE GAZA EFFECT Classified By: Econcouns Oliver John for reasons 1.4 (b) and (d) ¶1. (C) Summary: Starbucks' business in parts of the Middle East is suffering as a result of the recent Gaza clashes and rumors regarding the company's founder's purported support for the Israeli Government, according to executives at Al Shaya Co., which owns all Starbucks stores in the Middle East. Starbucks' founder and CEO, Howard Schultz, will undertake media appearances with select Arab news channels in order to dispel myths surrounding his, and his company,s, support for Israeli actions in Gaza and elsewhere. End Summary. ¶2. (C) In a meeting with Econoff February 5, executives at Al Shaya Co. -- a Kuwait-based retailing behemoth with 1,500 stores in the Middle East, Turkey and Russia -- said that their Starbucks stores in parts of the Middle East were losing business as a result of the recent violence in Gaza. VP of Corporate Communications Martin Norris and Ali Itani, a manager in the same department (and former International Fellow at the Center for Strategic and International Studies in Washington, DC) said that stores in Saudi Arabia, Lebanon and Jordan, in particular, had suffered in recent weeks. They said that a number of stores in Kuwait have experienced incidents whereby a woman in a car drives by, screaming epithets at customers. Al Shaya Co. owns and operates more than 240 Starbucks outlets in the Middle East. SPOOF LETTER HAUNTS SCHULTZ -------------- ¶3. (C) Norris and Itani said that Starbucks stores were the targets of both boycotts and "incidents" because of Starbucks, founder and CEO Howard Schultz's Jewish background and purported pro-Israeli beliefs. They said that much of the controversy surrounding Shultz emanates from a satirical letter written by an anti-Israel activist called Andrew Winkler in 2006 (who posted his satire on the internet in response to the Israeli-Hezbollah clashes in mid-2006). The letter reemerged on blogs and websites during the recent Gaza clashes. (Note: the letter is available at: www.snopes.com/politics/israel/schultz.asp. End Note). ¶4. (C) Norris said that he has been in extensive discussions with Starbucks International's head office in the Netherlands about possible strategies for containing the effects of this rumor-mongering. He said that he advocated strongly for media appearances by Schultz, which, he asserts, Schultz's advisors have only recently agreed to. Norris said that Schultz will likely appear on Al Arabiya in the near future, following in President Obama,s footsteps. WELL-TRODDEN PATH -------------- ¶5. (C) Comment: Starbucks is following in the well-trodden footsteps of other American consumer brands in the Arab world, with allegations of corporate sponsorship of the Israeli Government causing consternation amongst the Gulf and Levantine chattering classes. (Coca Cola was formally boycotted by the Arab League from 1968 to 1991 after opening a bottling plant in Tel Aviv, and its sales plunged 15% in Egypt in 2000 after rumors asserted that the Coca Cola logo contained anti-Muslim messages). Econoffs discussed the Starbucks controversy with a handful of Kuwaitis (three corporate executives, a dean at Kuwait University and two housewives) and all, unprompted, mentioned Schultz's pro-Israel "letter." None of these Western educated Kuwaitis knew that the letter was a spoof. Starbucks' business is unlikely to suffer major losses as a result of the Gaza clashes and the Schultz rumors, but American consumer brands will likely continue to be targets of informal boycotts whenever clashes occur between Israel and its Arab neighbors. End Comment. ********************************************* ********* For more reporting from Embassy Kuwait, visit: visit Kuwait's Classified Website at: http://www.intelink.sgov.gov/wiki/Portal:Kuwa it ********************************************* ********* JONES