By Kevin Sullivan
Washington Post Foreign Service
Saturday, February 11, 2006
COPENHAGEN, Feb. 10 -- The Arla Foods plant in Riyadh, Saudi Arabia, which produces cheese and flavored yogurt drinks, sits idle and the company's 800 employees in the country have been sent home because of a Middle East boycott of Danish goods, following a Danish newspaper's publication of cartoons of the prophet Muhammad.
"It took us 40 years to build up our business in the Middle East, and five days to bring it to a total stop," said Astrid Nielsen, spokeswoman for the Danish company here. She said suspending operations at the Riyadh plant, the company's regional base, and a near-total boycott of the company's products have cost Arla about $1.7 million a day since Jan. 28.
The boycott of Danish goods, propelled by Muslim leaders and imams preaching in mosques, has brought exports of Danish products to the Middle East and North Africa to a virtual standstill. It has scuttled a flow of goods to the region that was worth about $1 billion in the first 10 months of 2005, according to government statistics.
The boycott has been less visible than the angry mobs around the world burning Danish flags, torching embassies and carrying placards calling for "Danish blood." But it has been just as unnerving for Danish business leaders, who have spent decades expanding their sales of food, pharmaceuticals, industrial equipment and other products into the Middle Eastern market.
"As Danes, we are still sort of in a situation where we are thinking this is just a nightmare," Nielsen said, "and we are going to wake up in a little while and find that this didn't happen. We can never hope to regain what we had, but we hope we can reestablish some of it. We have a huge task ahead of us."
Prime Minister Anders Fogh Rasmussen, in an interview Thursday, said the boycott was not a major threat to Denmark's economy.
"According to the latest figures, 3 percent of Danish exports go to the Muslim world," Rasmussen said. "So seen from an overall perspective, it is of minor importance on the Danish trade balance."
Rasmussen, a former economic affairs minister, said it was "too early to make a final assessment" about the long-term impact of the boycott and whether Middle Eastern consumers would eventually start buying Danish products again.
"From experience we know that trade may be resumed in a longer-term perspective," he said. "Danish industries are famous for their ability to adapt to new situations. And our competitiveness is very strong. Danish companies are in very good shape for the time being."
Still, Rasmussen noted that companies such as Arla that do extensive business in the Middle East and North Africa "may be affected very significantly."
"And I strongly regret that, of course, because Arla is not responsible for what is published in a Danish newspaper," said Rasmussen, who has repeatedly expressed regrets that Muslims have been offended by the cartoons of Muhammad, while saying he cannot apologize for what was printed in a private newspaper.
"You can't hold a whole nation responsible for what is published in a free and independent newspaper," Rasmussen said. "I do know that it is very difficult to understand for many people in the Arab streets, because they can hardly understand how free and independent media work. But that's our system. It is unfair to take Danish companies and employees hostage in this case, in an economic sense."
Those arguments carry little weight in places such as the al-Qiswani Supermarket in the West Bank town of Beit Hanina, where prominently displayed posters urge shoppers, "If you love the Prophet, join us in boycotting Danish products." The posters are surrounded by photos of Danish cheeses, powdered milk, chocolates and other products to be avoided.
The store's owner, Abed Qiswani, 42, said his revenue has dropped 5 percent because of the boycott, which he said has been uniformly followed. He used to sell a carton of Danish cheese a week, but now those products are being left untouched, along with products from some other European countries, including French cheeses and Scandinavian cereals.
Qiswani said that when he tried to return his back stock of Danish products, his supplier told him he had lost nearly $200,000 in canceled orders as a result of the boycott in the West Bank and Jerusalem.
"What has struck me most, though, is that little children come to the store and ask if this is a Danish product," Qiswani said. "Boycotting is a very good thing. Politics is always connected to the economy. The problem these European countries have now is with the Islamic giant, and they should think about who they mess with."
Tariq Maslanani, 11, said he no longer buys French-made Laughing Cow cheese, his favorite, because a French newspaper also ran the cartoons.
"We cannot bear anybody cursing our prophet," said the sixth-grader.
Svend Roed Nielsen, head of trade policy at the Danish Foreign Ministry, said that in addition to daily consumer goods such as cheese and butter, there has been a noticeable drop in exports of pharmaceuticals and medicines to Muslim countries. He said that he was unsure of the exact loss but that those goods accounted for about $104 million in the first 10 months of last year. He said officials had heard that the expected signings of several contracts for Danish machinery and electronic goods had been postponed.
"Things are looking quite bad at the moment," said Keld Winther Rasmussen of the Danish Dairy Board. "We have products in the country we can't sell, in ships that we can't deliver, and products in dairy plants that we will have to find other markets for."
Rasmussen said dairy industry officials had hoped that Prime Minister Rasmussen's televised comments offering regrets for the offense caused to Muslims would improve the situation. "But so far that has had no impact," he said, adding that he hoped that Danish dairy exports to the Middle East would eventually restart. "We hope this is not the end. But we can see that it is going to take a very long time to regain our hold in the market. It could take years."
Bjarne Kristiansen, manager of a dairy in Aalborg, said exports to the Middle East account for 70 percent of his company's sales -- and that market has completely dried up since the boycott took hold. He said his company is losing sales of about 100 tons of feta cheese a week.
"If this continues, after two or three weeks we might have to stop production of feta cheese, which is our main production," he said. "Hopefully we won't have to close completely, but I don't know. It is a terrible situation."
Keld Pedersen, managing director of Nordex Food, said his company has lost 20 percent of its total sales, which normally go to the Middle East. He said the company has had to cut 15 jobs out of its workforce of 200.
"Maybe the government acted too late -- we all did," Pedersen said. "We were all very surprised about how quickly this situation developed. I can't fault the government's efforts now. But Denmark cannot do this alone, and it will not only be Denmark that suffers."
Pedersen said the Jyllands-Posten newspaper, which first published the Muhammad cartoons, "should have been more careful."
"Everyone has the right to freedom of speech, but you can't cry 'Fire! Fire!' in a cinema," he said. "But it's always easier to see these things after they have happened."
Pedersen said he is pessimistic that his company's Middle Eastern market, which it has been building for 25 years, will fully recover.
"I don't think it will ever be the same again," he said. "The consumers won't forget."
Special correspondents Alexandra Topping in London and Sufian Taha in Beit Hanina contributed to this report.