When Coca-Cola Grows Citrus on the Nile, Who Wins? Revisiting the End of the Arab Boycott in Egypt
Grand Valley Journal of History
W hen Coca-Cola Grows Citrus on the Nile, W ho Wins? Revisiting the End of the Arab Boycott in Eg y pt
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W hen Coca-Cola Grows Citrus on the Nile, W ho Wins? Revisiting the
End of the Arab Boycott in Egypt
Cover Page Footnote
I would like to thank Dr. Shane Hamilton of the University of Georgia History Department for advising me
throughout the research and writing process, as well as the Center for Undergraduate Research Opportunities
at the University of Georgia for providing me a Summer Fellowship to pursue this research.
Thi s article is available in Grand Valley Journal of History: http://scholarworks.gvsu.edu/gvjh/vol4/iss1/4
When Coca-Cola Grows Citrus on the Nile, Who Wins?
Revisiting the End of the Arab Boycott in Egypt
In 1966, when The Coca-Cola Company announced its decision to open a bottling
franchise in Israel, the Arab League responded by blacklisting Coca-Cola for violating its
economic boycott of Israel. Egypt, the region’s political heavyweight as well as its largest
consumer market, formally enacted the ban in 1968. However, under a different set of
political and economic circumstances, Coca-Cola negotiated a deal in 1977 to re-enter
Egypt, shortly before Egypt and Israel reached a momentous permanent peace agreement
in 1979. The records and context of this deal turn on its head the well-treaded narrative of
Western capital exploiting a developing country. Instead, an Egyptian government keenly
aware of its economic conditions and political constraints extracted a desperately-needed
investment of over $10 million ($39 million in today’s dollars) from Coca-Cola. They
were backed by insurance from the U.S. government, for the privilege of conducting
business in Egypt – a concession to which Egypt had already secretly assented in 1975 in
a precursor to the coming peace treaty.
Marx’s famous observation that “men make their own history, but they do not make
it as they please; they do not make it under self-selected circumstances, but under
circumstances existing already, given and transmitted from the past” is key to making sense
of the story of Coca-Cola’s re-entry to Egypt on the heels of normalization with Israel.1
Within the broader framework of capitalist economic relations, there is room for maneuver
and compromise. Egypt’s extraction of a massive investment from Coca-Cola
demonstrates that encounters between core and periphery do not always result in
exploitation of the periphery – in this instance, the opposite is true. This is not to negate
the larger structural inequalities of globalization, the history of rampant exploitation of the
developing world by Western multinationals, or the role of economics as justification for
French and British occupation and colonization of the Arab world. However, projecting
the standard model of imperialism onto every interaction between the West and the rest is
intellectually negligent and disregards the agency of non-Western actors. In the case of
Coca-Cola and Egypt that follows, it also proves factually inaccurate.
The subject of Coca-Cola is made worthwhile both by the availability of
documentation and the company’s symbolic political and cultural value. It is one of the
single most pervasive and easily recognized brands: the only two countries in which the
drink is not sold are Cuba and North Korea.2 Since the onset of the 20th century, Coca-Cola
has been taken to represent both the best and worst of America and capitalism as it
embodied Woodrow Wilson’s entreaty to the “democracy of business” to lead “the struggle
for the peaceful conquest of the world.”3 Additionally, there is a foundation of scholarly
study of Coca-Cola, and the largest source of company-related documents and sources
1 Karl Marx, The Eighteenth Brumaire of Louis Bonaparte, Marxists Internet Archive, 1852.
2 Cordelia Hebblethwaite, ”Who, What, Why: In which countries is Coca-Cola not sold?” BBC News
Magazine, September 11, 2012.
3 Victoria de Grazia, Irresistible Empire: America’s Advance Through Twentieth-Century Europe
(Cambridge: Harvard University Press, 2005), 1.
happens to be located at Emory University in my hometown of Atlanta (also, of course, the
long-time location of Coca-Cola’s headquarters).
Egypt is a valuable state for examination because its political history is inextricably
linked to colonization and imperialism. It was, at the time of the 1966 boycott of
CocaCola, the only major consumer market in the Middle East with which the company was
concerned. Notably, in the twentieth century, Egypt experienced British colonization, as
well as leadership by two quite different figures: the publicly confrontational, state
socialist, and anti-imperialist Nasser, and the more compromising, pro-market Sadat. This
history has led to a thriving conversation on the role of imperialism in Egypt, and after
detailing my findings, I will return to the question of imperialism and contribute my
conclusions to that conversation.
The Arab Boycott of Israel
To interpret Coca-Cola’s history in Egypt, it is absolutely essential to understand
the functioning of the Arab boycott of Israel. The “Arab boycott,” as it exists today, was
enacted by the Arab League in 1945 against the Jewish community in Palestine before the
creation of the state of Israel. In 1951, the Arab League established the Central Boycott
Office (CBO) Damascus to coordinate activities with national boycott offices throughout
member states. The original goal of the boycott was “to obstruct the development of a
Zionist economy, capable of sustaining a Jewish state,” though by the 1990s Arab states
that still participated began to see the boycott more as a bargaining chip to force the return
of occupied Arab lands and Palestinian rights than as an incapacitating economic attack on
Israel.4 In its function, the measure consists of a “primary” boycott of Israeli goods and
businesses, a “secondary” boycott of foreign companies that also conduct business in
Israel, and a “tertiary” boycott of shipping through Israel. A company found in violation of
the boycott’s terms – doing business with Israel – is referred to the CBO for a vote by
member nations on whether to place that company on the blacklist. If so, it is still
incumbent upon member states to enforce the boycott’s terms and ban the offending
company from its markets.5 This decentralization is important in understanding the
mechanisms of the boycott, as it permits a large degree of flexibility in the boycott’s
application. The boycott was never completely and uniformly enforced, especially in
regards to the secondary and tertiary boycotts and when business relations served a
country’s own interests. Though the boycott officially remains active, much of the Arab
world disregards it. Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, United Arab
Emirates, and Yemen still request boycott compliance documentation from foreign
companies, though especially in the Gulf, governments only pay lip service to the boycott
The first major breach in the application of the boycott came in 1979 with Egypt’s
peace with Israel and resultant cancellation of the boycott within its borders. While Egypt
was indeed diplomatically ostracized by the Arab League for this step, the boycott never
4 Gil Feiler, From Boycott to Economic Cooperation: The Political Economy of the Arab Boycott of Israel
(New York: Routledge, 1998), 25 & 91.
5 Martin A. Weiss, “Arab League Boycott of Israel,” U.S. Congressional Research Service (RL33961:
December 19, 2013), 2.
6 Ibid, 6.
regained its former power and cohesion. For example, by 1988, Coca-Cola reported
operations in 11 Arab countries, launched an ad campaign in Bahrain, and opened several
new plants in the Gulf – all while publicly operating in Israel. The Palestinian Authority
and Jordan canceled their boycotts when peace was made with Israel in 1993 and 1994,
respectively. Mauritania, Morocco, Algeria, and Tunisia do not enforce the boycott, and
the members of the Gulf Cooperation Council have moved towards non-enforcement as
well.7 Today the confrontational nature of the boycott is widely seen as out-of-date.
Although many Arab countries still refuse to diplomatically recognize Israel, there is a
wider acknowledgment that their neighbor is here to stay, and commercial pragmatism has
overshadowed the ideological basis of the boycott. But in 1979, Egypt’s decision to make
peace, normalize relations, and end the boycott was groundbreaking. The country’s dire
economic situation provides some context for the momentous push for peace and
accompanying cancellation of the boycott.
Egypt’s Political Economy in the 1970s
Anwar Sadat inherited a moribund economy when he became president of Egypt in
1970. Egypt’s disastrous defeat in the Six Day War in 1967 had led to the closure of the
Suez Canal (a primary source of revenue), loss of the Sinai oil fields, a sharp reduction in
tourism, a boost in military spending to rebuild Egypt’s decimated forces, and growing
international debt. Sadat’s early years marked a departure from his predecessor Nasser’s
policies as he cautiously initiated modest economic liberalization in recognition of the
undeniable fact that the root causes of the country’s external payments crisis in 1965-1966
had yet to be resolved. Debt was too high, the public sector had become stagnant and
wasteful, imports surpassed exports, and food imports were still necessary to feed the
population. Significant change was necessary, but Sadat needed political capital to enact
more substantive liberalization, both to convince opposition within his administration and
satiate the public, who would likely have to swallow a reduction in state benefits and
subsidies.8 Sadat, ever the shrewd politician, knew that nothing brings a country together
like a good old war.
In a telling interview given a year after the 1973 Yom Kippur/Ramadan War, the
Egyptian president explicitly admits he went to war to shore up Egypt’s finances, strange
as that explanation may seem. Sadat’s hope was that the Arab states not in direct military
conflict with Israel would come to the financial aid of confrontational states like Egypt, as
they had in the past. Indeed, as soon as the attack was launched, Arab states committed
$500 million in aid to Egypt. But this gift was only a temporary measure, and in the wake
of the war, Sadat saw the need for structural changes to the Egyptian economy to end the
cycle of financial crises he had inherited. Thus, the policy of economic liberalization
known as infitah (literally, “opening”) was conceived. Egypt’s limited victory in the war
provided Sadat with the prestige and political maneuvering room necessary to implement
structural reform. Its primary goal was the inflow of foreign capital, and Coca-Cola’s
7 Ibid, 2-3.
8 Roger Owen and Şevket Pamuk, A History of Middle Eastern Economies in the Twentieth Century,
(Cambridge: Harvard University Press, 1999), 133-134; John Waterbury, The Egypt of Nasser and Sadat
(Princeton: Princeton University Press, 1983), 407.
eventual investment in agriculture and factory infrastructure played right into the hands of
Sadat and other proponents of liberalization.9
Infitah became official policy in 1974 with the passage of Law 43, which regulated
the operations of foreign capital in Egypt. The basic goal of liberalization was to attract
foreign investment, especially Arab investment, in order to revitalize the Egyptian
economy with new manufacturing capabilities, technological assistance, and a stronger
export base. The liberalization policy met with only limited initial success – what foreign
capital did come to Egypt was directed to the petroleum, tourism, and consultancy sectors,
rather than productive industry. The goals of creating a manufacturing export base and
attaining self-sufficiency in food were not achieved. Neither was the balance of payments
issue immediately resolved, leading to another crisis in 1975-1976. In response, an IMF
stabilization program was haphazardly implemented – a partial devaluation of the Egyptian
pound and minor cuts to public subsidies led to riots in 1977, and the subsidies were quickly
restored.10 On top of all these problems, Egypt’s relations with its erstwhile patron, the
Soviet Union, were deteriorating. Trade with the Eastern Bloc dropped sharply in 1975
after the Sinai II disengagement with Israel, and by 1977 Egypt was essentially in default
on its debt to the USSR.11
From Egypt’s point of view, then, it entered a pair of negotiations in the mid-1970s
– to make peace with Israel and void the Arab boycott with Coca-Cola – in quite a desperate
position. A massive influx of funds was necessary to keep the country afloat, and ties with
its sometimes-benefactor, the Soviet Union, were deteriorating. Luckily, Sadat found
himself in the possession of valuable incentives to offer to both the American government
and the powerful corporation Sadat knew had strong ties to the White House. In the final
calculation, the offer of peace with Israel brought a massive payout from the U.S. that
helped keep the economy afloat. But even before the peace deal was reached, Sadat allowed
Coca-Cola to return to the Egyptian market in exchange for a substantial $10 million
investment in the country. Both agreements served to materially improve Egypt’s
economic well-being. But before examining in detail the deal with Coca-Cola, some
background on the company’s political connections and its previous encounter with the
Arab boycott in Egypt is necessary.
The Long Arm of Coca-Cola
Coca-Cola has a long tradition of influence in the corridors of American and world
power. In the 1930s, the company gained privileged access to information about Latin
American coca farmers and Peruvian cocaine factories through its relationship with Harry
Anslinger, head of the Federal Bureau of Narcotics (a predecessor to today’s Drug
Enforcement Agency).12 In 1961, Anslinger successfully lobbied for a provision in the UN
Single Convention on Narcotic Drugs allowing Coca-Cola to continue using decocainized
coca leaves to flavor its signature drink.13 When support was growing in post-World War
9 Waterbury, The Egypt of Nasser and Sadat, 127-128.
10 Ibid, 407-408.
11 Ibid, 172; Owen and Pamuk, A History of Middle East Economies in the Twentieth Century, 135.
12 Mark Pendergrast, For God, Country, and Coca-Cola: The Definitive History of the Great American Soft
Drink and the Company That Makes It (New York: Basic Books, 2013), 174.
II France for a ban on Coca-Cola products, U.S. Secretary of State Dean Acheson
threatened French Premier Georges Bidault with repercussions, and Bidault quickly
assured Acheson that he would not allow a ban to pass. Robert W. Woodruff, Coca-Cola’s
long-time president, was personal friends with President Lyndon Johnson.14 Most
important for the time period covered in this paper, however, is the relationship between J.
Paul Austin, Woodruff’s successor at the helm of Coca-Cola, and Jimmy Carter, American
president between 1976 and 1980.
Carter’s connection with Coca-Cola began during his 1971-1975 term as Georgia
governor. Unsurprisingly, the governor developed close ties with his state’s most
prominent corporation. When Carter began traveling overseas to gain international
expertise in preparation for a presidential run, Coca-Cola men around the world escorted
him, and Austin sponsored Carter’s membership to the prestigious Trilateral Commission.
Austin’s name was touted in speculation about Carter’s cabinet choices, though he said he
would prefer the role of an outside advisor.15 More disturbing, however, is an episode in
which Carter’s intervention led to the continuation of a specific sugar subsidy for which
Coca-Cola lobbied that kept the company’s ingredient prices down.16 This close personal
relationship between Carter and Austin was no secret: in the mid-1970s, critical years for
the Israel-Egypt peace talks, Austin met Egyptian President Anwar Sadat in Egypt for a
wide-ranging discussion (including, presumably, Coca-Cola’s re-entry to Egypt). Sadat,
angling for American support for the peace process, told Austin that reporting the substance
of their discussion to the American government when he returned was “the reason for our
conversation.”17 And when Sadat was having dinner at the White House, Carter called to
ask Austin if he wanted to mention the problems with the Egyptian military regarding the
company’s citrus investment (Austin declined).18 With this relationship in mind, the close
and steady contact between Coca-Cola and the American embassy in Cairo during the
company’s negotiations to re-enter the country in the late 1970s is unsurprising.
Nor is it surprising that Coca-Cola took advantage of federal funds to back its
investment in Egypt; rather, its procurement of project insurance through the Overseas
Private Investment Corporation (OPIC) is part of an established pattern. During World War
II, Coca-Cola’s promise to provide soft drinks for American soldiers stationed anywhere
overseas for five cents a bottle led to a massive expansion of bottling infrastructure and
personnel across the globe. Almost unbelievably, Coca-Cola employees abroad were
classified by the military as “technical observers” – civilians necessary for the war effort –
and the equipment necessary to set up bottling plants or more mobile arrangements was
shipped via military supply lines at no expense to the company.19 In the 1970s Coca-Cola
received funds from the U.S. Agency for International Development (USAID) and OPIC
to build bottling plants throughout the developing world.20 Unsurprisingly, Coca-Cola
14 Ibid, 224 & 266; also see Weiss, “Arab League Boycott of Israel.”
15 Mullaney, Thomas E., “Who’ll Fill Key Economic Posts?” New York Times, November 26, 1976, 77.
16 Pendergrast, For God, Country, and Coca-Cola, 293.
17 Ibid, 294.
18 Mark Pendergrast, Interview with Sam Ayoub, April 1, 1991, 15. Emory University, Manuscript,
Archives, and Rare Book Library, Atlanta, Georgia (EU MARBL), Mark Pendergrast Research Files (MP),
Box 4, Folder 3.
19 Pendergrast, For God, Country, and Coca-Cola, 184-200.
20 Bartow J. Elmore, “Citizen Coke: An Environmental and Political History of the Coca-Cola Company,”
Enterprise and Society 14.4 (December 2013), 724.
often sees itself as an agent of economic development and the promotion of the “American
way of life,” and appropriates these concepts as it expands into new markets. For example,
a company representative characterized Coca-Cola’s aggressive expansion through Europe
in the immediate aftermath of World War II as “our own individual ECA” in reference to
the Economic Cooperation Administration, the federal agency created to administer the
Marshall Plan.21 Alexander Makinsky, a Coca-Cola executive involved in the mid-1960s
boycott negotiations with Egypt detailed below, commented that “the best barometer of the
relationship of the U.S. and any country is the way Coca-Cola is treated.”22 With the
knowledge that Coca-Cola is often conflated with America and all the potential
connotations of economic imperialism, the remainder of this article seeks to interpret the
Egyptian experience with Coca-Cola in the 1960s and 1970s not as an imperial or
antiimperial encounter, but as an episode in which the economic self-interest of the Egyptian
state consistently guided decision-making.
Coca-Cola Encounters the Arab Boycott, 1966-1968
The events surrounding Coca-Cola’s violation of the Arab boycott and subsequent
ban from Egypt (along with the other Arab states) in the 1960s have been well-recounted
elsewhere.23 In short, the Anti-Defamation League of B’nai B’rith and other American
Jewish groups created a hailstorm of negative publicity in 1966 because Coca-Cola had no
operations in Israel (the company said the market was too small), and these groups accused
the company of succumbing to the pressure of the Arab boycott and thus implicitly
endorsing an anti-Semitic policy. In response to this public relations nightmare that could
have severely damaged sales in the U.S. market, a bottling franchise contract was quickly
signed with Israeli businessman Abraham Feinberg, and as a result Coca-Cola was placed
on the Arab League’s Central Boycott Office blacklist in November. Each member country
administers its own boycott, and Egypt did not fully comply until February 1968. The year
and a half between blacklisting and boycott implementation consisted of frantic bargaining
between Coca-Cola executives and high-level Egyptian government officials to work out
a deal whereby the soft drink could continue to be sold, though the company was ultimately
unsuccessful. Two aspects of the story of Coca-Cola and Egypt in 1966-1968 are important
in understanding Egypt’s calculations in its decision to boycott. These, in turn, are also
applicable to the coming analysis of the company’s return to Egypt. The first is Egypt’s
internal economic and external political conditions and constraints. The second involves
an analysis of the negotiations that took place in the period between CBO boycott and
implementation in Egypt.
By 1966, Egypt’s economy was fragile. President Gamal Abdel Nasser had realized
that U.S. aid (largely food assistance funded by the 1954 Public Law 480 “Food for Peace”
program) was essential.24 The country had just experienced a balance of payments crisis
that prompted IMF assistance and had missed payments on its foreign debt. Egypt’s
21 Time Magazine, August 22, 1949, 71, in EU MARBL, MP, Box 46, Folder “France.”
22 Pendergrast, For God, Country, and Coca-Cola, 225.
23 Maurice Jr M. Labelle, “De-coca-colonizing Egypt: globalization, decolonization, and the Egyptian
boycott of Coca-Cola, 1966-68,” Journal of Global History 9.1 (2014), 122-142.
24 Malik Mufti, “The United States and Nasserist Pan-Arabism,” in The Middle East and the United States:
History, Politics, and Ideologies, 5th edition, ed. David W. Lesch and Mark L. Haas (Boulder, Colorado:
Westview Press, 2012), 142.
humiliating defeat in the Six Day War in 1967 caused a further strain on the budget, as
much of the military had to be rebuilt.25 Coca-Cola’s role in this economic debacle centers
on the question of foreign exchange currency. Because the company had no syrup
concentrate plant in Egypt, the local bottler had to buy imported concentrate from the
company.26 This contributed to the drain of foreign exchange and harmed Egypt’s
alreadypoor balance of payments situation. Banning Coca-Cola would certainly not solve Egypt’s
economic woes, but it could be a small step in that direction. Thus, the decision to kick out
Coke had a reliable foundation in economic considerations.
The political climate of the region must also be taken into consideration. At the
time, Nasser was the Arab world’s figurehead, leading the confrontational states in their
stand against Israel. Though he commanded enormous personal and persuasive power
during this time, his actions were never completely free from the historical context. The
Khartoum Resolution, adopted by the Arab League in the wake of Israel’s stunning victory
in the 1967 War, exemplifies these limitations. The Resolution famously spelled out Arab
policy toward Israel with the “three no’s:” no peace, no recognition, and no negotiation.27
Acting in opposition to this principle in the years following the war – choosing the path of
peace and normalization – was political suicide. Nasser was certainly aware that Egypt
could be “no less Arab than Arabs on boycott matters,” as one Egyptian government
minister put it.28
Thus, it seems that the ultimate decision to boycott was practical rather than
ideological. Nasser often espoused hardline rhetoric, but he was no ideologue committed
to eliminating traces of Western influence in Egypt. After all, the Egyptian president
himself reportedly “drank no other” than Coke.29 With the political imperative of the
Khartoum Resolution and economic troubles always lurking in the background, the choice
to enforce the Arab boycott against Coca-Cola was both logical and unavoidable.
Coca-Cola’s Re-entry into Egypt
Article 3 of the Israel-Egypt Peace Treaty, signed in 1979, states that “the Parties
agree that the normal relationship established between them will include full recognition,
diplomatic, economic and cultural relations” and “termination of economic boycotts and
discriminatory barriers to the free movement of people and goods.”30 Thus Egypt’s role in
the Arab boycott ended conclusively with normalization of relations. But Egyptian officials
– as well as the U.S. State Department (or at least Secretary of State Henry Kissinger) –
knew in 1975, several years before the final peace treaty was drafted, that peace and
normalization with Israel would also signal the end of full application of the economic
boycott. Sam Ayoub, a Coca-Cola vice president of Egyptian origin, began making reg
visits to Egypt in 1974
, conducting meetings with President Anwar Sadat, Foreign Minister
Ismail Fahmy, Minister of Housing and Reconstruction Osman Ahmad Osman, and the
Central Boycott Office commissioner Mohammed Mahgoub.31 Between 1975 and 1977,
25 Waterbury, The Egypt of Nasser and Sadat, 95-98.
26 Labelle, “De-coca-colonizing Egypt,” 133-134.
27 Khartoum Resolution, League of Arab States, September 1, 1967.
28 Labelle, “De-coca-colonizing Egypt,” 139.
29 Ibid, 123.
30 “Peace Treaty Between Israel and Egypt,” Israel Ministry of Foreign Affairs, March 26, 1979.
31 Pendergrast, Interview with Sam Ayoub. EU MARBL, MP.
Ayoub and Fahmy negotiated the details of a large-scale Coca-Cola investment in Egypt
as quid pro quo exchange for Egypt halting its enforcement of the Arab League boycott
against the company, unrelated to the 1979 Israel-Egypt peace treaty.
On paper, the agreements between Egypt and Israel in 1974 and 1975 – the
Disengagement Treaty and Interim Peace Agreement (also known as Sinai II) – refer only
to the cessation of hostilities after the Yom Kippur War and pave the way for an Israeli
withdrawal from the Sinai Peninsula and negotiations toward the permanent peace agreed
upon at the end of the decade. Secretary of State Henry Kissinger’s “shuttle diplomacy” is
widely credited with brokering these deals.32 However, the historical record fails to note
that in addition to helping end the conflict, Kissinger also secured an off-the-record
agreement from the Egyptian government to stop enforcing its boycott of American firms
on the CBO blacklist, specifically Coca-Cola, Ford, and Xerox. There is no official
documentation of this agreement publicly available; therefore, it is impossible to know for
certain why Egypt agreed to this condition.33 Perhaps, considering Egypt’s failing relations
with the Soviet Union, Sadat hoped to gain favor in the eyes of the government still
providing his country with essential food aid. It is also reasonable to assume that Sadat
welcomed the investment and economic stimulus the blacklisted companies could provide,
and this explanation would align with the infitah’s goal of attracting foreign capital. While
blatantly failing to enforce the boycott would diminish Egypt’s reputation in the Arab
League, Sadat had already broken ranks with the Khartoum Resolution by engaging with
Israel in preliminary talks, although the definitive break would not come until the peace
treaty in 1979. Cables from the American embassy in Cairo demonstrate the difficulties
faced by Foreign Minister Fahmy, the embassy’s primary liaison on boycott issues, in
working out the details of such a politically sensitive decision. In 1975, for example, Fahmy
reaffirms Egypt’s commitment to its promise, but rebukes Kissinger for allowing Ayoub
to make a public visit during the tense period following the announcement of Sinai II.34
The only explicit reference to the secret agreement comes in a cable from U.S. ambassador
to Egypt Hermann Eilts to Secretary of State Henry Kissinger in 1975:
Fahmy “recalled that there is no reference in any of the Sinai II Egyptian documents
to the boycott and that GOE [Government of Egypt] had simply undertaken to assist
American firms with feasible projects to work in Egypt. As he had indicated from
the beginning, once satisfactory projects have been arrived at, GOE will permit
Ford, Coca Cola and others to operate in Egypt, but Egypt cannot get them off the
32 U.S. Department of State Office of the Historian, “Shuttle Diplomacy and the Arab-Israeli Disp
-1975,” Milestones: 1969-1976, October 31, 2013.
33 The only mention I discovered of the informal quid pro quo agreement is below. It is not mentioned in
the text of any agreement or treaty involving Egypt, Israel, or the U.S. prior to the 1979 peace treaty.
Records of the Egyptian government’s negotiation strategy are not publicly accessible.
34 Embassy Cairo to Department of State, Telegram 9023, September 12, 1975,
Central Foreign Policy
-79/Electronic Telegrams, Record Group 59: General Records of the Department of State,
National Archives, accessed via National Archives Access to Archival Databases (AAD) online search
engine. All further cables belong to the same Record Group and were accessed via the AAD system.
35 Embassy Cairo to Department of State, Telegram 6508, April 19, 1977.
Hopes from Americans in government and Coca-Cola that Egypt would lobby to
have the above companies removed from the CBO master blacklist proved naïve, as
disengagement and then peace with Israel drove a significant wedge between Egypt and
the rest of the Arab world. The Arab League suspended Egypt and moved its headquarters
from Cairo to Tunis, and most member states broke diplomatic relations with Egypt.36 This
reaction was foreseeable, as it explicitly contradicted the Arab stance toward Israel spelled
out in the Khartoum Resolution. It is thus puzzling why State Department officials and
Coca-Cola’s Ayoub expected that Egypt’s diplomatic sway would be efficacious in
loosening the larger boycott.
The details of the agreement that emerged from Ayoub’s negotiations with the
Egyptian government are as follows: Coca-Cola agreed to cultivate approximately 15,000
acres of land outside of Cairo to produce lemons and oranges for export to Europe and the
Middle East, as well as juice oranges for processing at a new plant to be built in Egypt. The
project was established as the Ramses Agricultural Company, a 50/50 partnership between
Coca-Cola and a consortium of Egyptian state-owned enterprises. Coca-Cola’s initial
investment of $5 million was planned to top out at $50 million over twelve years. The
American government, through the Overseas Private Investment Corporation (OPIC), also
pitched in with an insurance coverage policy of up to $9 million for the Ramses
Agricultural Company.37 Additionally, Coca-Cola would build a soft drink concentrate
plant in-country to eliminate the drain on foreign exchange stemming from imported
concentrate. Two months after the deal was finalized, and “in no way contingent on the
lifting of boycott restrictions,” according to a company spokesman, Coca-Cola also
pledged $400,000 to underwrite an archaeological project along the Nile River dubbed the
The joint citrus-growing plan never came to fruition, in an instance where the truth
is stranger than fiction. Just as the project got underway, the Egyptian Army began
dropping live bombs on land designated for the Ramses Agricultural Company. Ayoub
claimed that it was a matter of bureaucratic miscommunication rather than malicious intent:
both the Ministry of Agriculture and the Army believed the land was theirs. Apparently the
army was simply unaware that the site had been earmarked for the agricultural project when
it commenced target practice. Eventually, a compromise left the citrus venture with 12,000
of the original 15,000 acres. However, more bureaucratic squabbles ensued, and in the end
Coca-Cola pulled out of the project at a loss of over $10 million. Company officials
expressed sincere disappointment at what was expected to be a quite profitable investment,
but the primary goal – regaining access to the Egyptian consumer market – had been
The extent to which the Egyptian government hoodwinked Coca-Cola in signing
the agreement – despite the agricultural project’s eventual failure – becomes apparent only
after placing the clear quid pro quo deal in the context of Egypt’s economic and political
36 Alan Cowell, “Arab League Headquarters to Return to Cairo,” New York Times, March 12, 1990.
37 Letter in possession of author from Overseas Private Investment Corporation in response to FOIA
request, June 10, 2014.
38 Embassy Cairo to Department of State, Telegram 9070, July 3, 1976; Sallye Salter, “Coke to Pour
$400,000 Into Nile River Expedition,” Atlanta Constitution, November 16, 1977, in EU MARBL, MP, Box
18, Folder 9.
39 Pendergrast, Interview with Sam Ayoub, EU MARBL, MP; Nathaniel Harrison, “Things go poorly for
Coca-Cola project to grow fruit in Egypt,” Christian Science Monitor, January 28, 1981.
conditions. At the start of negotiations, the Egyptian government had already committed
to the U.S. government to remove its boycott as an unofficial stipulation of Sinai II, later
made explicit in the 1979 treaty. Thus, entering talks in the mid-1970s with Coca-Cola,
Ford, and others to re-enter the country, Egypt knew that it held no cards in the
negotiations. Nevertheless, Fahmy and Sadat managed to extort what can only be described
as an exorbitant bribe for a bureaucratic maneuver that would become legally inscribed
only two years later.
In political terms, the move was a genius stroke to boost the infitah. Surely Sadat
was aware of the backlash from the Arab world that would result from peace with Israel,
and as noted above, the open-door policy was first conceived with the goal of attracting
Arab capital to invest in Egypt. With chances of attracting Arab capital at this point
somewhat slim, Egypt needed an infusion of non-Arab capital. And considering the
country’s recurring foreign exchange problem, investment was particularly needed that
would rectify the imbalance by boosting exports and bringing foreign currency into Egypt.
Just as Egypt’s decision in 1968 to ban Coca-Cola made sense on the financial level, so too
did the 1977 citrus deal serve the economic interests of the Egyptian state. The final trump
comes with Sadat’s expressed desire to make the desert bloom and his administration’s use
of phrases like “invading the desert,” “attacking the land,” and obtaining “food security.”40
There was land ready for cultivation: a contentious debate took place in parliament over
the details of the initial infitah laws concerning foreign activity in agriculture. The
government was holding several hundred thousand feddans of land reclaimed from the
desert (one feddan is just over an acre) and pouring significant funds into maintenance and
improvement. Supporters of infitah reasoned that the best course of action was partnering
with foreign agribusinesses, whose “capital resources, advanced technology, and market
knowledge would make profitable for them what was a dead loss for Egypt.”41
For the American government, any secondary benefits from the Egypt-Israel peace
talks were to be welcomed. President Carter invested massive diplomatic capital in
resolving the Arab-Israeli conflict, and the Camp David Accords were the major success
of his administration.42 To sweeten the deal, the U.S. government committed
approximately $1 billion in aid per year to Egypt and $2-3 billion per year to Israel – sums
that the U.S. continues to provide – essentially as a payment for peace.43 With an
investment this large, asking for its businesses to be let back into the Egyptian market
seemed a small request. It also conveniently satisfied a long-standing wish of the company
headed by Carter’s personal friend. The fact that the Egyptian government was reconciling
with Coca-Cola was a sign, however small, of the benefits of backing the Middle East
In the view of Coca-Cola, returning to Egypt had been a goal since the day it had
been ejected. Egypt was the largest and most lucrative market in the Middle East, and Pepsi
had been operating without major competition since 1968 because Pepsi never ran afoul of
40 William E. Farrell, “Egypt Coaxes Nile Farmers to ‘Invade’ the Desert,” New York Times, August 4,
41 Waterbury, The Egypt of Nasser and Sadat, 137.
42 Lawrence Wright, Thirteen Days in September: Carter, Begin, and Sadat at Camp David (New York:
Knopf, 2014), 6 & 284; Steven V. Roberts, “Analysts Give Carter Higher Marks in Foreign Affairs than in
Domestic Policy,” New York Times, January 19, 1981.
43 Stephen M. Walt, “Making Lemonade in the Middle East,” ForeignPolicy.com, July 12, 2013; Jeremy M.
Sharp, “Egypt: Background and U.S. Relations, Congressional Research Service (RL33003: June 5, 2014).
the Arab boycott by operating in Israel and, interestingly, was never the object of public
relations attacks from American Jewish groups for its non-investment. Further, Coca-Cola
expected its investment to be quite profitable and was also protected on the downside by
insurance from OPIC.44
A Tale of Imperialism?
There are numerous examples in both scholarly and popular literature of the
tendency, mentioned in the introduction, to reduce interactions between a Western
government or corporation and a developing country to a caricature, whether dismissingly
critical or blindly optimistic. Most easily noted are the dual narratives of “strong
globalization” versus “weak globalization.” The first represents the fears of an impending
global monoculture created by Western (specifically American) capital and corporations
imposing their will on helpless indigenous peoples and developing countries. The second
sees globalization with hope as a force for cultural pluralism, whereby the local adaptations
of McDonald’s and Coca-Cola help create a thriving and ultimately beneficial interaction
between global and local. These tropes find expression everywhere – Coca-Cola itself
espouses a version of the “weak globalization” message in its advertising.45 However, in
the context of Coca-Cola, Egypt, and the Arab boycott, “strong globalization” instinctually
seems like a more proper theory and one might expect to find a story of Egypt’s
exploitation. The only other works to address Coca-Cola’s relationship with Egypt – one
literary and one scholarly – both adopt this model.46
Sun’Allah Ibrahim, a prominent Egyptian writer of the sixties and seventies,
explicitly features Coca-Cola as a destructive force in Egyptian society in his novel The
Committee. When asked by the faceless, all-powerful committee to name the symbol by
which the twentieth century will be remembered, the protagonist settles on Coca-Cola,
launching into a soliloquy that lasts several pages and uncompromisingly indicts the
company’s ability to influence events and politics across the world. In particular, he notes
(accurately) that the Coca-Cola president, Paul Austin, played a role in getting Jimmy
Carter onto the Trilateral Commission. The book continues with a vicious attack on the
cronyism and corruption of Egypt’s economic liberalization that brought little or benefit
for the majority of the people. In decrying this corruption and Coca-Cola’s fearful power,
Ibrahim’s message remains relevant; however, his protagonist’s critical view fails to
consider Egypt’s ability to manipulate the imperial ambitions of Coca-Cola.47
There has only been one treatment of the process by which Coca-Cola initially ran
afoul of the Arab boycott and was banned from the Egyptian market. That work is an
important addition to the scholarship on the company in the Middle East and provides
important context for this paper. The historian Maurice Jr. M. Labelle recounts
CocaCola’s entrance to Egypt on the back of the American military during World War II, the
44 Pendergrast, Interview with Sam Ayoub, 9-10 & 17, EU MARBL, MP.
45 Jonathan Friedman, “Global System, Globalization and the Parameters of Modernity,” in Global
Modernities, ed. Mike Featherstone, Scott Lash, and Roland Robertson (London: Sage, 1995), 69-90;
Robert J. Foster, Coca-Globalization: Following Soft Drinks from New York to New Guinea (New York:
Palgrave Macmillan, 2008), 6-10.
46 Sun’Allah Ibrahim, The Committee
(Syracuse: Syracuse University Press, 2001)
47 Ibrahim, The Committee, 16-23.
process by which the company ran afoul of the boycott, and Coca-Cola’s official eviction
from Egypt in 1968. Labelle argues that the “spirit of decolonization dominated Egypt’s
post-independence political economy” and that Egypt’s decision to enforce the boycott
reflected support for the concept of “decolonization.”48 However, this analysis falls prey
to the tendency to impose the imperialism narrative in the face of other complicating
Consider, for example, the alternatives expressed within Labelle’s article itself. The
Egyptian under-secretary on the economy in charge of boycott matters, Hussein Khalil
Hamdi, told an American embassy officer that Egypt had no choice but to maintain the
Arab stance on the boycott, illustrating the political imperative to stand as a united front
against Israel.49 Egypt’s estrangement from the rest of the Arab world after normalization
with Israel in 1979 showed, perhaps to a greater degree than the 1968 Coca-Cola issue
would have, the necessity, in terms of regional prestige and reputation, of upholding the
Arab stance on the boycott. Labelle also noted that many officials welcomed the boycott
on economic terms, as the import of concentrate for producing Coca-Cola was a significant
drain on Egypt’s foreign exchange.50 In another demonstration that the government viewed
the issue in economic terms, Egypt seriously considered a Coca-Cola counter-proposal to
establish a concentrate plant in the country – thus eliminating the foreign exchange problem
– before making a final decision. The company was aware that the foreign exchange
imbalance was a significant problem for Egypt.51 The problem was so pressing in
19651966 that the country began restructuring talks with the IMF.52 In an interesting turn,
CocaCola was part of the problem in 1966, but became a partner in the solution by 1977.
Further demonstrating that the issue was financial rather than ideological, Hamdi is
quoted in internal company correspondence as saying, “if the bribe is big enough Egypt
will not boycott.”53 This statement only provides more evidence for the quid pro quo nature
of the 1977 citrus deal, though Ayoub was reluctant to say so.54 Ford negotiated a similar
plan, and the company-prepared Q&A distributed to regional embassies for press inquiries
also side-steps the direct question of quid pro quo in its response.55 Ultimately, it seems
that economics, rather than ideology, guided Egyptian decision-makers.
There are previous scholars of both Egypt and Coca-Cola who have called for a
revisiting of the reductionist imperialism narrative. In his monograph of the politics of
investment in Egypt during the first half of the twentieth century, historian Robert Vitalis
calls for a revision of that narrative, and opens with the statement that “the politics of
business and industry building in Egypt can no longer be reduced to the idea of an
overarching struggle between imperialism and the nation.”56 Similarly, anthropologist
48 Labelle, “De-coca-colonizing Egypt,” 132.
50 Ibid, 134.
51 Letter to John Talley, June 30, 1966, EU MARBL, Robert W. Woodruff Papers (RWWP), Box 48,
52 Waterbury, The Egypt of Nasser and Sadat, 407.
53 Letter from Vernon G. Hoppers to John Talley, October 17, 1966, EU MARBL, RWWP, Box 48, Folder
54 Pendergrast, Interview with Sam Ayoub, 12, EU, MP.
55 Embassy Cairo to Department of State, Telegram 18303, November 4, 1977.
56 Robert Vitalis, When Capitalists Collide: Business Conflict and the End of Empire in Egypt (Berkeley:
University of California Press, 1995), 5.
Robert Foster’s study of the integration of Papua New Guinean society into the world
economy through the example of Coca-Cola echoes Marx with a view of commodities and
globalization that permits people to create their own meanings and uses of the products
while recognizing that the underlying power relationships remain unequal.57
To illustrate the complexity of these interactions, an example from Egypt herself
may be helpful. In depicting the limits of the power of the Egyptian regime under Nasser
and Sadat, the historian John Waterbury makes note of low-intensity bureaucratic
insurrection that continually frustrated the attempts of the power center in Cairo to enact
sweeping measures through the country’s sprawling administrative machine. His
description is worth quoting at length:
“Seemingly one then had the meeting of the historically conditioned docile
Egyptian with the bureaucratic behemoth obeying the directives of the new
pharaoh. However, nothing could be farther from reality. The great administrative
pyramid is indeed there with a presence in every village, quarter, and factory in the
country, but it has, more often than not, been appropriated by local interests,
manipulated to personal advantage by its own personnel, and put to the service of
those who can buy its favor and benefits. Seldom has it been the executor of the
It is important to understand that Waterbury is not claiming that Nasser and Sadat
were powerless to control the behavior of their subjects, or that most Egyptians led their
lives outside the reach of the bureaucratic machine. Instead, the claim is that local interests
appropriated the power structure imposed on them by the revolutionary government in
Cairo and negotiated a new method of existence that was different from, yet significantly
colored by, both the pre-bureaucratic mode of organization and the vision of top-down
directive guidance by the Egyptian government of the pliable masses.
Waterbury’s observation is exceedingly applicable to the shaping of the historical
narrative about Coca-Cola and the world, and particularly useful for interpreting the story
of Coca-Cola’s re-entry into Egypt in the 1970s. First we must take note of the immense
power the company wields through close relationships with government officials and U.S.
presidents, the local interest groups created by franchising and in-country production, the
cultural suasion of the second most well-known phrase in the world, and of course the sheer
financial power of Coca-Cola.59 Also of note is the power of the U.S. government in that
it holds the strings of massive financial aid to the government of Egypt. These make up the
“circumstances already existing” of Marx’s quote. But here we find the balance tilted in
favor of Egyptian officials making “their own history.” Egypt appropriated Coca-Cola’s
profit motive and the U.S. government’s financial largesse to serve local interests. The
Coca-Cola deal provided an essential capital injection to an economy on the brink of
collapse, particularly in light of the regional isolation Egypt would experience in the
aftermath of peace with Israel. It also checked off Sadat’s key aspiration to develop the
desert for agriculture. Unfortunately for Egypt, Waterbury’s analysis of the insurgent
57 Foster, Coca-Globalization, 8.
58 Waterbury, The Egypt of Nasser and Sadat, 347.
59 Pendergrast, For God, Country, and Coca-Cola, 378; Elmore, “Citizen Coke,” 724.
Egyptian bureaucracy strikes twice, as demonstrated by the live bombs,
miscommunication, and turf wars that sunk the citrus project before it ever got off the
The pattern that emerges in Egyptian relations with Coca-Cola does not, in the end,
take an imperial flavor. Rather, the actions of Sadat, Nasser, and the other officials involved
in the decision-making process concerning the boycott demonstrate a keen awareness of
Egypt’s economic needs and a commitment to use the largesse of Coca-Cola to achieve
those goals. Dealing with deep-rooted economic problems during the periods surrounding
both Coca-Cola’s departure and re-entry to the country, the soft drink company played into
Egyptian policies to improve its foreign exchange situation and draw in foreign capital to
establish a stronger export base. The traditional narrative that Coca-Cola’s activities in
Egypt would be necessarily exploitative has proven misguided. This narrative denies the
agency of Egyptian actors and discounts their ability to act in a self-interest contradicting
the aims of Coca-Cola. In fact, the tables were turned, and Coca-Cola’s 1979 advertising
slogan of “have a Coke and smile” was likely not lost on Sadat, Fahmy, and the other
Egyptian officials who negotiated a $10 million handout from the oblivious soft drink
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