Tubs of ice-cream are seen as a labourer works at Ben & Jerry's factory in Be'er Tuvia, Israel July 20, 2021. REUTERS/Ronen Zvulun

JERUSALEM, June 29 (Reuters) - Unilever (ULVR.L) on Wednesday sold its Ben & Jerry's ice cream business in Israel to its local licensee for an undisclosed sum, aiming to smooth over a potentially damaging diplomatic row.

The deal comes after the U.S. ice cream brand announced last year it would stop marketing products in the occupied Palestinian territories, saying that selling there was "inconsistent" with its values.

The episode highlighted the challenges facing consumer groups taking a stand on Israel's occupation of the Palestinians, such as the San Francisco-based Airbnb, which in 2019 reversed its decision to delist Israeli settlements.

The international boycott, divestment and sanctions (BDS) movement seeks to isolate Israel over its treatment of the Palestinians. Israel says such boycotts are discriminatory and antisemitic.

"We will fight delegitimization and the BDS campaign in every arena, whether in the public square, in the economic sphere or in the moral realm," Israel's Foreign Minister Yair Lapid said in a statement.

Last year, Israel condemned the sales boycott as "morally wrong" and said Unilever would face "severe consequences". The consumer goods giant defended Ben & Jerry's autonomy, but said it was "fully committed" to Israel and would find a solution by the end of this year.

Under the new arrangement Ben & Jerry's ice cream will be available to all consumers in Israel and the occupied West Bank.

The new owner is the brand's long-time Israeli ice cream licensee Avi Zinger, owner of American Quality Products. Zinger had sued Ben & Jerry's after its decision in the West Bank, saying the company illegally severed their 34-year relationship.

"The new arrangement means Ben & Jerry’s will be sold under its Hebrew and Arabic names throughout Israel and the West Bank under the full ownership of its current licensee," Unilever said.

Ben & Jerry's and its independent board maintained the right to decide on its social mission when it was bought by Unilever in 2000. But Unilever said it "reserved primary responsibility for financial and operational decisions and therefore has the right to enter this arrangement."

Israel captured the West Bank, part of the territory Palestinians want for an independent state, in a 1967 Middle East war. Most countries consider Israeli settlements on Palestinian land to be illegal. Israel disputes this.

"The return of Ben and Jerry's to Israeli settlements, which were built on Palestinian land, exposes it to international legal accountability and its name will be on the United Nations blacklist of companies operating in settlements," The Palestine Liberation Organization's Wasel Abu Yusef told Reuters.

Omar Shakir, Israel and Palestine Director at Human Rights Watch, said the deal sought to undermine the "principled decision" to stop selling the ice cream in Israeli settlements.

"What comes next may look and taste similar, but, without Ben & Jerry's recognized social justice values, it's just a pint of ice cream," he said in a statement.

Ben & Jerry's is well known for its commitment to social justice. It has recently expressed strong support for the Black Lives Matter movement, LGBTQ+ rights and electoral campaign finance reform.

Reporting by Aby Jose Koilparambil in Bengaluru, Ari Rabinovitch and Henriette Chacar in Jerusalem and Ali Sawafta in Ramallah; Editing by Mark Potter and David Evans

Source: Reuters

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