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Breaking the British Blockade - Abe Feinberg Part 2

Having played a significant role behind the scenes in securing the United Nations vote for the partition of Palestine, Abe Feinberg was able to concentrate on his duties as president of Americans for Haganah. His primary objective was finding the funds for the clandestine acquisition of armaments needed by the Haganah to defend the soon to be State of Israel against the impending attack by 5 Arab armies. Following the rebirth of the Jewish State and the victorious end to the first Arab Israeli War, Abe Feinberg set about doing what he could to establish the economic viability of Israel.

Breaking the arms and refugee embargoes.

Following the United Nations Partition vote, violence that has been described as a civil war, broke out between the Jewish and Arab residents of Mandate Palestine. While the British Mandate for Palestine authorities were stringent in doing their utmost to prevent the Jews of Palestine from arming to defend themselves, there was no such restriction on the Arab community or paramilitary forces. The British military authorities did very little to prevent attacks against Jewish persons or property, more often than not, turning a blind eye to Arab attacks, while they concentrated on preparing for their own impending departure from Palestine. In a similar vein, Arab militants from the surrounding countries were allowed to enter Palestine at will, while Jewish Holocaust refugees were in the main denied entry. Adding insult to injury, many of the refugees who had recently been freed from Nazi death camps, were incarcerated in barbed wire detention camps in Palestine itself, as well as on the islands of Cyprus and Mauritius.

The Haganah had manifold needs as it was active on numerous fronts, over and above it's overt role as the primary paramilitary force for the defence of the Jewish residents of Palestine. The Palmach, which was the covert or underground elite force of the Yishuv, was made up of Haganah members, while other operatives ran the Aliyah Bet operation of bringing Jewish refugees to Palestine, mostly illegal in the eyes of the British Mandate administrators. There was a global prohibition on the sale or supply of military matériel to the Jewish Agency or to the Jewish paramilitary forces, which meant that all armaments had to be acquired and imported clandestinely, another Haganah responsibility.

Ships and aircraft that could be used to ferry refugees and arms from Europe to Palestine could generally not be chartered, which meant that the Haganah had to acquire its own fleet of ships and aircraft, which was also prohibited as these could be (and often were) modified for military use. All the shipping, aircraft, weapons and ammunition had to be sourced from black market suppliers wherever they could be found, with a premium generally added to the cost in the form of commissions or bribes to suppliers. The upshot of all these needs was an even greater need for ready funds to purchase whatever became available, usually at short notice from shady operators. This was where Abraham Feinberg and the Americans for Haganah came to the fore, making introductions to potential suppliers and then, most importantly, raising and providing the necessary funds to make the purchases.

Many books have been written and movies made about the spiriting of aircraft, ships, military vehicles, artillery pieces and many types of ammunition from sources in the United States, South America and Europe to Palestine, but very little has been said about the Jewish businessmen in the U.S. and elsewhere who raised the millions of dollars needed to make it all happen. Without ready money very little would have been possible, and Abe Feinberg was the go to man when money was needed. The book Angels in the Sky by Robert Gandt , (available from Amazon on ), goes into great detail of the type of deals and the urgency for funds that usually accompanied every significant purchase of aircraft or armaments, but never reveals the source of the vast sums of money that suddenly became available. Without the fundraising success of Abe Feinberg and Americans for Haganah, Israel might never have lived to see the light of day after the combined attack by 5 Arab armies on 15 May 1948.

The movie Exodus highlighted the dreadful realities of Aliyah Bet (Illegal immigration) and the terrible conditions under which refugees were ferried to Mandate Palestine, as well as the harsh treatment they received at the hands of the British authorities. Ships such as the Exodus were purchased by Haganah Aliya Bet operatives with funds made available by Abe Feinberg through the offices of Americans for Haganah. Without their efforts many tens of thousands of Jewish Holocaust refugees might have languished for years in Displaced Persons Camps, rather than joining their brethren in Palestine, where they were able to to join in the fight for a Jewish Homeland.

American born Israeli, Murray Greenfield, a volunteer seaman on Aliyah Bet ships tells the story of these ships in his book "The Jews’ Secret Fleet" (available from Amazon on . He makes his readers aware of the intolerable conditions and privations experienced by the refugee passengers and the volunteer crew members, as well as the horrific treatment meted out by the British authorities when they captured and boarded ships trying to break the blockade. Many of the 200,000 Holocaust refugees that were able to enter Palestine and later become citizens of Israel owe a great debt of thanks to Abe Feinberg and many others who played such an important role in the rebirth of Israel.

The war had been won, but peace presented a new set of challenges for the nascent State of Israel. The conflict had cost the lives of almost 6,500 people, or 1% of the population, and had left the economy in tatters, while at the same time hundreds of thousands of Jewish refugees from Europe and the Arab states were in dire need of sustenance and accommodation. Abe Feinberg realised that industries and employment opportunities had to be created, and with this in mind he successfully approached the giant Coca Cola Corporation in early 1949 for the rights to open a bottling plant in Israel. To his great consternation, prime minister Ben Gurion refused the necessary permission to establish the plant on the grounds that there was no place for a luxury drink such as Coke in a socialist state, where people were starving, with basic needs of far greater importance.

Israel Bonds

The establishment of Israel Bonds in 1950 to fund the building of housing and infrastructure coupled with the creation of jobs, was the brainchild of David Ben Gurion. He saw this as a means of obtaining the financial participation of Diaspora Jewry in the growth of Israel. Despite his dismay at Ben Gurion's position regarding Coca Cola, Abraham Feinberg was one of those at the forefront. both as an investor, and in the promotion and underwriting of bond sales. The Development Corporation for Israel (DCI) was established as the U.S. underwriter of debt securities (Israel Bonds) issued by the State of Israel. By 1957 Golda Meir was able to announce that Israel Bonds accounted for 35% of Israel’s development budget. Abraham Feinberg, a founding member of the board, was elected as president of the Development Corporation for Israel (DCI) in January 1960.

Prime minister Ben Gurion launching Israel bonds in New York

Among the earliest projects funded by the bonds were the nationalisation of the Dead Sea Works and the establishment of the National Water Carrier. The Water Carrier enabled the irrigation of almost half a million acres of arable land in the Negev, while the Dead Sea Works allowed Israel to become a major exporter of chemicals. Later projects funded by Israel Bonds included the construction of the Hadera power station, the ports of Eilat and Ashdod and modernisation of the Haifa port. During 1958, when Shimon Peres advised Ben Gurion that additional funds were needed for the completion of the Dimona Nuclear research facility in the Negev, Ben Gurion had sage advice “phone Abe”, which Peres did, and within a short time the funds for the completion of the important facility became available.

By 1960, in addition to his ascendency to the presidency of the DCI, Feinberg was also the president of the American Committee of the Weizmann Institute of Science. His most important service to the financial wellbeing of the State of Israel as well as his most significant business success came about through the combination of a strange set of circumstances. I wrote earlier that he negotiated the Coca Cola franchise for Israel in 1949, an initiative that did not eventuate due to governmental intransigence. Shortly after that, the Arab League was able to institute an almost global boycott of investment in Israel. Multinational companies were placed in a situation where they had to choose between the miniscule Israeli market and the combined markets of the Arab League States.

Breaking the Arab Boycott

This all started changing when the founder and owner of the Tempo Bottling Company in Israel, Moshe Bornstein, was rebuffed by Coca Cola in an attempt to obtain the franchise for Israel. During April 1966 he accused Coca-Cola of refusing a franchise for Israel, because they feared Arab league retaliation and the accompanying loss of market share. The Anti-Defamation League investigated and issued a statement, which was given national coverage, supporting Bornstein's accusations of anti-semitic bias. Soon after this, Nathan’s Famous Hotdogs, with over 40 branches, announced that it would no longer be offering Coca Cola on its menus. This was followed by a massive outpouring of public criticism of anti-semitism levelled against the Coca Cola company. With Israel at that stage still the darling of U.S. liberals, there was huge support for Bornstein, accompanied by a dramatic drop in sales, which forced Coca Cola management to reassess the situation. The company announced that it would be granting a franchise for a plant in Israel, but much to Bornstein's acute dismay, Coca Cola ignored him completely and controversially granted the franchise to Abraham Feinberg.

The following report appeared in The Jewish Telegraphic Agency on 18 April 1966 "James A. Farley, chairman of the Coca-Cola Export Corporation, has announced that Abraham Feinberg has been granted the Coca Cola franchise for Israel. Farley said that in 1949, Mr. Feinberg, with a group of associates, received approval from the Coca-Cola Company of his application to bottle Coca-Cola in Israel. “Because of the difficult hard currency situation at that time, Mr. Feinberg and his associates were unable to get Israeli Government approval and subsequently withdrew their application in 1950,” the statement pointed out, adding that “Mr. Feinberg has never lost his interest and, as recently as March 31, predating the current controversy, advised me of his continuing serious interest and renewed his request for a franchise.”

1991 Madrid Peace Conference

Coca Cola’s action broke the back of the boycott of investment in Israel and very soon other multinationals followed their lead and began investing in the Jewish State. The Arab League States retaliated by banning the sale of Coca Cola, while Pepsi continued to observe the boycott, becoming the biggest beneficiary as the only supplier of cola in the Arab world. The boycott on Coca Cola remained in place until 1991, by which time most, if not all multinationals were conducting business with, or in Israel. Pepsi saw fit to begin supplying the Israel market with its products after the 1991 Madrid Conference, which involved multilateral discussions between Israel, Syria, Lebanon and a joint Jordanian/Palestinian delegation. After the conference prime minister Yitzhak Shamir said the following on 1 Novemebr 1991 "With an open heart, we call on the Arab leaders to take the courageous step and respond to our outstretched hand in peace". During the next 2 years trade or other treaties were signed with the Gulf states of Oman and Qatar as well as with the Muslim majority African states, Morocco, Tunisia and Mauritania. The Madrid Conference was the beginning of the negotiations which led to the Oslo Accords, and their accompanying forlorn hope of peace.

Moshe {Mozi) Wertheim

The first marketing and later general manager of the Central Bottling Company (CBC), otherwise known as Coca Cola Israel, was Moshe (Mozi) Wertheim, an employee of Teva Pharmaceuticals, who had been “lent” to Feinberg. Wertheim steadily acquired shares in CBC, eventually owning about 40% of the company. CBC was valued at $400 million by Discount Bank in 1998, making Wertheim an extremely wealthy man. Feinberg had also acquired control of Mizrahi Bank, with Wertheim as a minority shareholder, although he acted as Feinberg’s nominee, effectively controlling both Mizrahi and CBC. Following Feinberg's death, his heirs disposed of all Abe's Israeli business assets by selling them to Mozi Wertheimer. The previously adamant boycotter, Pepsi, later saw no harm in acquiring the Israeli based SodaStream company, a favourite target of the BDS movement, who are opportunistically, but with little success, seeking to emulate the success of the earlier Arab league boycott.

Abe Feinberg Philanthropy

Abraham Feinberg established the Feinberg Graduate School for Business and also endowed 3 important bursaries at the Weizmann Institute in 1983; The Belle and Philip Feinberg Scholarship; The Lillian Feinberg Scholarship; and The Shirley and Judge Wilfred Feinberg Scholarship. Feinberg sponsored medical research, particularly in the field of schizophrenia research in the United States and in Israel. He later endowed the psychiatric wing at Schneider Children's Medical Center in Petah Tikvah, establishing the E. Richard Feinberg Department of Child and Adolescent Psychiatry. Besides his services to Israel, Feinberg was awarded an honorary doctorate by Brandeis University where he endowed The International Center for Ethics, Justice and Public Life. He served as the chairman of the university Board of Trustees from 1954 to 1961

Abraham Feinberg, one of Israel's greatest benefactors, was a lifelong Democrat. He had been a confidante of U.S. presidents Truman, Kennedy and Johnson, while also enjoying close relationships with Israeli leaders Chaim Weizmann, David Ben Gurion and Golda Meir. Abraham Feinberg passed away in 1998 at the age of 90.

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Fascinating, interesting and as always extremely well researched and authored. My education continues......

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