(Bloomberg Businessweek) -- In early December, scattered violence erupted in Israel after President Trump announced that he would recognize Jerusalem as the nation’s capital, abandoning the U.S.’s long-standing neutrality on the city’s status. It wasn’t the orgy of bloodshed between Jews and Palestinians that some had expected, at least not yet. But the hostilities bode poorly for what Trump has described, vaguely, as a coming “ultimate deal” for all of the actors in a conflict that has lasted more than a century. The prospect of peaceful coexistence in the region seems as bleak as ever.
Except perhaps in Rahat, a city of 62,000 in the rocky Negev desert. On a fall afternoon, Daniel Birnbaum steers a white Skoda sedan off the highway and up to a complex of four white buildings, one of which bears an enormous logo that reads “SodaStream.” In 2015, the $1.5 billion maker of home carbonation devices moved the bulk of its manufacturing here, to the country’s largest Bedouin city. Birnbaum, the chief executive officer, parks just as a work shift is ending and the 1,700-person campus is emptying out. But inside one of the cavernous buildings, two dozen or so employees remain on the assembly line, earning overtime.
They represent, as SodaStreamers like to say, a United Nations in miniature: Russian Jews, Ethiopian Jews, Bedouins, Palestinians, Druze, even a dreadlocked member of the Black Hebrews—a group of African Americans who claim to have descended from the ancient Israelites. Birnbaum, who’s 55 and broad-shouldered, with immaculately trimmed graying hair, moves through the ranks, dispensing hugs, waves, and patter. The workers are obliged to seem cheerful—he’s the boss, and he has two journalists in tow—but the affection seems genuine and mutual. “Hey, there’s my favorite Palestinian!” Birnbaum says, greeting a manager. Next, he introduces Shourok Alkrenawe, a tall, moon-faced Bedouin who wears a patterned burgundy headscarf and radiates the confidence of someone much older.
“She’s an amazing woman!” Birnbaum says. “She’s only 22, a Bedouin girl, and she’s managing a shift. She’s a team leader. Can you believe it? Who do you have on your team?”
“I have two Bedouins—”
Birnbaum interjects: “Male or female?”
“Two men,” Alkrenawe replies.
“That’s incredible right there,” Birnbaum says.
“A Palestinian,” Alkrenawe continues.
“A Palestinian, OK.”
“One Jewish woman and a Russian,” Alkrenawe says.
“Each one of them is older than she is,” Birnbaum says. “That’s what you’d call the future.”
SodaStream International Ltd. has had a good run lately. Unit sales of its machines—countertop gadgets that inject carafes of tap water with CO₂ to make sodas, tonics, and other fizzy drinks—were up 22 percent last year, to 2.9 million. Birnbaum will gladly expound on SodaStream’s wonders, from the environmental (users can stop buying their sparkling beverages in disposable bottles) to the mixological (before the factory visit, he crafts a tasty nip of gin, Aperol, and bubbly water). But with the prospect of a Trump-triggered third intifada looming, this isn’t a story about the bliss of homemade seltzer. It’s the tale of a CEO who claims to be selling not just bubbles but peace, and who says his model can help resolve one of the world’s most intractable standoffs.
Birnbaum would be the first to tell you he’s not a left-winger. Like Israeli Prime Minister Benjamin Netanyahu, he says the West Bank and Gaza are historically Jewish and were liberated in the 1967 Six-Day War, rather than occupied. Birnbaum, however, also says this is irrelevant. He’s in favor of a two-state solution that would involve Israel ceding most of the territories to the Palestinians. And that’s unlikely, he argues, without first addressing the abysmal Palestinian employment situation, which breeds resentment and violence. In the Gaza Strip, blockaded for more than a decade by the Israeli army, the unemployment rate has reached 42 percent—in the same league as Somalia. The situation is only somewhat less dismal—18 percent—on the West Bank.
Those who do have jobs aren’t exactly content. Almost 117,000 West Bank Palestinians pour into Israel and its settlements every day to work. They typically make twice what they would in Palestinian-cntrolled areas. But in many cases, Palestinians pay exorbitant fees to shady employment brokers. They often make less than Jewish workers for the same tasks. They also must spend hours of unpaid time each day passing through border checkpoints, where they’re often humiliated by Israeli soldiers.
Birnbaum argues that Israel should let more Palestinians into the country so that more of them can work for companies like SodaStream, where they can toil beside—or even over—their Jewish peers, enjoying the same salaries and benefits. When Jews and Arabs mingle on the factory floor, he says, they discover their commonality and stop demonizing each other. In other words: The work of peace begins at work itself.
Not everybody, of course, is convinced of the purity of Birnbaum’s intentions. In recent years, human-rights activists have pushed for high-profile SodaStream boycotts. In 2014 they claimed victory when the company said it would shutter a factory on the West Bank, which the boycotters argued had been part of Israel’s illegal occupation of the territory. (The story got extra media play because a bathrobe-wearing Scarlett Johansson had just starred in a SodaStream Super Bowl ad.)
Birnbaum says the boycotts hurt Palestinians more than they help them: Several hundred lost their jobs when he shut the West Bank factory and moved operations to Rahat. “What are these people thinking?” he asks of SodaStream’s antagonists. “That the West Bank should be starved and people shouldn’t work? Their hate for Israel is stronger than their love of the Palestinians.”
As with the Israeli-Palestinian conflict itself, Birnbaum’s campaign has become a multilevel scrum. He’s sparred with the Netanyahu administration, which one assumes would be on the side of Israeli companies, but Birnbaum accuses it of needlessly throwing 74 of his Palestinian employees out of work last year to score points with its right-wing base. The prime minister’s aides have derided Birnbaum as a performance artist, which may not be entirely off the mark. He’s clearly someone who loves a fight and the spotlight that comes with it. “He always likes to be the hipster David vs. Goliath,” says Camiel Slaats, one of Birnbaum’s former bosses. It’s true that he isn’t shy about using the tribulations of his Palestinian workers to promote the interests of SodaStream. Quantifying the effect is difficult, but the company’s shares have more than quadrupled in two years, as consumers increasingly associate the brand with health and virtue. “Activism has become a big part of not only people’s day-to-day lives but their spending and consumption habits,” says Anthony Campagna, senior equity analyst at EVA Dimensions. “They’re trying to stay on the right side of the fence, positioning themselves as a trendy, hip, nice brand.”
What do SodaStream’s workers think of Birnbaum’s dual campaign? Let’s ask one of the company’s longtime Palestinian employees. His name is Nabil Bsharat.
Every weekday, Bsharat, a 43-year-old with olive skin and a shaved head, wakes up at 4 a.m. He dresses quietly so as not to wake his wife. He’s gotten good at it—she rarely stirs. A self-described middle-of-the-road Muslim, Bsharat takes a few moments to pray in the living room of his home in Jab’a, a village on the West Bank near Ramallah. Sometimes, one of his seven children comes out for a hug and kiss before he leaves, but most mornings, he’s alone. By 4:20 a.m., Bsharat is making his way along badly paved streets to a bus stop. His total commute to work is three hours—but only if he makes it through an Israeli checkpoint.
On most days, Bsharat is one of thousands of Palestinians attempting to cross into the country at the Qalandiya screening post. They stand in one line to go through a metal detector, another line for a bag check, and a third for fingerprint scans. Then they wait for permission from the Israeli soldiers to leave. The process can take 45 anxious minutes. The buses that await the workers on the far side can’t linger past 5:15 a.m.—and if the workers miss them, they don’t get paid. “Everybody wants to get out of there at the same time,” Bsharat says, sipping mint tea on his living room sofa on a day off. “I feel like an animal. There are people that stopped going [into Israel], people that said, ‘I don’t want this nightmare.’ Sometimes I ask myself why I do it. But there’s something that pushes me, captures me.” Bsharat has worked at SodaStream for seven years and thinks of the factory as his “home.” And he feels a certain loyalty to Birnbaum.
The son of a conservative rabbi who fled Eastern Europe to escape the Holocaust, Birnbaum was born in New York but grew up on a kibbutz in southern Israel, where one of his neighbors was David Ben-Gurion, the country’s first prime minister. Young Birnbaum was consumed with making money. He sold his classmates “pizzas” that he made in a toaster oven with bread, tomato sauce, and sliced cheese. His mother recalls that he even tried to sell his friends rocks.
After getting an MBA at Harvard Business School in 1992, Birnbaum did time at Procter & Gamble Co. and then returned to Israel, where he started a division of Pillsbury and later headed Nike Inc.’s operations in the country. He increased sneaker sales with marketing stunts such as a party in an old Tel Aviv metro station, which attracted politicians, movie stars, and reporters who wrote about Nike’s brash Israel chief.
Slaats, his former boss at Nike, says the company would have promoted Birnbaum. But Birnbaum didn’t want to leave Israel. Instead, in 2007, he took a job as CEO of SodaStream. The company, then 104 years old, had once been known for the catchy slogan “Get Busy With the Fizzy.” But when Birnbaum arrived, SodaStream was almost bankrupt and had just been purchased by a private equity firm for a mere $6 million.
Birnbaum revived sales in part with an attention grab: a marketing campaign that criticized Coca-Cola Co. and PepsiCo Inc. for bottle waste and drew threats of lawsuits from Big Soda that he happily publicized. “We were this little Israeli company suddenly on the international map, shaking up a big industry,” he recalls, sipping some newly carbonated water at SodaStream’s headquarters outside Tel Aviv, a cheerful place decorated with pictures of giant pink and blue bubbles.
Over lunch at a local hummus restaurant, Birnbaum produces his own stash of garlic sauce from a plastic container and talks about how SodaStream came to market peace. The soda-skirmish sales bump meant he had to hire more workers at its factory in Mishor Adumim, an industrial park on the West Bank. Few Israelis applied, so Birnbaum decided to bring in Palestinians, though he knew some employees might balk. “There was terrorism going on,” he says. “The Jews would think that if you take Palestinians, they’ll blow themselves up.” Birnbaum installed a metal detector at the factory entrance—but he also quashed a proposal that only Palestinians would have to walk through it, making it mandatory for everyone. He says three Israeli employees quit rather than work next to Arabs.
Birnbaum says he was surprised by what good employees the Palestinian workers turned out to be. “Some of them never take a sick day,” he marvels. Soon they comprised the largest ethnic group among the plant’s 1,400 workers. Birnbaum was delighted to find that despite their historic animus, Palestinians and Israelis mixed well on the job. It wasn’t through clever management. “We didn’t know what we were doing,” he says. Rather, it occurred naturally. He compares it to the discovery of penicillin.
As he got to know SodaStream’s Palestinians, Birnbaum took a parental—verging on paternalistic—interest. Upon discovering that some had never seen the ocean, he got the government’s permission to take several busloads to the beach south of Tel Aviv, along with their Israeli co-workers. “It was so funny,” he says. “First of all, they go swimming in full garb, no bathing suits—which helps you drown, by the way, because the clothing absorbs so much water. Plus, they can’t swim to begin with.” With blithe comments like that, Birnbaum can seem indifferent to his workers’ plight. But he also has a penchant for bighearted deeds, supporting his claim—and that of his friends—that he truly cares and doesn’t just see the Palestinians as another corporate asset. After the sea trip, Birnbaum offered to personally pay to build a pool in Jab’a so Bsharat and the roughly 150 other SodaStream employees who live there could learn to swim. (The Palestinian Authority blocked the project, Bsharat says, because it didn’t want to take money from an Israeli company operating in the occupied territory. The authority’s local representatives declined an interview request.)
Sometimes, Birnbaum’s taste for grand gestures and desire for the limelight converge. In 2013, Shimon Peres, Israel’s then-president, invited him to Jerusalem to receive the country’s Outstanding Exporter Award. Birnbaum brought three of his Arab workers, including Bsharat—but as they entered the presidential residence, the SodaStream employees were taken aside and strip searched by Israeli security. Birnbaum was apoplectic and demanded to be stripped to his briefs, too. (The guards declined.) At the ceremony, with TV cameras rolling, Birnbaum turned and confronted Peres in Hebrew. “This thing,” he said, “clarified for me, Mr. President, the importance of asking a greater question than the question of export. And this is: How do we treat each other as human beings?” For Birnbaum, it was a high-profile opportunity to remind the world of his zeal for peace and his dismay about how Israel treats Palestinians. SodaStream sells most of its machines in Europe, where attitudes are less sympathetic to Israel than in the U.S.
The incident endeared Birnbaum to Bsharat—but not all Palestinians feel as warmly. Ismael Abu Zayyad, a 27-year-old from Abu Dis, worked at SodaStream at the West Bank factory shortly before its closure. He appreciated the higher-than-average wages and the benefits, but he felt he was enriching Israelis, whom he considered the enemy of his people. He’s now a high school biology teacher, making half his old salary. But it’s OK: “I feel free,” he says, during an interview at a gas station in the West Bank, near the site of SodaStream’s former factory.
Afterward, two reporters take a taxi to a checkpoint near Jerusalem, getting out to cover the last few meters on foot. Three Israeli soldiers hustle over. One of them, an Ethiopian with dreadlocks, moves his right hand toward the trigger of his semiautomatic rifle.
Another soldier intervenes, inspects our ID cards, and defuses the situation. “No one is allowed to walk here,” he says. “Usually, we point our guns at those who do.”
Other soldiers approach. The last is a skinny kid wearing a black yarmulke over strawberry blond hair.
“Why didn’t you point your guns at us?” one of us asks in Hebrew. “Something to do with the European look of our faces?”
“If your faces were only a little darker,” the soldier says, and walks back to his post.
Standing up for his employees didn’t win Birnbaum any accolades from Palestinian human-rights activists. To the contrary, they went after SodaStream because of its West Bank factory.
SodaStream’s fiercest opponent has been an activist group called Boycott, Divestment, Sanctions. Better known as the BDS, it’s trying to force Israel to give up the Gaza Strip and the West Bank, among other things, with tactics similar to those used successfully against South Africa’s apartheid government in the 1980s. The BDS’s co-founder, Omar Barghouti, agreed to discuss SodaStream for this article but canceled after learning an Israeli journalist would attend the meeting. He emailed a statement: “After decades of systematically destroying Palestinian industry and agriculture, confiscating our most fertile lands and richest water reserves, and imposing extreme restrictions of movement preventing many from reaching their workplaces, the Israeli occupation has pushed tens of thousands of Palestinians off their lands. This has effectively forced workers and farmers to seek jobs in Israeli projects in the illegal colonies. This is a coercive relationship by definition.”
In 2014, after Johansson’s kittenish Super Bowl ad, BDS activists distributed memes of the actress sipping seltzer by a border wall, and others with a blood-spewing SodaStream machine. European protesters went into department stores and put stickers on its products: “Every SodaStream means a family massacred.” The John Lewis Plc chain of U.K. department stores pulled SodaStream products from its shelves.
“Even if they gave up, I’m not giving up and you’re not giving up”
SodaStream’s shares plunged. Barghouti says this proves the boycott was working. Birnbaum’s spin is that sales fell because of a broader decline in traditional soda consumption. Either way, late in 2014, the company announced it was repositioning itself as a purveyor of homemade sparkling water rather than sugary beverages—and that it would move its West Bank operation to Rahat in Israel.
The BDS claimed SodaStream’s withdrawal as a coup. But the movement is still telling the public not to buy the company’s products. The updated rationale: Barghouti says SodaStream built its new factory on land Israelis stole from local Bedouins, as part of a plan to “ethnically cleanse the indigenous Palestinian-Bedouin citizens of Israel.” Birnbaum calls that preposterous. So do local Bedouin officials. In 2015, Rahat’s Bedouin mayor, Talal El-Garnawi, wrote to a U.S. congressional committee that he was “delighted” to host the factory. “We would like to stress,” he added, “that despite occasional hateful allegations in some media, there is absolutely no dispute, and there has never been a dispute, regarding the land on which the factory was built.”
SodaStream’s Palestinian workforce dwindled after the move to Rahat. Not everybody wanted to travel several hours a day back and forth from the West Bank. Some didn’t qualify for work permits—Israel at one point would issue them only to Palestinians who are 22 or older and married with at least two children. Still, 74 Palestinian SodaStream employees fulfilled those requirements and were willing to make the daily odyssey. Israel granted them temporary permits.
Then, in February 2016, Netanyahu allowed the permits to expire. Birnbaum says it was a bank-shot maneuver by his administration to score points against the BDS. “They wanted me to blame the BDS for closing the factory and say that as a consequence, the Palestinians lost their jobs,” he says. “But the Palestinians lost their jobs because of the Israeli government.” He also criticizes the administration for suggesting that the BDS campaign has had any impact on SodaStream. “Never give a terrorist group credit,” he says. “They fight for credit.” (The Netanyahu administration declined to comment.)
SodaStream posted a video online of Birnbaum bidding farewell to his tearful Palestinian workers, telling them not to become embittered and hateful because of the way they’d been treated and to keep believing in the possibility of peace. “Even if they gave up, I’m not giving up and you’re not giving up,” he says in the clip, jabbing his finger like a general.
For the next year and a half, Birnbaum prodded the government to restore the permits. He also tried to keep his Palestinian employees working by attempting to set up a production company in Jab’a. The venture would be funded entirely by SodaStream, but Bsharat would be the owner—that way SodaStream wouldn’t be accused again of operating in the occupied territories. “It was a slam dunk,” Birnbaum says. But the venture fell apart. Birnbaum says it made him wonder if his Palestinian employees weren’t prepared to take on such responsibilities. Not so, says Bsharat. It’s because he received a call from the Palestinian secret police. He went to Ramallah and chatted with some officers, who told him good-naturedly that he didn’t need the headaches that would surely follow if he carried out the plan. Bsharat heeded the warning. “You don’t have to be a genius to figure these things out,” he says.
Eventually, Birnbaum prevailed through official channels—in part by threatening to move SodaStream’s factory out of the country entirely. In May 2017, he personally contacted the 74 Palestinians and told them they’d soon be back at work. Bsharat still has Birnbaum’s text message on his phone. After receiving it, he says, he was so happy he couldn’t sleep for days.
Meanwhile, SodaStream is building a visitors’ center to accommodate European and U.S. tour groups that want to see the company’s Jews and Arabs toiling in harmony at the factory. Birnbaum is talking to the International Red Cross about brokering a deal with the Israeli government to let him hire more Palestinians, this time from blockaded Gaza. “We’d do the transportation, give them jobs, pay them Israeli wages, which would mean they would be multimillionaires in Gaza,” he says. And the company has announced a new product feature that is either delightfully fitting for a company based in the Holy Land, or hubristic, or both: turning water into wine. It’s done with a Riesling-flavored concentrate that can be mixed with fresh soda.
Genuine peace remains elusive. When Trump recognized Jerusalem as Israel’s capital on Dec. 6, it was all Bsharat and his fellow commuters could talk about as they waited at the checkpoint. “Our biggest fear is that this will lead to a new round of violence, from both sides,” he says. But Bsharat says Trump’s declaration has failed to divide the workers at SodaStream. “Everybody thinks this was unnecessary,” he says. “I hope that this city will be the capital for everyone. For Christians, for Muslims, for the Jews, for the Druze. It doesn’t matter who.”
--With assistance from Fadwa Hodali
To contact the authors of this story: Devin Leonard in New York at dleonard12@bloomberg.net, Yaacov Benmeleh in Tel Aviv at ybenmeleh@bloomberg.net.
To contact the editor responsible for this story: Nick Summers at nsummers1@bloomberg.net, Bret Begun
©2017 Bloomberg L.P.
