NEW YORK — CORPORATIONS generally do not like to mix politics with business, but political issues were hard to suppress in Matsushita Electric Industrial Company's agreement last week to buy entertainment giant MCA Inc. The $6.6 billion buyout, the largest Japanese purchase ever in the United States, raised concerns about the growing Japanese presence in Hollywood. The deal also shed light on another, less-publicized political issue: the participation of companies from Japan and other nations in a longstanding Arab boycott of Israel.
MCA Chairman Lew Wasserman is a prominent member of the US Jewish community and a significant donor to Jewish causes. Matsushita is among several leading Japanese companies that have no direct trade with Israel. The electronics giant instead sells an estimated $20 million annually of its Panasonic, JVC, Technics, and National brands in Israel through a New York-based agent.
Jewish activists, hoping to convince Matsushita to open direct links, aired their concerns to MCA representatives during the negotiations, but received no assurances.
``Matsushita has no special attitude toward any nation, and this won't change,'' company president Akio Tanii told reporters after the deal was finalized.
Activists claim that other large Japanese firms - Toyota, Mazda, Nissan, Toshiba, Canon, Hitachi - conduct no trade with Israel. They also point to a lack of Japanese investment in the country. Japan Air Lines is criticized for not flying to Israel, and Japanese ships for avoiding Israeli ports.
Yaacov Cohen, Israel's deputy director-general for economic affairs, recently called Japan ``the worst offender'' among industrial nations. Pro-Israel groups also fault South Korean, British, German, and Italian companies.
The boycott began in 1951 when the League of Arab States began blacklisting multinational companies that trade and invest in Israel. The intent is to make companies choose between Israel and the Arab world, and weaken Israel's economy. Every Arab nation except Egypt, Morocco, and Algeria supports the sanctions.
The Arab League's enforcement of its own rules can be indiscriminate and unpredictable. Corporations are routinely added and deleted from a master list that includes thousands of entries. Coca-Cola was a prominent blacklisted member, but is now welcomed by Arabs, despite its trade with Israel. Saudi Arabia has not bothered to discover if companies supplying Persian Gulf forces are blacklisted.
``The Arabs shrug it off when it suits them and they enforce it when it suits them,'' says Walter Stern, chairman of the New York-based Committee on Freedom of Trade with Israel.
The US Commerce Department reviews dozens of complaints each year and occasionally levies modest fines when US companies are found participating in the boycott. An ongoing investigation involves Baxter International, the world's largest hospital supplier. Pro-Israel groups suspect Baxter got off the blacklist by selling a factory in Israel and a year later beginning operations in Syria. Baxter insists its actions stemmed from business concerns.
Japanese companies also claim that economic conditions, not Middle East politics, guide their Israeli business. Israel's high political risk and uncertain economy have deterred large-scale foreign investment in general, making it difficult to prove that a firm was adhering to the boycott rather than acting in its best interests.
Jewish organizations counter that Japan is especially cooperative with the boycott because of its extreme dependence on Arab oil.
Several Japanese companies have started to deal with Israel, without bad result. Mitsubishi Motors sells autos directly to Israel; Honda supplies cars via its US division, and decided to ship spare parts directly. Israeli exports to Japan were $755 million in 1989, up from $622 million the year before. But one product, diamonds, accounted for $593 million of the total.