Summary:
Itochu Corp’s aviation unit announced plans to end its strategic cooperation with the Israeli defense firm Elbit Systems following an International World Court ruling concerning the situation in Gaza.
Why it Matters:
The actions by the Japanese conglomerate underscore global attention on business conduct linked to international law and moral questions surrounding the conflict in the Middle-East, emphasizing a heightened scrutiny on defense agreements in geopolitical conflict zones.
The Big Picture:
Itochu has stated that while their partnership with Elbit was aimed at enhancing Japan’s own security and not connected to the conflict between Israel and Palestine, recent legal implications by the World Court and the stance of the Japanese government have impelled them to reassess this relationship.
What They’re Saying:
“The partnership is based on a request from Japan’s defense ministry for the purpose of importing defense equipment for the Self-Defense Forces necessary for Japan’s security, and is not in any way related to the current conflict between Israel and Palestine,” Tsuyoshi Hachimura, the CFO of Itochu, impressed upon stakeholders during an earnings call.
On the Ground:
Amidst other business engagements of Itochu in Israel that appear stable, including fintech investments and car sales operations, the dissolving cooperation with Elbit Systems signifies a key shift influenced by concerns over the ethical implications of working with institutions linked to the Gaza conflict.
Earnings Impact:
The announcement comes as Itochu reels from a year-over-year decline in net profit by 10.3 percent in the nine-month period concluding December 31, attributing faltering earnings to fluctuating commodity prices and general market challenges as they uphold their year-end profit predictions.
Background:
With over a century of operation since its inception in 1858, Itochu stands as a pivotal figure among Japan’s ‘sogo shosha’, or general trading companies, with a sweeping international network and diverse industry involvements.
This story was first published on timesofisrael.com.