Unilever in a bind as Ben & Jerry's decides to end ice cream sales in occupied Palestinian territories

Israel warned consumer goods giant Unilever on Tuesday of "severe consequences" from a decision by subsidiary Ben & Jerry's to stop selling ice cream in Israeli-occupied territories, and urged US states to invoke anti-boycott laws.

Monday's announcement followed pro-Palestinian pressure on the Vermont-based company over its business in Israel and Jewish settlements in the West Bank, handled since 1987 through a licensee partner, Ben & Jerry's Israel.

Most countries consider Israeli settlements on Palestinian land to be illegal. Israel disputes this.

The country's Prime Minister Naftali Bennett, in a phone call with Unilever CEO Alan Jope, called the move a "glaring anti-Israel measure" and said that the government would move "aggressively against any boycott measure targeting civilians," according to the premier's office.

Ben & Jerry's, based in South Burlington, Vermont, is known for its commitment to social justice that has recently included strongly supporting the Black Lives Matter movement, LGBTQ+ rights and electoral campaign finance reform.

It was acquired by Unilever in 2000 in a deal that allows it to operate with more autonomy than other subsidiaries, including giving legal powers to an independent board to make decisions over its social mission, brand integrity and policies.

On Monday, the Chunky Monkey ice-cream maker released a statement saying the brand would not renew its license agreement with its Israeli partner when it expires at the end of 2022.

Ben & Jerry's said selling its products in the occupied Palestinian territories was "inconsistent with its values".

The episode has sparked a clash between Ben & Jerry's independent board and Unilever.

Ben & Jerry's Monday announcement went on to say that the company would stay in Israel under a different arrangement, without sales in the West Bank, among areas where Palestinians seek statehood. That position was reiterated in a separate statement issued by Unilever itself the same day.

In an interview with NBC, Anuradha Mittal, the chair of Ben & Jerry's independent board, said the board had not been asked to vote on any proposal to continue sales in Israel, and so the announcement of the move had violated the acquisition deal of 2000.

The Ben & Jerry's board would have to vote to approve any different arrangement, which it had not done yet, Mittal said.

"I am saddened by the deceit of it," Mittal told NBC.

"This is not about Israel. It is about the violation of the acquisition agreement that maintained the soul of the company. I can't stop thinking that this is what happens when you have a board with all women and people of color who have been pushing to do the right thing."

Asked for comment on Mittal's remarks, Unilever said: "As you saw in our statement, Unilever has always recognised the right of the brand and its independent Board to take decisions about its social mission."