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DISNEY STIRS ARAB IRE FOR DEPICTING JERUSALEM AS ISRAEL'S CAPITAL

The Walt Disney Co. expressed disappointment Wednesday that it was "being prejudged" in a controversy over an exhibit that purportedly depicts Jerusalem as the capital of Israel and declined to comment on a possible Arab boycott of Disney products.

The United Arab Emirates vowed Wednesday to ban the sale of all Disney products if the Israel exhibit at Disney's EPCOT Center at Walt Disney World in Florida goes ahead on Oct. 1. It urged all Arab and Islamic states to join such a boycott. Kuwait said it was looking into the controversy.

The status of Jerusalem is a sensitive issue in the Middle East. Israel regards all of Jerusalem as its "eternal and indivisible capital" while Palestinians want East Jerusalem to be the capital of a future Palestinian state.

Walt Disney World Resort spokesman Bill Warren said he would not comment on the prospect of a boycott but added: "We still value our relationships with Arab countries."

On the growing controversy, he said: "I guess I'm disappointed that we're being prejudged, particularly because the issues that are being raised began many, many years ago and were not our creation."

Analysts said the U.S. entertainment giant was unlikely to be damaged by the boycott threat because its business in the Middle East was relatively small.

The controversy is the second time Disney has angered Arab groups in five years. In late 1993, the company altered two lines of the lyrics in the animated film "Aladdin" in response to complaints from the Arab-American Anti-Discrimination League.

Israel joined the fray on Wednesday, accusing the United Arab Emirates of injecting politics into entertainment and saying the exhibit was supposed to feature "Jerusalem as a holy city for millions around the world, Jews, Christians, and Muslims alike."

But an Israeli Foreign Ministry news release said Israel had agreed to participate in the 15-month exhibition only after it was agreed "that the centrality of Jerusalem as the capital of Israel would be emphasized."

PaineWebber analyst Christopher Dixon said the threatened boycott was more a public relations than a financial issue for Disney.

"It's really not an issue from an investment standpoint," Dixon said. "Disney is traditionally a focus for every special interest group, whether it's gays at the theme parks to history professors who are trying to stop a project in Virginia. They become a lightning rod."

Mary Ann Winter, an analyst at Brown Brothers Harriman, said Disney derives more than half of its income from the United States, with Japan and Europe its other important markets.

"If there was some Japanese problem, a major situation, then there would be an impact," Winter said. "But I can't see that (Middle East) having much of an impact."

Warren declined to comment on whether the exhibition would in fact depict Jerusalem as Israel's capital.

Last month, another American corporate icon, fast-food chain Burger King, decided to close a restaurant in a settlement in the Israeli-occupied West Bank after protests by Arab and Islamic groups.

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