Kiss frontman Gene Simmons, Australian musician Deborah Conway, and film-maker Nancy Spielberg are among 120 entertainment industry figures to sign an open letter against the boycott of Sydney festival, after more than 30 acts and individuals withdrew over the festival’s $20,000 sponsorship deal with the Israeli embassy.

In the letter, published on Thursday by Creative Community for Peace, the signatories described the boycott as “an affront to both Palestinians and Israelis who are working to advance peace through compromise, exchange, and mutual recognition”.

“While we all may have differing opinions on the Israeli-Palestinian conflict and the best path to peace, we all agree that a cultural boycott is not the answer,” it continued.

The letter quoted comments made by Nick Cave in 2018, when he said: “The cultural boycott of Israel is cowardly and shameful. Israel is a real, vibrant, functioning democracy – yes, with Arab members of parliament – and so engaging with Israelis, who vote, may be more helpful than scaring off artists or shutting down means of engagement.” Nick Cave has not signed the 2022 open letter.

Sydney festival opened on Thursday night hours after the withdrawal of another of its program highlights, Tropical Fuck Storm.

Late on Thursday, the Gareth Liddiard-led band posted a strongly worded statement about what it called the festival’s failure to “fix the problem they created”, which led to “online harassment” and “smear campaigns” aimed at the festival’s billed artists.

“Sydney festival [took] on a sponsor so dodgy, pointless and controversial it would inevitably mean that hundreds of unwitting artists (who are having a rough enough time with the pandemic as it is) would become the targets of online harassment, bullying, smear campaigns, ridiculous accusations, misrepresentations and abuse from total strangers who have no idea what’s actually going on behind the scenes, what any artist’s position is or even what they’re talking about,” the statement read.

The band has joined more than 30 companies, individual artists and panel members of the festival’s the Reckoning series by either cancelling their gigs, or going ahead without the sponsorship or support of the official festival program.

In the past 24 hours, comedian Tom Walker, singer/songwriter Hope D and artist Gerwyn Davies have also joined the boycott.

In their statement, Tropical Fuck Storm said the band had been in discussion with the Sydney festival over the past 48 hours about the possibility of refunding the Israeli embassy’s $20,000 sponsorship of Decadance, a performance devised by Israeli choreographer Ohad Naharin and Tel Aviv’s Batsheva Dance Company, and co-presented by Sydney Dance Company.

“Sydney festival has stated they have no intention to refund the money or sever the sponsorship relationship, even though the shit sandwich they’ve landed every billed artist in is blatantly obvious to them,” they said.

“Due to this complete lack of respect and integrity towards the artists billed from Sydney Festival and its partners, we have decided to cancel our two appearances.”

All references to the Tropical Fuck Storm’s two Sydney festival concerts had been removed online by the festival by Thursday evening.

‘We feel immense empathy with the situation’

At the Sydney festival’s official media launch earlier on Thursday, artistic director Olivia Ansell told journalists that festival management and the board remained concerned about the controversy.

On Tuesday, the board issued its second statement reaffirming its position that it would not be terminating its sponsorship with the Israeli embassy.

“We’re always surprised by anything that disrupts the festival … it’s sensitive, something being created to bring artists together, so we can see a myriad of perspectives,” Ansell said.

“We feel immense empathy with the situation.”

Co-launching the festival with newly appointed New South Wales arts minister Ben Franklin, Sydney’s lord mayor Clover Moore said she was following the boycott debate closely.

“The artists who are performing may or may not support the policies of their government, but they need to get funding from the government so that they can perform,” she said.

“I just think about the Sydney Symphony and the Sydney Theatre Company who go overseas and perform,” she continued.

“And it may very well be that there are people overseas who are angry about our inaction on climate change. They’re really concerned about our refugee policy, or our First Nations policy, but we wouldn’t want to see our Sydney Symphony or our Sydney Theatre Company boycotted for those reasons, because probably many people in both those institutions would not be supporting those policies either.

“So I think it’s a matter for people to make up their own minds. But I think we should really keep in mind that this is about our artists and giving them an opportunity to perform.”

Late on Thursday, the president of the Zionist Federation of Australia, Jeremy Leibler, sent Guardian Australia an extensive statement that included excerpts from a letter he wrote to the Sydney festival, in which he described claims by boycott organisers, that by including an Israeli act the festival is excluding Palestinians and other Arabs, as “errant nonsense and worrying proof that the objective of those calling for a boycott is not a peaceful future for Israelis and Palestinians, but a future without Israel.”

The letter from the federation went on to state:

“The Sydney festival should be a safe space to celebrate the artistry and gifts of all peoples, including Israelis and Palestinians. Instead, the boycott organisers have attempted to make the festival culturally unsafe for anyone who believes in freedom of speech, and the freedom to have differences of opinion. It is appalling behaviour and the Jewish community condemns it outright.

“If vitally important civil society organisations such as the Sydney festival cave into campaigns from these extremist groups, it will only encourage them to continue this behaviour. We have seen throughout history that while these campaigns start with Israel and the Jewish people, they very rarely end there.”

According to a statement released on 22 December by the Palestinian Justice Movement Sydney, the sponsorship deal was sealed in May, the same month Israeli armed forces launched a series of air attacks on Gaza, killing a number of Palestinian civilians. “Palestine advocates call on all opponents of apartheid to boycott the 2022 Sydney Festival,” that statement said.

The campaign is in line with the Palestinian Boycott, Divestment, Sanctions (BDS) movement, modelled on the boycott of apartheid South Africa. “The BDS campaign states that ‘refraining from participating in cultural events in Israel or in Israel-funded activities around the world is the most important expression of support for the Palestinian call for a cultural boycott of Israel’,” the statement continued.

“By partnering with Israel, Sydney festival will … contribute to the normalisation of an apartheid state.”