A truck removes a Zim-branded shipping container at the Haifa Port
A truck removes a Zim-branded shipping container at the Haifa Port. Photo by Bloomberg
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The good scenario is that things will be bad. Thus predicts David Milgrom on Israeli exporters in the Jewish year 5773, and he should know. If he has any advice for exporters, it's to try to exit the riskier spots, like Europe, and target safer ones such as the U.S.

"Even if the euro bloc doesn't fall apart, and we don't believe it will, I don't expect this year to be any better than last," says the CEO of ICIC, the Israeli Credit Insurance Company.

"As long the crisis is confined to Europe, it won't lead to catastrophe," Milgrom says. But if it isn't? Europe will continue to crumble, the euro bloc will disintegrate and "things will be very bad," and not only in Europe. That could create a global crisis that decimates the emerging markets, he predicts darkly.

The ICIC insures more than $12 billion worth of credit each year for Israeli exporters to 112 countries. It covers commercial and political difficulties (for instance, when an Israeli exporter gets stiffed after a change of government). The company bases its forecasts on data from its co-owner, Euler Hermes, a global credit insurer. (ICIC's other owners are Harel Insurance Investments and Finances and Bituach Haklai.)

What does "risk" mean for an exporter? That because of deterioration in the country's financial condition, its importers (of Israeli exports) will get caught up in the negative spiral and won't be able to pay their bills.

Among the countries riskiest for Israeli exporters (in English – they won't get paid by local importers) on the ICIC list this year are Turkey, Greece, Russia and Argentina. (Of the four, only Russia had been on the list last year.) The state of risk in Italy, Spain, and Portugal has worsened from moderate to high, says the company. Also high-risk are China, India, and Brazil.

So who's safe? The U.S. says the ICIC, and the U.K., Germany, France, Canada and Japan.

"The risk in Europe is still growing," Milgrom cautions. "A few years ago the whole continent had been low risk. The risk of exporting to France for instance could grow because of looming policy changes, for instance.

Take Spain. This will be the test year, Milgrom says. "If it doesn't get aid and goes into default, the economic chaos will hit its companies, which won't be able to pay their bills. But Spain is a big export market for Israeli companies, about a billion dollars a year, so exporters can't simply be told not to export to Spain. They can be told to carefully check the companies with which they do business."

As for Greece, Israeli exporters can't just up and pull out of a market gone sour, he says, though they'd be better off doing so. Greece is very likely to leave the euro bloc, Milgrom says: If that happens, Israeli exporters aren't likely to get their money, or at least, not in full. ICIC for its part has sharply curbed coverage of exports to Greece.

South America isn't quite the safe harbor for the Israeli export. In Argentina, the main source of risk is that the country is almost out of foreign currency reserves, Milgrom explains. In fact the country is almost bankrupt, he warns.