Crisis with Turkey taking its toll on Israeli exporters
Israel Credit Insurance Company figures show late payments by Turkish importers of Israeli products increased dramatically in the first nine months of the year, by 90%.
The crisis in relations with Turkey is also manifesting in credit and business dealings between the two countries.
Israel Credit Insurance Company figures show late payments by Turkish importers of Israeli products increased dramatically in the first nine months of the year, by 90%. A total of $40 million in debt is "substantially late," which the ICIC defines as more than 30 days after the credit terms set by Israeli exporters and their customers. The increase encompasses all exports to Turkey.
Relations have taken a turn for the worse in recent years, after an Islamic party rose to power in Turkey. The rift was further deepened with Israel's January incursion into Gaza during Operation Cast Lead.
ICIC chief executive David Milgrom said there have been unusual instances of Turkish companies not paying debts to Israeli exporters. Collecting debt in Turkey is relatively complicated, he added. Turkish banks that used to provide information to exporters about which potential clients had restrictions placed on their bank accounts have stopped doing so, making it even more difficult to manage customer credit in the country.
At the same time, Israeli exports to Turkey have plunged by 40%, while exports overall decreased 22%. Israel exports totaled $800 million in the first nine months of the year, compared to $1.3 billion in the same period last year. The hardest hit industries have been metals, chemicals and plastic.
ICIC, an Israeli company, issues $12 billion annually in export insurance for customers in 115 countries. The coverage assures that suppliers will receive their payment, in the event that their customers become insolvent, financially strapped, or don't pay due to political events. ICIC is owned by Harel Insurance, Bituach Haklai and international credit insurer Euler Hermes.