Finance Minister: Israel Could Be Affected if pan-European Crisis Breaks Out

Steinitz: Combination of European crisis and events in China are telling. Israel should look toward Europe with concern and China with hope.

BEIJING - "We have no exposure to Greece. Our connections to Greece are minimal, and our commercial connections with Portugal and Ireland are also not substantial. But with Spain and Italy we have stronger ties, and there the danger is larger. Therefore, if a pan-European crisis breaks out, it could reach us," Finance Minister Yuval Steinitz told TheMarker yesterday.

Steinitz is currently leading a delegation of Finance Ministry, Environmental Protection Ministry and business representatives in China. At this stage, he can't predict how the Greek crisis will develop, he said.

However, the combination of the European crisis and events in China are telling, he said - Israel should look toward Europe with concern and China with hope.

Steinitz also discussed the global financial crisis that broke out in 2008, causing countries to increase their national deficits.

"In another year or two, economists will be beating their breasts over their sins," he said. "After doing so once after they didn't predict the 2008 crisis, they'll be doing so again over the bad advice they gave European governments and the United States, bringing them to huge deficits. This is an ideological crisis for economics."

If there's another round of the global financial crisis, Israel will enter in good shape, Steinitz said, because neither government deficits nor the debt-to-GDP ratio have increased significantly.

"We got through the first wave well. We didn't use up all our ammunition, and we didn't develop a deficit," he said. "If there's another wave, we'll know how to handle it. We need to be cautious, we can't be more calm than we were in 2008. I hope that what we're seeing now are only aftershocks."