Israel’s Defense Firms Want to Restock European Inventories

Israeli defense firms are looking for sales opportunities in Europe to restock inventories depleted by donations to Ukraine, as Russia’s invasion has led to a major increase in defense spending across the region. European nations have been looking to balance the needs of Ukraine with resupplying their own stockpiles and purchasing new systems to prepare for potential future conflicts. Israel’s big three defense contractors, Rafael Advanced Defense Systems, Israel Aerospace Industries (IAI) and Elbit Systems have been aiming to take advantage of the spending spree. In mid-April, for example, Israel’s Defense Ministry said it was in advanced talks with Germany to sell Arrow 3 air defense system. Finland, meanwhile, is acquiring the David’s Sling missile defense system, and Greece has announced a deal to acquire Spike missiles and drones.

The three companies already have a presence in Europe, with some having local subsidiaries or agreements with European defense companies, or unique European footprints, such as Rafael’s EuroSpike program. That means they are in a position to quickly react to new procurement plans.

For Cohen, who leads Rafael’s land maneuver systems business, the war in Ukraine has emphasized a need for land warfare equipment in particular.

“The conflict has highlighted the principles of land maneuvering and holding territory conquered during battle,” he said. “This understanding of operational requirements has led to countries in Europe and around the world to develop serious plans for purchase and procurement of fighting vehicles, especially tanks.”

Cohen also pointed to the related market of protective equipment to complement those vehicle fleets.

Rafael hopes those market dynamics bode well for its Trophy active protection system. The U.S. and Germany have already acquired the Trophy for their Abrams and Leopard tanks, respectively. The system has been operational in Israel since 2011, and Cohen said it has received upgrades since to meet changing threats.

Kril, Elbit’s executive vice president for international marketing and business development, said a huge demand exists for artillery system munitions, protection capabilities and electronic warfare weaponry.

The company’s acquisition of IMI in 2018 added new munitions as well as artillery and rocket systems to the company’s portfolio. Kril point to this as enabling Elbit to potentially fill orders for countries that have seen munitions shipped to and consumed by Ukraine in the war.

Elbit has built a network of local companies across Europe, including in the U.K., Sweden, Switzerland and Germany.

“They are expanding that as we speak because we understand the increase of the budget doesn’t mean they are willing to buy from outside; they would like most of the work, and also development or maintenance. They expect to see more activities done in the country, so a strategy of establishing subsidiaries is one layer of the strategy, and this is in partnership with other companies. [It’s] a win-win for both of us for programs,” Kril said.

At IAI, CEO Levy said he hopes to bring his company into play in Europe by linking equipment across the air, space, land and sea domains of warfare.

“This is where I will connect it to Europe,” he said. “IAI now has a lot of products that are suitable for the war that is taking place in Europe and gives us a view toward the future battle space. When you look at the war there, you will see the requirements for better situational awareness and capabilities for space that are unique to IAI.”

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