Israeli defense companies deepen European footprint through local production
Israeli defense companies are expanding their presence across Europe through local manufacturing, joint ventures, and strategic partnerships, as governments across the continent increase defense spending and place greater emphasis on domestic production.
Recent activity includes Rafael’s agreement with Lower Saxony and Aurelius to acquire Volkswagen’s Osnabrück plant for production of Iron Dome components, as well as its approximately EUR 2 billion sale of the Spyder air defense system to Romania. Rafael is also exploring manufacturing activity in Cyprus and already participates in European ventures including EuroSpike and EuroTrophy.
Elbit Systems has also deepened its European operations through its German subsidiary and recently demonstrated the SkyStriker loitering munition with Diehl Defence. Israel Aerospace Industries, meanwhile, has helped drive Germany’s emergence as a major buyer of Israeli defense technology through the Arrow 3 program.
The trend reflects a broader shift toward localization in European defense procurement. Greece’s recent EUR 3.1 billion Achilles Shield agreement with Israel includes approximately EUR 700 million of work for Greek companies, while EU financing initiatives increasingly favor projects with substantial European production content.
Germany has become Israel’s second-largest defense export market, accounting for 21% of Israeli defense exports between 2021 and 2025, behind India at 29%. With NATO members moving toward significantly higher defense spending, Israeli companies are increasingly embedding themselves within European supply chains rather than relying solely on exports from Israel.
Read more in Globes.
