In a 12 months of conflict, with fight challenges at house and political challenges overseas, together with the banning of corporations from main worldwide exhibitions, Israel’s protection trade achieved a brand new document in protection exports in 2014: $14.795 billion, up about 11.7% from 2023 and double the quantity 5 years in the past, the Ministry of Protection reviews.
The primary engine of demand was Europe, the place protection budgets have elevated because of the Russia-Ukraine conflict, and the proportion of Israel’s protection exports has jumped from 35% to 54%. An intriguing enhance throughout the conflict has been within the Abraham Accords international locations, which, after falling from 24% to solely 3% in 2023, jumped once more to 12% in 2024. In distinction, a pointy, substantial decline was recorded in Asia-Pacific, the biggest vacation spot till final 12 months, from 48% to 23%.
“There’s problem in Asia-Pacific, however even there we’re making an effort to adapt ourselves to the markets,” says Ministry of Protection Worldwide Protection Cooperation Directorate (SIBAT) head Brig. Gen. (res.) Yair Kulas. The ministry explains the problem in Asia, just like different markets, together with the US and Europe, by the demand for native manufacturing. At present, the coverage of India (Israel’s largest protection export vacation spot) and different international locations is that as a part of offers, they may obtain knowhow, and a few manufacturing can be carried on the market. “We understood that we wanted to permit our industries to be related, as a result of even in NATO tenders an area subsidiary is required.”
One other document was achieved within the quantities of offers, with for the primary time ever, greater than half of the offers value $100 million or extra. Based on SIBAT, there was a soar final 12 months from 40% to 56.8% in transactions on this vary. On the similar time, 17.4% of the whole offers got here from small transactions of as much as $10 million, 16.3% within the vary of $10-50 million, and the remainder have been within the vary of $50-100 million. “We advocate a coverage of preventing for each deal,” Kulas stresses. “Even when it’s a small system and a restricted market, we work to be there.”
The primary driver of offers is G2G (authorities to authorities). Israel’s main shoppers like Greece, choose G2G because of the authorities umbrella of the deal and the power to work in a single transaction with a number of Israeli industries. Thus, complete G2G transactions of the Ministry of Protection with its counterparts world wide reached a document of $6.7 billion. Because of this 45% of Israeli protection exports final 12 months have been led by the Ministry of Protection.
Air protection leads demand
The conflict has created a significant problem for Israel’s protection industries. Corporations should provide Israel’s protection wants, typically on the expense of delaying deliveries to clients overseas, or if doable doubling and typically much more the variety of manufacturing strains. On the similar time, the conflict elevated demand for merchandise much more as a result of they’re “fight examined” – confirmed on the battlefield.
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“The mixture of industries, IDF and Ministry of Protection is enticing on the earth,” says Kulas. “When engineers in industries serve within the reserves after which return to improvement, that is distinctive to Israel. This brings about a rise in international demand.”
World demand is led by air protection programs, particularly because of the Russia-Ukraine conflict, which has seen widespread use of missiles, and above all drones. Israel’s success in coping with the unprecedented Iranian assaults in April and October final 12 months has positioned its protection trade as a spotlight for rising worldwide demand within the area, and that is additionally mirrored in SIBAT knowledge. About 48% of Israeli protection exports in 2024 have been air protection programs. That’s, nearly equal to all different Israeli offers mixed. In 2023, for comparability, air protection programs accounted for “solely” 36% of the quantity of offers. The expansion in each the proportion of huge offers ($100 million or extra) and the proportion of air protection programs out of the whole is obvious in Israel’s main offers within the area, most notably the sale of the Arrow 3 by Israel Aerospace Industries (IAI) to Germany in 2023 for $3.5 billion, and the sale of David’s Sling to Finland for about $360 million.
The 2024 figures don’t replicate the worldwide curiosity within the laser-based air protection system Iron Beam. Growth is being led by the Ministry of Protection Directorate of Protection, Analysis and Growth (DDR&D) (MAFAT) and Rafael. Iron Beam Kulas says, “Arouses curiosity, and has potential. Nonetheless, with each system we produce, or in improvement, we perceive that we should defend the programs. Subsequently, we rigorously select our clients.”
Areas wherein IAI stands out are satellites and area, in addition to radar and digital warfare, which every accounted for 8% of the exports. In July 2024, IAI reportedly offered satellites to Morocco, a rustic within the Abraham Accords, for about $1 billion. A worrying development may be seen in drones and unmanned aerial automobiles (UAVs). In 2022, these accounted for about 25% of complete offers, whereas in 2023 they fell to solely 4% – and this 12 months they’ve up to now accounted for only one%.
Final November, Elbit introduced that it had gained contracts value $335 million to provide Hermes 900 UAVs and protection programs to a European nation. The contracts, which can be carried out over three and a half years, additionally embody the availability of PULS rocket launchers. Weapons, launchers ammunition and armaments accounted for about 2% of exports and about 3% of complete income final 12 months.
The challenges following the conflict
The primary half of 2025 is about to finish, and regardless of the encouraging knowledge, SIBAT’s head admits they’re dealing with an important problem. “The photographs from Gaza and the accusations in The Hague are having an influence. This intensifies the Ministry’s problem, and we have now to see how we are able to cope.”
One other problem lies in provide chains – a problem that started throughout the Covid pandemic and has worsened throughout the conflict because of the results of Houthi assaults on delivery lanes and their missile launches, which result in the intermittent shutdown of Ben Gurion airport.
Kulas says that the conflict has highlighted the benefits of Israel’s protection corporations, which had not been beforehand evident on the worldwide market: “Through the years, international locations have sought high quality and value, and in recent times one other key issue has entered the place Israeli industries have a bonus – and that’s velocity of supply. If a rival comes and provides a supply time of seven years, our corporations include 2-3 years and so they take it. They succeed on this regardless of the challenges of the conflict.”
Printed by Globes, Israel enterprise information – en.globes.co.il – on June 4, 2025.
© Copyright of Globes Writer Itonut (1983) Ltd., 2025.
