While the Russian invasion of Ukraine unleashed horrendous suffering on millions of people, one business sector is basking in the flames of war: the arms industry.
- The return of war to European soil on the largest scale since World War II, has triggered unprecedented global demand for advanced means of combat of every sort.
The Israeli military industry, which at the government’s instruction is not supplying arms to the fighting parties, is about to rake in vast profits from this bonanza.
During 2020 and 2021, Israeli weapons exports reached new peaks – totaling $7 billion and $11.3 billion per year, respectively.
All signs point to this growth trend continuing in the coming years as well. Accordingly, in addition to large revenues for the industries themselves, more jobs will be created and production lines may have to expand.
The sales will give rise to additional transactions in Israel, with a large number of subcontractors, many from the country’s outskirts, making a living working for the defense industries.
- The momentum the local industry is feeling also has to do with growing involvement by the top ranks of the Defense Ministry – like Defense Minister Gantz and his director general, Maj. Gen. (res.) Amir Eshel – in worldwide marketing efforts.
To that end, Eshel visited no fewer than 14 countries in the past three months.
While Israel has been involved in secret deals with Arab states for no few years, the Abraham Accords that were initiated by Donald Trump and Benjamin Netanyahu gave a “kosher stamp” for far broader trade with the countries that joined the accords in 2020.
- In the past two years alone, the scale of transactions with these countries is estimated at $3 billion. As a result of the events in Ukraine, demand has already surged far beyond that.
The preparations for a cruel new world have begun.
Eastern Europe, as well as countries in the western part of the continent, are arming themselves to the teeth for fear of Russian aggression.
The brutal invasion of Ukraine caught them almost completely by surprise.
- In East Asia there’s concern about Chinese expansionism – Beijing’s offensive intentions were illustrated this week in the escalation toward Taiwan in the wake of a visit by the Speaker of the U.S. House of Representatives, Nancy Pelosi.
Arab countries are acquiring weapons because of the Iranian threat and often also in light of threats of terrorism or civil revolt at home. The countries of the Caucasus region also found reasons to increase their weapon supply.
“With the exception of Africa, a surge in sales is anticipated in every continent,” says an Israeli security source.
Thus, countries whose defense budget stood at only 1 percent of their GDP intend to double it very soon.
Germany and Britain, who in recent decades sharply slashed their orders of battle tanks and planes, are looking for ways to increase them again.
The most highly demanded Israeli-made combat products are missile interception systems.
Germany, for example, is engaged in talks for the purchase of the Arrow 3 system, a deal worth hundreds of millions of dollars, and will include Israeli maintenance services for many years to come.
- Israel is considered a world power in many areas in which interest is exceptionally high: air defense, cyber, small satellites, drones, defense systems for tanks and armored personnel carriers, and precision munitions for various needs.
The potential for deals is vast, and it’s not just a matter of financial profits. The sale of advanced systems, while keeping in mind attempts to prevent technologies from leaking into undesirable hands, will also advance Israel’s policy interests and its foreign relations.
Source: Amos Harel – HAARETZ