Israel's Weapons Sales to Europe More Than Double Amid Refugee Crisis

Sales to Europe grew from $724 million in 2014 to $1.63 billion in 2015, presumably as a consequence of the refugee crisis and the rise in terror attacks on the continent. Sales to North America also climbed, to $1.02 billion.

A Heron 1 unmanned aerial vehicle.
Israel Aerospace Industries

Israel signed contract for arms deals worth $5.7 billion last year, a slight increase over 2014 but down sharply from 2013 levels, Michel Ben-Baruch, head of Sibat, the Defense Ministry’s defense export agency, said on Wednesday.

“Completing a challenging year, we succeeded through collaborative and determined work to preserve the scope of contract signings compared to 2014,” he said, citing $5.6 billion of new orders in 2014 and $6.5 billion in 2013.

Sales to Europe more than doubled last year to $1.63 billion from $724 million, presumably as a consequence of the refugee crisis and the rise in terror attacks on the continent. Sales to North America also climbed, to $1.02 billion.

But after three years of growth in weapons sales to African states, 2015 saw a drop of almost 50% to $163 million, down from $318 million in 2014 and $223 million in 2013. Sales to Latin America fell to $577 million while those to Asian countries — by far Israel’s biggest regional market — declined to $2.3 billion from just under $3 billion in 2014.

Asian sales should show improvement next year as Israeli companies pursue major arms deals with India. Last week, Israel’s Rafael Advanced Defense Systems and India’s Reliance Defense said they were forming a joint venture in India to manufacture air-to-air missiles, air defense systems and observation balloons in order to address procurement programs valued at $10 billion over the next decade.

Earlier in March, India’s Cabinet Committee on Security approved the purchase of two additional Phalcon Airborne Early Warning and Control Systems from Israel. 

In all, India is expected to procure Israeli military equipment worth an estimated $3 billion ahead of a visit to Israel by Indian Prime Minister Narendra Modi, according to a report on the IHS Jane’s 360 website.

The Stockholm International Peace Research Institute said this week that global military spending rose for the first time in several years in 2015, to nearly $1.7 trillion.

But the Defense Ministry termed 2015 “another challenging year for defense industries around the world” amid declining oil prices and unfavorable exchange rates. It said sales for 2016 should remain steady.

Some 700 small and medium-sized Israeli companies export defense equipment, but between 75% and 80% of Israeli military exports are generated by just three companies — the state-owned Rafael and Israel Aerospace Industries and the publicly traded Elbit Systems.

The largest single category of the military exports, accounting for 14% of all new contracts, was upgrading aircraft and aerospace systems. Radar and electronic systems came in second, at 12%, and drones at 11%. Intelligence and information systems made up 10%.