Israeli firms profit as Europe boosts defence spending

June 17, 2016  

(AFP) As European defense budgets rise in the wake of increased threats, Israeli companies are seeing a boost in sales, further solidifying the country’s image as an arms industry leader.

The increases have come despite, and perhaps partly aided by, Israel’s continued conflict with the Palestinians – with Israeli firms themselves highlighting that their products have been tested in conflict.

European spending on defense and security had remained roughly static in the past decade, but Russia’s annexation of Crimea in 2014, Islamist attacks in France and Belgium, and a wave of refugees from the Middle East have encouraged a spike.

Across the continent, defense budgets are expected to increase by 8.3 percent this year, according to a recent report by a group of think tanks including the French Institute for International and Strategic Affairs.

Israeli companies, many of which have strong backing from the state, are capitalizing by pushing new products.

Twenty-nine of them displayed technologies this week at the Eurosatory conference in Paris, one of the world’s largest land defense exhibitions.

Exports to France, which has strongly criticized Israeli population growth in Judea and Samaria and is overseeing a “peace initiative” geared towards imposing a Palestinian Arab state, have spiked.

In 2014, the total number of exports of both homeland security and defense technologies from Israel to France amounted to slightly over $150 million, according to the Israel Export Institute.

That figure more than doubled to $355 million in 2015, when France was hit by two major jihadist attacks.

In 2016, Israel is projected to overtake Italy to become the world’s seventh-largest defense exporter – by far the smallest country in the top 10, according to arms industry analysts IHS Jane’s.

There has been a “substantial increase” in European interest in Israeli technologies, said Ran Kril, vice president of international marketing at Elbit Systems, one of the country’s largest weapons companies, with profits of just under $900 million last year.

That has come “after long years in which the defense budgets in Europe were declining,” he said.

Seeing through trees

At a media exhibition of Elbit’s new technologies last week in the Israeli city of Netanya, products on display included a radar system the company said was first specifically designed to locate people through trees.

A salesman pitched it as being perfect for European countries seeking to locate migrants hiding in forests.

“Maybe you are not going to shoot them, but you want to bring the police forces or other means,” he added.

Kril confirmed that Elbit, which provided drones to protect stadiums during the 2014 World Cup in Brazil, was also involved in the ongoing Euro 2016 football tournament in France, though he would not specify how.

Other Israeli firms, too, are finding increasing interest.

Saul Gold from AgentVI, which specializes in smarter CCTV technologies, said they had seen a five to 10 percent increase in inquiries in the past six months from northern Europe.

Among those they had met with about their systems was Brussels airport, the scene of an April suicide bombing that, along with an attack at a metro station, left 22 people dead.

Gold said European airports were increasingly interested in learning about security measures at Israel’s Ben Gurion Airport, often cited as having the highest security measures globally – though critics accuse Ben Gurion security of engaging in racial profiling.

Israeli edge?

The desire for Israeli technologies stands in contrast to Europe’s sometimes hostile approach to Israel diplomatically.

Late last year, the European Union introduced labeling on all products from Jewish communities in Judea and Samaria, and Elbit’s 2015 annual report identifies “calls in Europe and elsewhere to reduce trade with Israel” as among the threats to its growth.

Ironically, prior to the devastating Paris attacks earlier this year, French authorities reportedly rejected Israeli technology which could have prevented the attack – apparently due to political pressure.

Many of the technologies being sold to Europe are first used in conflict with Palestinian terrorists, including the 2014 war with Hamas and other terrorist groups in Gaza.

Indeed for companies, this experience is often a major selling point.  

“These countries very much admire the operational experience of these systems,” Kril said.

“Most of these products and technology are fielded and are bringing results daily. This is very important for the customers, especially the ones that need immediate technology and immediate solutions.”

Gilles Perez of the Israel Export Institute said: “The Israeli edge is where the security ecosystem allows the Israeli companies to have many pilots, many tests at home.”

“They can test it with the (Israeli military), with the special security forces.”

Arutz Sheva staff contributed to this report.

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