Israeli Defense Firms Eye Cyprus for European Production Hubs
Israeli defense industries are exploring the establishment of manufacturing plants and management headquarters in Cyprus, according to a report by "PhileNews." This potential move is driven by Cyprus's strategic location close to Israel, its strengthening ties with Hellenic nations, and its status as an EU member state. Such a presence in Europe is crucial for participation in the SAFE program, which finances defense deals up to 150 billion euros, provided 65% of the transaction value is sourced from EU countries or Ukraine.
The interest in Cyprus was a key topic during Israeli President Isaac Herzog's visit to the island last Thursday. Cypriot media reported that major Israeli defense companies, including Elbit, Israel Aerospace Industries (IAI), and Rafael, are considering setting up production lines and administrative offices. For Cyprus, hosting these strategic facilities would offer economic benefits through jobs and taxes, while also bolstering its modern defense capabilities amidst regional tensions, particularly with Turkey.
Despite political tensions between Israel and some EU nations, defense ties remain strong. Examples include Elbit's cyber division securing a 25 million euro contract in the Netherlands for combat management systems and Israel's National Cyber Directorate assisting Madrid, Spain, in protecting critical infrastructure. Germany remains a significant partner, with the Arrow 3 missile defense deal valued at approximately $6.6 billion and Rafael's acquisition of a Volkswagen plant in Osnabrück to produce Iron Dome components.
Discussions between President Herzog and his Cypriot counterpart, Nikos Christodoulides, regarding defense manufacturing in Cyprus are inspired by other European models. Romania has become a production hub for Elbit, creating thousands of jobs. Greece recently signed a 3.1 billion euro deal for Israeli air defense systems, including David's Sling and SPYDER from Rafael and Barak MX from IAI, with significant involvement from Greek companies.
