Israel's Defense Exports Shift Focus to Europe Amid US Dependence

Israeli defense exports reached a record $19.2 billion in 2025, with 36% directed to Europe and only 13% to North America, indicating a significant market shift. Despite this, capital and attention remain focused on the US, and the scale of American activity is often misleading. For instance, a $1.25 billion contract for Rafael and Raytheon to produce Tamir interceptors in Arkansas was for Israel's benefit, with Israeli technology and demand driving American production. Similarly, Israel Aerospace Industries' North American revenue largely comes from aviation division conversions and maintenance, not Pentagon adoption of Israeli systems. In contrast, European sales for Israel Aerospace Industries and Elbit Systems are primarily from military divisions and significantly higher than North American figures. A 2016 US military aid memo solidified a direction of $3.3 billion annually in military aid and $500 million for missile defense, gradually shifting spending to the US. In February 2026, Washington formalized a policy where arms transfers advance US foreign policy by using foreign procurement to expand US production capacity. The article argues that Israel has funded this US policy as if it were its own, with the Ministry of Defense making subsidized routes the default and company management approving subsidiaries and production transfers without sufficient justification. Alternatives to US dependence, such as independent development or European partnerships, are often stifled before reaching the Ministry of Defense due to anticipated rejection, creating an institutional fear that perpetuates dependence. The author contends that the perception of America as a strategic partner and Europe as merely a market is outdated, as geographical realities and shared threats from Iran and Russia increasingly tie Israel and Europe into a common security system. European nations like Germany, Finland, and Slovakia have acquired Israeli defense systems, sometimes requiring US approval, while Greece is building an Israeli architecture with Rafael and Israel Aerospace Industries. Europe is integrating Israeli technology into its own defense capabilities, but Israel has not yet leveraged the European market for industrial depth. Political challenges in Europe, including Spain's ban on defense trade and France's restrictions, necessitate deeper integration beyond mere sales. The article proposes that Israel should become so embedded in European defense that its exclusion would harm European workers, suppliers, and capital. European funding programs like the SAFE loan facility, which requires significant local content, offer opportunities for Israeli companies, provided they establish local operations and production. The immediate goal is to build a multi-layered defense architecture that reduces reliance on the US, with capabilities that can be produced and exported without American approval, and systems Israel can develop and sell independently or with European partners. The article cites the success of the Barak 8 program with India as a model for leveraging partnerships for knowledge and market access, emphasizing that European partnerships should retain Israeli ownership and control over intellectual property and future development. Establishing several focused hubs in Europe, rather than bases in each country, is recommended, with Greece and Cyprus identified as potential centers due to their existing demand and access to European funding. The article warns that Europe is rapidly integrating Ukraine into its defense industry, bringing operational experience and rapid development cycles, and that Israeli industries must act now to secure a place in European production before alternatives are fully established.