Israel's Rafael and Israel Shipyards to Supply Cyprus with Naval Systems and Vessels Worth €150 Million

Israel Shipyards and Rafael Advanced Defense Systems are nearing a joint deal to sell naval vessels and weapon systems to Cyprus for approximately €150 million. The agreement is expected to be finalized in the coming weeks, following negotiations between the Israeli Ministry of Defense and the Cypriot Ministry of Defense. Under the proposed deal, Israel Shipyards will supply the Cypriot Navy with ships equipped with Rafael's weapon systems. Both companies have a history of collaboration on defense programs with Cyprus and other nations.

Previously, Israel Shipyards delivered a patrol vessel to Cyprus less than a decade ago, designed for protecting its economic waters and equipped with radar, command and control systems, and two Typhoon naval weapon stations. Rafael and Israel Shipyards have also engaged in similar partnerships for arms deals in Azerbaijan and the Philippines in recent years. This new initiative with Cyprus is being promoted as a government-to-government (G2G) transaction, aiming to deepen Israel's security, political, and economic ties with the island nation. It also seeks to establish a joint axis with Greece, countering Turkey's efforts to leverage the ongoing Middle East conflict to enhance its regional standing.

This development follows a significant €3 billion "Achilles Shield" deal between Israel and Greece last summer, which involves establishing a Greek air defense system based on Rafael and Israel Aerospace Industries (IAI) systems. Additionally, IAI began supplying Cyprus with its Barak MX air defense system about two years ago, replacing the country's aging defenses. Although Israel has not officially confirmed the Cyprus deal, these systems were showcased in a military parade in Nicosia celebrating Cyprus's 66th Independence Day earlier this month. Israeli defense sources suggest that the Cyprus naval deal could pave the way for further business ventures between the two countries, including potential cooperation in defense manufacturing.

In a separate development, Elbit Systems announced a $235 million deal to supply rocket launchers and artillery rockets to an unnamed European country, later identified as Azerbaijan. This G2G transaction, facilitated by the Israeli Ministry of Defense, involves supplying Azerbaijan's military with EXTRA-MR medium-range rockets and PULSE launchers over the next three years. Israel's defense exports reached $19.2 billion in 2025, with 52% of these exports stemming from G2G deals, which are generally faster and have longer-term strategic implications due to government guarantees. Over the past decade, Israeli defense companies have secured billions of dollars in deals with Azerbaijan, including sales of Barak MX air defense systems, LORA ballistic missiles, and various drones and loitering munitions. Elbit has also supplied Azerbaijan with drones, self-propelled howitzers, and other artillery systems, while Rafael has provided anti-tank Spike missiles, among other systems. Expanding defense exports and fostering industrial cooperation with foreign companies are key objectives for the Israeli Ministry of Defense, aiming to strengthen political ties and facilitate knowledge transfer for domestic arms production abroad. Rafael and Israel Shipyards declined to comment on the Cyprus deal.