Israel Secures $3.4 Billion Greek Air Defense Deal Amid Rising Asian Demand
The Greek parliament is set to approve a nearly $3.4 billion deal to purchase Israeli air defense systems as part of the "Achilles Shield" program, following a National Security Council decision from about a month ago. This initial contract is smaller than earlier reports of 3.5 billion euros but may lead to further agreements. The deal includes three different systems: Rafael's David's Sling for upper-tier defense, Israel Aerospace Industries' Barak MX for mid-tier, and Rafael's Spyder for lower-tier protection. David's Sling can intercept cruise missiles, aircraft, and drones up to 300 km away, while Barak MX covers threats from short to long range with three missile types.
This sale is Israel's second-largest air defense export after the Arrow 3 deal with Germany, which involved contracts worth $3.5 billion initially and an additional $3.1 billion last December to boost interceptor production. The Greek purchase is driven by concerns over Turkey's threat, which covers the entire country. Israeli defense exports to Europe surged in 2024 to 54% of total sales, largely due to this deal, while Asia-Pacific's share dropped to 23% from 48% in 2023.
However, Israeli defense officials expect a sharp rise in sales to Asia-Pacific in the last quarter of 2024, motivated by Western and U.S. intelligence assessments anticipating a possible Chinese invasion of Taiwan next year. India remains Israel's largest defense customer, accounting for about 29% of exports from 2021 to 2025, followed by Germany at 21%. India faces ongoing border disputes with China, intensifying its demand for Israeli defense products.
Japan is emerging as a significant future buyer, having increased its defense budget by 25% between 2020 and 2026 and seeking advanced missiles, air defense, satellites, naval capabilities, and drones. Japan recently evaluated Israeli Heron MK II drones and signed a $261 million deal for American MQ-9B drones. Other potential Asian customers include Vietnam, Thailand, and the Philippines, with Vietnam recently contracting Rafael for $250 million worth of loitering munitions.
Despite strong demand and new contracts, Israeli defense stocks have declined sharply in 2024, with the TA-Bitachon index down about 13.5% year-to-date, reflecting market caution and profit-taking rather than business fundamentals. For example, Next Vision reported a $5.6 million order but saw its shares drop 5.5%. This divergence highlights investor skepticism despite robust sector activity.
