Israeli defence firms eye Cyprus as European expansion gathers pace

Politics IsraelTop News Israeli defence firms eye Cyprus as European expansion gathers pace Proedroi Amyn 1536x864 Relevant News Israeli defence firms eye Cyprus as European expansion gathers pace 13 September 2026 Turkish Airlines flight diverted after severe turbulence near Tunis 13 September 2026 Israeli and Palestinian couples remanded over 126 kg yacht-smuggled ketamine in Cyprus 13 September 2026 Andreas Bimbishis 13 September 2026 FacebookXWhatsAppEmailPrintViber Israeli defence companies are looking for new bases inside the European Union as they expand their activities across the bloc, and Cyprus is emerging as one of the countries where deeper cooperation could develop. Such investment could also bring economic benefits to Cyprus, following models already seen in countries including Germany and Romania. The possibility of Israeli companies establishing production facilities in Cyprus was among the issues discussed during Israeli President Isaac Herzog’s visit to Nicosia last Thursday. According to sources familiar with the talks between the presidents of Cyprus and Israel, Israeli companies operating in the defence sector are showing strong interest in establishing headquarters and industrial facilities on the island. That interest is linked both to the relationships those companies have already developed with EU countries and to the SAFE programme. Cooperation inside the European Union is therefore developing on two levels: through EU-wide initiatives such as SAFE and separately through bilateral agreements with individual member states. For Cyprus, the potential benefits would be twofold. Such an industry could contribute significantly to the economy while also supporting the country’s own defence capabilities, particularly in systems associated with modern warfare. A rapidly expanding relationship The European Union has begun a systematic rearmament drive built around two broad areas. The first concerns heavy weaponry, including weapons systems, tanks and aircraft. The second focuses on modern security systems such as sensors, interceptors and surveillance technologies. The markets capable of supplying this full range of equipment are relatively limited. For the first category, the United States remains the main external supplier for systems not produced within the EU, not least because of the long-established defence relationship through NATO. For the second category, involving modern forms of warfare, Israel has become one of the main destinations for European countries seeking to strengthen their defence capabilities. Defence ties withstand the political climate Relations between the European Union and Israel remain politically strained. In defence, however, cooperation between individual European states and Israel has largely remained insulated from the broader political climate, something reflected in the scale of existing agreements. A recent Politico report highlighted several examples of cooperation between European countries and Israel’s defence industry. Netherlands: In 2025, Elbit Systems’ C4I and Cyber division won a €25 million contract to supply battlefield management systems. Spain: In 2024, the Spanish Defence Ministry awarded Rafael Advanced Defense Systems a €1.17 million contract without an open tender. Prime Minister Pedro Sánchez later announced the cancellation of €1 billion in defence contracts with Israel. At the same time, however, Madrid’s regional government sought and received assistance from Israel’s cyber directorate in January to protect critical infrastructure. Denmark: In September 2025, Elbit Systems Deutschland secured a €6.5 million contract for a device used to process and analyse electronic signals. In January, Germany and Israel signed a memorandum covering a cyber shield on German territory using Israeli technology. A month later, in February, Greece, Cyprus and Israel inaugurated a maritime cybersecurity centre in Nicosia. Italy has also prioritised Israeli technology and took a significant step in 2024 by introducing an incentive under which Israeli cybersecurity software is treated on an equal footing with EU and NATO products in public tenders. Made in Israel, produced in Europe What Nikos Christodoulides and Isaac Herzog discussed regarding Israeli defence industry activity in Cyprus would not be unprecedented. There are already several Israeli-owned factories and production lines operating inside the European Union. Romania has become one of Elbit Systems’ main production hubs in Europe. The company operates seven production facilities in the country, providing 1,000 direct jobs, including engineers and technicians, and more than 2,500 indirect jobs through local suppliers and related activity. Germany is also developing into a major hub for air-defence systems. Rafael Advanced Defense Systems, together with the state of Lower Saxony and investment fund Aurelius, signed an agreement to convert Volkswagen’s plant in Osnabrück into a defence centre. Rafael and IAI Europe also use Germany as a base for servicing European contracts. The conversion of the Osnabrück plant provided a lifeline for the facility and preserved hundreds of jobs. Greece became more deeply integrated into this network after state-owned Israel Aerospace Industries acquired Greek defence company Intracom Defense. Through that acquisition, part of the production and development work for European programmes, including projects backed by the European Defence Fund, is now carried out directly at Greek facilities. A defence industry growing at speed Major contracts aimed at meeting specific defence needs across the EU have given further momentum to Israel’s defence industry, particularly in three areas: Air defence: Systems designed to counter missiles and rockets. Cybersecurity: Advanced digital systems protecting critical infrastructure. Advanced technology: Artificial intelligence and smart munitions. The figures also show that the negative political climate surrounding Israel internationally has not translated into weaker performance for its defence industry. The sector is recording record revenues, driven not only by increased domestic demand but also by major exports to Europe and other international markets. The combined annual revenue of Israel’s three defence industry giants exceeds $21.5 billion. Elbit Systems: Revenue reached $7.94 billion in 2025, up from $6.83 billion in 2024, with an order backlog approaching $25 billion. Israel Aerospace Industries: Revenue reached $7.38 billion in 2025, compared with $6.11 billion in 2024, an increase of 21%. Rafael Advanced Defense Systems: Revenue rose to $6.28 billion in 2025 from $4.85 billion in 2024. The Iron Dome manufacturer sells about half of its output abroad. Israeli technology versus Turkish scale Israel and Turkey are not direct competitors across every segment of the defence industry because they often produce different types of products. They do, however, compete fiercely for market share and geopolitical influence far beyond the wider Middle East. Israel’s strength lies in technology. It sells systems and capabilities that relatively few countries possess. Turkey’s strength lies in manufacturing complete platforms, including ships, helicopters and armoured vehicles, at highly competitive prices, particularly for markets in Asia and Africa. The customer bases of the two countries also differ significantly for political reasons. Israel’s key buyers include Western countries, particularly the United States and EU states, as well as Asian countries with large defence budgets such as India and Singapore. Western countries turn to Israel for the security and technological capabilities of its systems. Turkey, by contrast, has penetrated markets that Israel cannot easily access for political reasons, including much of the Muslim world, Gulf countries and a number of developing markets in Africa. Subscribe to our Newsletter Latest News Turkish Airlines flight diverted after severe turbulence near Tunis Israeli and Palestinian couples remanded over 126 kg yacht-smuggled ketamine in Cyprus Is Christodoulides opening the door to ELAM? 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