The head of one of Israel’s biggest defense firms said Europe sales will keep growing, shrugging off calls for sanctions and trade restrictions over the war in Gaza.
“We see great business potential in Germany, the UK, Romania, Sweden and Denmark,” Bezhalel Machlis, chief executive officer of Elbit Systems, which makes rockets, drones and laser-based aerial defense systems for the Israeli army, told Bloomberg in a phone interview.
With Europe under pressure to beef up defense budgets with the war in Ukraine now in its fourth year and a new military operation underway in Gaza, Elbit is among the defense companies reporting more business. Sales surged 22% in the first quarter, helped by expanding military spending globally and in Europe in particular, its second-largest market.
The stock has almost doubled in value in dollar terms in the past year. In a regulatory filing this morning the company said it had raised $512 million in an overnight sale of shares.
Still, with relations between Israel and European nations souring because of the assault on Gaza, there’s a risk that future sales may be affected. The UK has warned it is pausing a free trade agreement talks with Israel and Spain’s foreign minister has pushed for tougher action.
European Officials Step Up Pressure on Israel Over Gaza War
European sales make up almost 30% of total consolidated revenues for Elbit. The European Union is planning hundreds of billions of euros of military spending since the US administration made clear it would no longer be the main guarantor of Europe’s safety.
The latest talk around ceasefire negotiations between Russia and Ukraine isn’t prompting Machlis to temper his bullish growth predictions. Regardless of the outcome, Europe will have to lift its spending, he said.
“European leaders understand that ramping up defense budgets creates deterrence,” Machlis said. “They also realize they need to have much more independent capabilities and be less dependent on the US.”
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