Israel emerges as key supplier in Western rearmament drive

As Western militaries race to replenish depleted weapons stockpiles after conflicts in the Middle East and Ukraine, Israel's defense industry is emerging as a critical supplier of advanced military systems.

The United States' long-held position as the world's "arsenal of democracy" is under increasing strain following years of heavy weapons expenditures supporting Ukraine and defending allies against Iranian missile attacks.

Inventories of key munitions, including Tomahawk cruise missiles and Patriot and THAAD air-defense interceptors, have been significantly reduced, creating urgent demand for new production.

Ukraine continues searching worldwide for air-defense systems to protect its cities from Russian ballistic missile attacks, while demand is also growing in South Korea, Taiwan, Japan and the Philippines.

Governments want these systems as quickly as possible, but expanding production requires time, capital and skilled labor.

Against that backdrop, Israel's defense sector, already one of the world's top military exporters, is ramping up production to meet growing demand, particularly from Europe.

In recent years, Israeli companies have signed major contracts to provide air-defense systems to Finland and Germany, along with numerous smaller agreements supplying military equipment to NATO members and countries in East Asia.

At present, Israel's three largest defense companies—Elbit Systems, Israel Aerospace Industries and Rafael—have a combined order backlog valued at more than $90 billion.

Many Western countries have struggled to keep pace with the surge in defense demand that began after Russia's invasion of Ukraine in February 2022.

During the Cold War, Western nations maintained a vast defense-industrial capacity to counter the Soviet threat. After the collapse of the Soviet Union in 1991, many European countries sharply reduced military spending, and the industrial base supporting those forces contracted as well.

That trend began reversing after Russia's invasion of Ukraine and accelerated further following the Swords of Iron War, which began with the Hamas attack on Israel on Oct. 7, 2023, and the subsequent conflicts involving Iran.

The growing demand for military equipment has prompted governments to encourage defense manufacturers to expand production.

On Thursday, President Donald Trump met at the White House with executives from several large and mid-sized defense companies as part of an effort to accelerate output.

The $88 billion the administration has requested from Congress to cover costs associated with the war against Iran is largely intended to replenish weapons and ammunition inventories depleted during the conflict.

Pentagon statements suggest that effort may be only the beginning of a years-long campaign to rebuild stockpiles.

For example, the Pentagon recently signed a contract with defense giant Lockheed Martin to supply $35 billion worth of THAAD interceptors on an accelerated timeline.

While THAAD launchers and radar systems deployed to the Middle East during the war with Iran are returning to their home bases, it remains unclear how many interceptor missiles will accompany them.

Last March, as the war was still raging, executives from BAE Systems, Lockheed Martin, Northrop Grumman, RTX Corp., Boeing, Honeywell Aerospace and L3Harris Technologies met at the White House with the president and senior cabinet officials.

Regular communication between the administration and industry leaders has continued since then. Several Israeli defense companies with U.S. subsidiaries are also participating in the production ramp-up.

Congressional approval of the president's proposed $1.5 trillion defense budget is pending, and defense executives say that firm contractual commitments will be required before companies can make the major investments needed to expand production.

For Israeli defense manufacturers, however, the combination of rising global demand, growing concerns about regional security and Western efforts to rebuild military stockpiles has created one of the most significant business opportunities in decades.