Israeli arms firms seeking to regain cancelled weapons contracts in wake of Gaza ceasefire

Israeli arms companies are attempting to re-secure international arms deals suspended as a result of the genocide in Gaza, especially those with European countries.

Israeli weapons makers are currently intensifying their communication with European countries following the Gaza ceasefire, in a bid to persuade them to resume purchases of arms, as well as secure new contracts, to compensate for financial losses incurred during the war, the Israeli newspaper Yedioth Ahronoth reported.

Spain cancelled three weapons import contracts with Israeli arms companies worth almost 1 billion euros, and other European states froze contracts valued at $600 million due to the Gaza war, according to reports.  

A senior official at one of Israel's largest arms manufacturers said that factories were operating at full capacity to replace the enormous quantities of ammunition used by the army during the war and replenish stockpiles.

However, they pointed out that Israel's arms industry is fundamentally export-based and profit-motivated. Therefore, arms manufacturers were seeking new contracts - especially with Europe, hoping that the ceasefire in Gaza would ease tensions with those European countries that had condemned Israeli actions in the war and cancelled or frozen arms deals due to political sensitivities.

In a recent survey by the Manufacturers Association of Israel (MAI), which included 132 exporters, half reported that they had contracts cancelled or not renewed by foreign clients; 70 percent said the cancellations were political, and 84 percent of those were from EU countries.

Additionally, 38 percent reported shipping difficulties, while 29 percent mentioned customs delays around the world, perhaps in part due to labour union strikes regarding the handling of Israeli weapons.

Israel's arms exports amount to around $15 billion annually – but this figure declined in 2025 as several countries cancelled contracts with Israel, while others obstructed the shipment of spare parts for Israeli weapons.

Most of Israel's key export markets for weapons are in Europe, which buys tank and artillery shells, smart munitions, drones, interceptor missiles for air defence systems, and other advanced equipment.

Europe has been increasing its armament since Russia's invasion of Ukraine in 2022 - a development that benefited Israel's defence industry, with Israeli defence exports reaching $14.8 billion in 2024, half of which went to Europe.

However, in the wake of the genocide in Gaza, public opinion in many European countries turned sharply against Israel, leading to a halt in the purchase of Israeli weapons and in the sale of spare parts for aircraft.

Israel's three largest defence companies - Rafael, Elbit Systems, and Israel Aerospace Industries (IAI) - currently have a combined backlog of orders worth around 250 billion shekels, both domestically and abroad, some of which have been temporarily frozen.

Israeli economist Yehuda Sharoni said on the news website Walla that Israel's economy was suffering and that the Gaza ceasefire agreement wouldn't significantly improve the situation.

He was sceptical of what he called "celebrations over stock market gains and talk of the dollar's decline against the shekel," asserting that this discourse created "an illusion of triumph," but the overall Israeli economy was struggling.

Sharoni argued that most analysts' belief that after the ceasefire, Israel's economy would benefit from a dramatic post-war economic shift was wishful thinking.

"Some people imagine that the global credit rating agencies will upgrade Israel's economic rating, but it will take at least another year before these agencies reconsider their assessments, which will depend largely on how much stability returns to Israel," Sharoni said.

Israeli military sources believe that defence spending was unlikely to decrease in the coming years, even after the war ended, and that the result would be "a budget deficit exceeding 100 billion shekels ($30.1 billion). Companies won't recover unless Europe lifts its threats to boycott Israeli military and civilian exports and unless investors return to Israel", he said.

On Tuesday, Spanish Prime Minister Pedro Sanchez said there should be no impunity for "the main actors in the genocide that has been perpetrated in Gaza", and confirmed that the two-way arms embargo against Israel approved by the Spanish parliament last week would remain in place.

"We will maintain this ban until this entire process is consolidated and finally moves toward peace," he said.

This is an edited translation from our Arabic edition.