Predictions of a Crushing Blow to the Israeli Arms Industry in 2027 Due to the Gaza War

SadaNews - An executive in the Israeli arms industry has predicted that the sector will face a severe blow in 2027 after a decline in 2026 if Israel's war on the Gaza Strip continues, as reported by Yedioth Ahronoth, without revealing his identity.

The official stated, "Many countries want to obtain our weapons, but they prefer to wait until the Gaza war ends, and international attention shifts as wars prolong, and clients cannot wait forever."

He added, "If things stabilize now, we can still benefit from strong demand, but if that does not happen, we will be in a completely different position."

Israeli defense exports reached a record $14.8 billion in 2024, half of which was to Europe, while the Ministry of Defense has warned for months that increasing international isolation may harm future sales, and is seeking to expand exports as a means to finance new production infrastructure and advanced systems to maintain Israel's military superiority.

Escalating Crisis

Israeli defense industries are warning of an escalating crisis after Spain canceled a new arms deal with Rafael, raising the total value of suspended contracts with Israeli companies in recent months to around $654 million.

Industry officials fear that cancellations could extend to other countries seeking to pressure Israel to end the war in Gaza, while the prolonged freeze on new deals, estimated to be worth billions of dollars, threatens long-term exports, according to the newspaper.

Last week, the Spanish Ministry of Defense announced it had canceled a planned purchase from Rafael for dozens of "Lightning 5" targeting pods, which guide aerial bombs, valued at over $218 million.

Earlier, Spain canceled an order for Spike anti-tank missiles from Rafael, worth about $272 million.

Another deal valued at $763 million with Elbit Systems and two Spanish companies for Pols missile systems was also canceled, with Elbit's share of the deal being about $152 million.

Earlier this year, Spain canceled a smaller ammunition order worth several million dollars with a subsidiary of Elbit.

According to the newspaper, these cancellations are part of a broader campaign launched by Spanish Prime Minister Pedro Sanchez, who has adopted an unusually harsh tone towards Israel during the Gaza war.

In recent weeks, Spain has imposed an arms embargo, prevented supply ships linked to Israel from docking at its ports, and halted exports of raw materials, forcing Israeli companies to seek alternatives.

Over the weekend, Spain and Italy deployed warships to escort the Freedom Fleet, which left Barcelona in late August to break the Israeli naval blockade on Gaza.

The governments announced this step after organizers of the fleet stated that their ships had been attacked by drone strikes, causing damage to several vessels.

Public Opinion Pressures

According to the newspaper, executives point out that in the midst of a global arms race, canceled system sales, such as Spike missiles, can quickly be redirected to other buyers, but they caution that the real threat lies in the continued freeze on new contracts after deals worth billions have been stalled for months.

Foreign procurement officials indicate that the hesitation stems from anti-Israel public sentiment, fears of internal unrest, and a desire to avoid politically sensitive decisions, according to the newspaper.