Israeli defense exports drop by 5%, ministry to focus on G2G deals
Head of exports division says Covid-19 devastated global defense sector, Asia Pacific countries remain biggest buyers
Israel has maintained its spot among the top 10 global defense exporters despite a 5% decrease in exports which totaled $7.2 billion in 2019, according to figures revealed Monday by the Ministry of Defense’s International Defense Cooperation Directorate (SIBAT).
This is the second year in a row that Israel has recorded a decline in exports after breaking the all-time record of $9.4 billion in 2017, due in large part to $2 billion in orders of the Barak-8 aerial defense system by India.
“We were expecting to see a trend of growth in G2G (government to government) agreements throughout the year 2020, but the coronavirus pandemic has devastated the global economy and the defense sector," said Brig.-Gen. (ret.) Yair Kulas, head of SIBAT. "As such, we are adjusting our activities in the defense ministry and working to turn this crisis into an opportunity for our defense industries."
Brig.-Gen. (ret.) Yair Kulas. Photo: Ariel Hermoni/Ministry of Defense
The sectors of exports were divided as follows: Radar and electronic warfare (17%); missiles, rockets, and aerial defense systems (15%); manned aircraft and avionics systems (13%); Visual reconnaissance and optronics (12%); firearms (10%); drones and UAVs (8%); Cyber and data intelligence systems (75); audio surveillance and communications systems (7%); vehicles and armored vehicles (4%); customer service and miscellaneous (3%); armor and ammunition (35); and naval systems (1%).
The defense ministry does not divulge the countries Israeli companies expert to, only their region. In 2019, the Asia-Pacific region continued to dominate the Israeli defense export market, making up 41% of all the deals. European countries purchased 26% of exports, beating out North America (25%), Africa (4%) and Latin America (4%).
Last year saw an increase in government to government deals at the expense of direct sales with manufacturers. G2G sales stood at $635 for 2019 compared to $421 million in 2018 and $276 million in 2017.
“Agreements between governments are used as a way to bypass the requirement of drawn-out tender processes in some countries and as part of a war on bribe and corruption in others,” said Kulas. “This trend is continuing and we are already seeing sales of $700 million in 2020.”