Can Israel Access the New European Defense Fund?

The European Union’s latest defense initiative, the “Rearm Europe Plan – Readiness 2030,” aims to fortify Europe’s military resilience in an increasingly unstable world. Given Israel’s advanced defense capabilities and history of collaboration with European nations, one might assume it would be a natural partner. Yet, strict eligibility criteria and political considerations make Israel’s access to this fund highly unlikely — with consequences that stretch beyond defense procurement.

[https://ec.europa.eu/commission/presscorner/detail/en/ip_25_793]

The Eligibility Barrier

The draft proposal mandates that 65% of procurement costs must be spent within European Free Trade Association (EFTA) countries — comprising EU member states, Norway, Iceland, Switzerland, Liechtenstein, and Ukraine. The remaining 35% can be sourced from other nations, but only if they hold a security and defense partnership agreement with the EU.

Israel, despite its renowned defense technology and robust trade ties with Europe, lacks such an agreement. Its deep strategic alignment with the United States — including a preference for U.S.-developed systems and technologies — creates political friction with the EU’s push for strategic autonomy. The likelihood of Israel negotiating a bespoke security deal with the EU remains low, particularly given ongoing EU-Israel tensions around human rights and regional security.

Existing EU-Israel Defense Cooperation

While Israel may be locked out of this particular fund, it remains a participant in Horizon Europe, the EU’s flagship research and innovation program. This initiative supports civilian-focused projects, though many Israeli innovations — particularly in cybersecurity, drone technology, and AI — possess dual-use potential, meaning they could bolster both civilian and defense sectors.

However, this arrangement is increasingly under fire from some European lawmakers who argue that Israeli firms benefit unfairly from EU research grants while indirectly supporting its military-industrial complex. Calls for stricter oversight and conditional funding are growing louder, adding pressure to an already precarious partnership.

Strategic and Political Implications

For Israel, exclusion from Rearm Europe Plan is more than a lost financial opportunity — it’s a strategic setback. Europe is a critical market for Israeli defense exports, and the inability to participate in this fund could erode its competitive edge in the region.

Moreover, the fund’s structure incentivizes EU states to prioritize European suppliers, potentially reducing demand for Israeli technologies. In a worst-case scenario, this could nudge European countries toward domestically developed (and possibly less advanced) alternatives, reinforcing the EU’s goal of defense self-sufficiency at Israel’s expense.

That said, Israel is far from isolated. It continues to cultivate defense ties with countries like India, South Korea, and the UAE, alongside its ever-strong U.S. partnership. In fact, exclusion from the EU fund may accelerate Israel’s pivot towards non-European markets — particularly in Asia, where demand for high-tech defense solutions is growing.

Defense Technology Competition

Europe’s push for defense autonomy also raises another uncomfortable question: is the EU’s exclusion of Israel inadvertently fostering competition?

Countries like France and Germany are ramping up homegrown initiatives in areas where Israel traditionally excels, including missile defense, UAVs, and cybersecurity. Israel’s absence from the fund could embolden European defense giants — Airbus, Dassault, Rheinmetall — to fast-track indigenous alternatives to Israeli systems.

Yet, European contractors may still seek Israeli expertise through subcontracting arrangements. Even if direct participation in the fund is off-limits, Israeli tech could find its way into European defense projects via third-party partnerships. This is especially plausible for niche capabilities like counter-drone systems, cyber defense, and missile interception, where Israel remains a global leader.

Public Opinion and Political Lobbying

Geopolitics is rarely static, and defense funding is no exception. Some EU member states — particularly those with strong defense ties to Israel, like Hungary, the Czech Republic, and Greece — may advocate for exceptions or adjustments. Such lobbying efforts could introduce loopholes or special arrangements, especially if European defense firms themselves push for access to Israeli innovations.

Moreover, the EU’s evolving security landscape may force pragmatism over politics. If Europe’s defense challenges intensify — whether from Russia, instability in the Middle East, or other unforeseen threats — the bloc may reassess its stance on partnerships with non-EU defense powerhouses like Israel.

A Long-Term Perspective

While the current draft proposal excludes Israel, this might not be the end of the story. Should Israel pursue a tailored security cooperation framework — perhaps one that preserves its U.S. alignment while offering limited EU collaboration — the door to funding could reopen.

Alternatively, Europe’s own strategic needs may shift faster than expected. If the EU’s indigenous defense industry fails to deliver the technological advances required for “Readiness 2030,” member states may push for broader eligibility criteria, creating an indirect pathway for Israeli participation.

Conclusion

Israel’s exclusion from the Rearm Europe Plan – Readiness 2030 reflects both regulatory barriers and deeper geopolitical frictions. While this presents a clear economic and strategic setback for Israel’s defense sector, the country’s global partnerships and technological edge will ensure it remains a formidable player on the world stage.

Whether through indirect involvement via European subcontractors or by accelerating ties with other defense markets, Israel’s military-industrial future remains resilient — even if Europe temporarily shuts its doors.