Europe’s arms sanctions deliver unprecedented blow to Israel’s military economy

Pars Today – Israel’s arms market, considered one of the pillars of the regime’s economy, now faces the risk of losing billions in revenue amid a wave of canceled weapons contracts and sanctions.

Israel’s arms industry, long regarded as one of the main pillars of the regime’s economy and a key tool of its political leverage, is now facing unprecedented and serious challenges.

According to Pars Today, citing Fars News Agency, while this industry has played a crucial role in providing Tel Aviv with both economic revenue and diplomatic power, a new wave of sanctions and canceled military contracts has cast a heavy shadow over its future.

Cancellation of billion-euro contracts by Europe

According to the Israeli financial daily Calcalist, in recent months—under public pressure and protests against the Gaza war—Israeli arms deals worth around €600 million have been canceled, while the regime also faces the risk of losing contracts worth several billions more.

In particular, the Spanish government has canceled several of its recent arms contracts with major Israeli companies, including Rafael.

In just one case, Spain canceled a €207 million contract for arms imports from this company following the official announcement of sanctions.

These contracts included various aerial guidance systems, Spike anti-tank missiles, rocket launchers, and ballistic missiles — all of which had been a significant source of revenue for Israel.

Sanctions as political pressure on Tel Aviv

The cancellation of these contracts and the imposition of sanctions are part of the Spanish government’s political pressure campaign to compel Israel to halt its military operations in the Gaza Strip and put an end to genocide.

In addition to the arms embargo, Spain has imposed extensive restrictions on the movement of ships and on the export of strategic raw materials to Israel, while also banning the import of goods produced in illegal Israeli settlements in Palestinian territories.

These sanctions, recently formalized through a royal decree by the Spanish government, are part of a growing trend across Europe that has increasingly placed Israel in political and economic isolation.

Warnings from Israel’s defense industry and looming crisis

Israel’s defense industries organization, a formal state body, has warned of the consequences of this trend, stating that the cancellation or suspension of new contracts will result in billions of dollars in losses for Israel’s economy.

This issue is particularly crisis-inducing for major firms such as Rafael, Elbit Systems, and Israel aerospace industries.

Disruption in Israel’s technology and AI collaborations

In another development, the U.S. company Microsoft announced that it has cut off its cloud computing and artificial intelligence services to Unit 8200, Israel’s intelligence branch.

This move followed reports that these technologies were being used for extensive surveillance of Palestinians and is seen as a symbol of international pressure on Israel’s military technologies.

Israel’s arms industry remains one of the main pillars of its economy, generating between $10 and $12 billion in foreign revenue annually.

This industry not only creates thousands of direct and indirect jobs but also plays a key role in Tel Aviv’s political influence and diplomacy through extensive exports to over 70 countries worldwide. Companies such as Rafael, Elbit Systems, and Israel Aerospace Industries are among the main players in this sector.

Israel’s defense industry, long regarded as both an economic strength and a symbol of the regime’s military capability, now faces serious vulnerabilities.

The wave of contract cancellations, sanctions, and international restrictions has not only caused enormous financial losses but also severely undermined the credibility and promotional value of “battle-tested weapons,” which Tel Aviv had relied on for years.

These developments have cast serious uncertainty over the future of this sensitive and strategic sector of Israel’s economy, forcing the country’s major defense companies to reconsider their export strategies and international operations.