Europe accounted for 36% of Israel’s record $19.2 billion in defence export agreements in 2025, making it Israel’s largest regional market.
Yet the rules governing European rearmament expose a paradox: exclusive control over a weapon can restrict the freedom to sell it. Israel can expand that freedom by sharing defined industrial authority with Greece.
European rearmament redefines industrial sovereignty
The EU’s €150 billion Security Action for Europe (SAFE) instrument finances defence procurement under conditions designed to strengthen European production and technological independence. Generally, no more than 35% of component costs may originate outside the EU, Ukraine and eligible European Economic Area countries. Advanced categories, including air and missile defence, also require contractors to develop and modify products free of restrictions imposed by third countries. Under SAFE, Israel is a third country. Greek assembly alone cannot secure eligibility; European industrial rights matter as much as the factory.
Greece brings more than a manufacturing location. Its €3.035 billion Achilles’ Shield agreement with Israel establishes a major customer, industrial cooperation and a production base with export potential. Greek industry also contributes technology of its own. In February, Hellenic Aerospace Industry demonstrated the integration of its KENTAVROS counter-drone system with Israel Aerospace Industries’ BARAK MX. Athens brings military demand, engineering expertise and access to the European market. It is entitled to demand corresponding authority over the systems developed and produced through that partnership.
The paradox of control: when sovereignty restricts exports
Israel already knows the cost of divided authority. American cooperation helped develop David’s Sling and Arrow 3, whose sales to Finland and Germany required Washington’s approval. That partnership delivered exceptional military capabilities while constraining Israel’s export freedom. Israeli industry has every reason to protect its technological sovereignty. It cannot, however, regard American approval as an infringement on its commercial freedom while demanding unrestricted control over products developed with European partners.
The distinction lies between ownership of existing technology and authority over future products. Israel can retain its intellectual property, license selected capabilities and establish new programmes with development and commercial rights agreed from the outset. Greek industry must receive the authority to manufacture, improve and export the resulting European systems. Those rights should reflect each partner’s technology, investment and responsibilities.
The BARAK 8 air-defence system offers a precedent. Jointly developed with India, the system generated substantial business through shared development and production. IAI subsequently developed BARAK MX within the broader BARAK family. Cooperation on one programme did not prevent further Israeli development. Greece and Israel can apply that principle to Europe, defining rights for each new programme while preserving their respective technological interests.
Shared technology, competing commercial interests
A Greek partner with genuine development rights may eventually become an Israeli competitor. That risk is real. So is the business lost when exclusive control excludes a product from procurement requiring European autonomy. Israel must weigh both. A commercially successful partnership cannot rest on the assumption that every future decision must remain in the original supplier’s hands.
Existing American licensing restrictions cannot be erased through European production. New programmes must be designed for European operational requirements from the outset, using technology Israel can lawfully license and development rights that do not reproduce the restrictions attached to existing systems. Some capabilities will remain wholly Israeli; others justify shared authority. Israeli security interests, commercial returns and access to European procurement must determine the division.
From European procurement to strategic market access
Israel’s strengths in air defence, counter-drone protection, electronic warfare, sensors and maritime security correspond to European requirements. In September, under the separate European Defence Industry Programme (EDIP), the EU approved collaborative projects in integrated air and missile defence and counter-drone capabilities, both involving Greece. These initiatives establish priorities rather than purchase orders, but they give Greece a place in programmes shaping Europe’s future capabilities.
Licensed technology, joint development and European production can open markets beyond the reach of conventional weapons exports. A Greek partner empowered to improve and market the resulting systems can extend their commercial life, adapt them to new requirements and attract additional customers. Israel earns from its expertise without having to retain every industrial decision. Greece gains enduring engineering, manufacturing and export capabilities.
Control is valuable when it protects freedom of action. When it prevents a sale, it becomes a constraint. Greece offers Israel the opportunity to turn that distinction into an industrial strategy.
About the author
Shay Gal is Founder & Principal of Line of State, a strategic practice for strategic affairs, government relations and public power. He previously served as Vice President of External Relations at Israel Aerospace Industries (IAI) and as Chief of Staff to its Chairman.