Spanish Arms Cancellations deals of €600M Raise Fears of Wider Boycott on Israeli Defense Industry

The Israeli defense industry is sounding the alarm after the Spanish government canceled another major arms deal with Rafael, deepening concerns that other countries may follow suit as part of efforts to pressure Israel to end the war in Gaza.

Over the past several months, Madrid has canceled deals worth nearly €600 million with Rafael and Elbit Systems, including high-profile contracts for missile guidance systems, anti-tank weapons, and rocket systems. Industry executives warn that beyond immediate losses, the greater danger lies in a stagnation of new contracts worth billions—a freeze that could undermine Israel’s record-breaking export momentum.

Spain Pulls Plug on Rafael, Elbit Deals

Last week, the Spanish Ministry of Defense terminated its contract with Rafael for the purchase of dozens of “Lightning 5” systems—advanced kits that turn conventional bombs into precision-guided munitions with a range of 100 kilometers. The deal, valued at over €200 million, had been in advanced stages.

This followed earlier cancellations of:

• A €250 million purchase of “Spike” anti-tank missiles from Rafael.

• A €700 million deal for Puls rockets with Elbit Systems, of which Elbit’s share amounted to roughly €140 million.

• A smaller small-arms contract with an Elbit subsidiary earlier this year.

In total, Spain has walked away from nearly €600 million in Israeli defense procurements since the start of the Gaza war.

Sanchez Hardens Line Against Israel

Spanish Prime Minister Pedro Sánchez has positioned himself as one of Europe’s fiercest critics of Israel’s campaign in Gaza. In recent weeks, his government has:

• Imposed an arms embargo preventing Spanish ports from serving vessels supporting Israeli operations.

• Blocked exports of raw materials destined for Israeli firms, forcing manufacturers to seek alternative suppliers.

• Deployed a naval escort alongside Italy to accompany the “Tsumud” flotilla attempting to break Israel’s blockade of Gaza.

In an irony noted by Israeli officials, the Spanish warship sent to escort the flotilla is equipped with defense systems manufactured by Rafael.

Industry Reaction: “Comfort of Fools”

While the Defense Ministry has not officially responded to Spain’s moves, industry leaders have spoken more bluntly.

“After the war, they will be back on all fours,” a senior executive told Calcalist. “They need our weapons more than we need them. They are a small market—but we must remain vigilant about other locations.”

Executives stress that canceled orders are quickly snapped up by other buyers in a global arms race. “If Spain cancels ‘Spike’ missiles, they will reach another customer who is only too happy to receive them,” one official said. “That may comfort us in the short term—but it is the comfort of fools.”

The real danger, they argue, is stagnation in new deals valued in the billions of dollars, with negotiations frozen by political sensitivities and hostile public opinion in Europe and beyond.

“If the current situation continues, we’ll begin to see export declines in 2026, with the real blow in 2027,” another senior official warned. “If deterioration is stopped now, we can still save the situation and ride on strong demand for Israeli weapons. But if we push further, we’ll find ourselves in a completely different, far worse reality.”

Record Exports Now at Risk

Israel’s defense exports reached a record in 2024, totaling $14.8 billion, with half of all deals in Europe. The Defense Ministry has long promoted foreign sales as crucial for funding next-generation weapons programs and maintaining Israel’s technological edge.

Officials warn that relying solely on domestic procurement is impossible. “Anyone who thinks that industries like ours can survive only on orders from the Defense Ministry doesn’t understand where they live,” one senior executive said. “Maybe President Trump will finally come to his senses, stop this war, and maybe we’ll save something. Right now, Israel risks becoming a leper country. We cannot be Sparta.”

Barkat’s 24-Hour Mission to Berlin

The crisis extends beyond weapons exports. Over the weekend, Economy Minister Nir Barkat made a “24-hour lightning trip” to Germany, accompanied by Manufacturers’ Association President Ron Tomer. Their goal: to persuade Berlin to block a European Commission initiative that could suspend sections of EU-Israel trade agreements, exposing Israeli exports to customs duties.

“Germany’s support for us in the face of looming sanctions is very necessary,” Tomer said. “We received encouraging messages that they will not allow harm to trade with Israel, but the political constraints in Europe make the situation uncertain.”

The confluence of canceled arms deals, frozen negotiations, and potential EU trade penalties underscores Israel’s growing international isolation. For an industry that has thrived on global demand, technological prestige, and European partnerships, the warning signs are flashing red.

Industry leaders remain defiant that demand for Israeli systems will endure—but admit that without a shift in the political climate, the coming years could mark the end of Israel’s golden age in defense exports.