Israel’s defense industry at a crossroads

One doesn’t need to be a defense expert to understand that October 7, 2023, marked a historic turning point. Israel has entered a long, painful and unpredictable war. Before it is too late, the public, the military and the government must undergo deep strategic reevaluation. An approach is needed that recognizes the threat is not only on the borders, but also at the production table in every aspect of Israel’s defense needs. Israel must aim not only for military independence but also for industrial self-reliance.

The Iron Swords War leaves no room for illusions: we can no longer afford to live under the false sense of security that “suppliers will deliver,” that “assistance will arrive” and that the world will always stand by our side. The painful and complex reality proves otherwise.

History doesn’t forget. In the 1960s, Israel experienced an embargo from France, then one of the country’s main suppliers of air force equipment. Overnight, support was cut off, and Israel was forced to rapidly develop independent capabilities. This is how the Israeli defense industry, as we know it today, was born.

What diplomacy couldn’t accomplish, regulations, delays, restrictions and “soft sanctions” are managing — often without being called by name. This creates a situation in which critical military projects are delayed, equipment arrives late, planning is stalled and the cost is measured in lives, operational readiness and public trust.

When production is outsourced abroad, we not only expose ourselves to logistical and political risks, but also harm the Israeli economy. Offshoring leads to the retirement of experienced workers without replacement. Valuable knowledge—technological, engineering and practical—fades away. Factories shut down or scale back, and the geographic periphery, which is the backbone of the industry, is slowly weakened. This is a destructive cycle: lack of investment reduces capabilities, which in turn increases reliance on foreign procurement, further weakening local production, and so on.

Contrary to popular belief or the allure of high-tech careers, not every young Israeli aspires to work in the tech industry. Most seek a profession, job security and a sense of purpose. A strong, modern, well-maintained defense industry can be a stable employment anchor for thousands—engineers, technicians, production workers, logistics personnel, quality control specialists and more. The next generation needs not only apps, but also the ability to assemble, design, build and innovate. The defense industry is not a relic of the past, it is a bridge to the future.

A comprehensive set of policy measures is urgently required to safeguard and strengthen Israel’s defense industry. The government must officially recognize the defense industry as critical national infrastructure. This designation should be accompanied by substantial financial support, regulatory frameworks and operational streamlining to ensure resilience and responsiveness.

Mechanisms must be established to restrict the import of defense products that can be manufactured in Israel. This should be paired with targeted incentives that encourage domestic production and investment in local capabilities.

Israeli companies should be clearly prioritized in public tenders—even when foreign offers may appear more cost-effective. The U.S. model, which favors small businesses in federal contracts, offers a relevant and proven approach.

Robust investment in technological and vocational education is essential. Programs should be developed in partnership with the Defense Ministry and the defense sector to ensure a skilled next generation of engineers, technicians and operators.

A new legislative framework should be introduced to drive investment in the defense manufacturing sector. Modeled after the Capital Investment Encouragement Law, it should include strong incentives for establishing, expanding and upgrading production infrastructure within Israel.

Every day, I see the gap between Israel’s impressive local manufacturing capabilities and the untapped opportunities within the defense sector. Israeli industries are capable of design, execution, compliance with the highest standards and close cooperation with the defense establishment. What’s missing is policy.

Without a comprehensive strategic shift, we may soon find ourselves with advanced weapon systems but no prototypes, no spare parts and no workforce capable of producing or maintaining them. The time to act is now—not another day after, and not when inventories run out and emergency procurement at twice the cost becomes inevitable. Industrial independence is a life insurance policy—not a luxury.