Israel’s arms sales are still booming. But pressure over its war in Gaza is exacting a cost

By Nic Robertson, Florence Davey-Attlee, CNN

London (CNN) — Israel’s Prime Minister Benjamin Netanyahu is preparing his nation for, in his words, a “kind of isolation” that could last for years.

For the first time, the usually intransigent leader conceded last week that international outrage over how Israel is waging war in Gaza is turning Israel into a potential pariah. While he subsequently walked back his bleak prognosis, Netanyahu underscored a reality: Israel’s place on the global stage is changing.

As the annual United Nations General Assembly is held in New York, allies like the United Kingdom, Australia and Canada have recognized a Palestinian state.

The move reflects their exasperation with the Israeli leader, and a potentially existential moment for Israel.

Netanyahu, meanwhile, is calling on Israel’s arms makers to step up their readiness. “We will need to strengthen our independent weapons industries so that we have munitions independence, a defense industrial economy, and the industrial capability to produce them,” he said last Monday, speaking at a finance ministry conference.

Israel and its arms makers have long been viewed as producing cutting-edge weapons technology, and those weapons have been sold to countries around the world. But as international criticism of the war in Gaza grows, Israel risks losing its position in some of those markets.

Spain, after months of signaling, last week annulled hundreds of millions worth of orders for battlefield weapons made by Israeli companies. Prime Minister Pedro Sanchez, who formally recognized Palestinian statehood in May 2024, called Israel’s war in Gaza “barbarity” and has called for more punitive action against Israel, including for it to be barred from international sporting competitions and the Eurovision Song Contest.

Oded Yaron, arms industries and technology reporter at Israel’s left-leaning Haaretz newspaper, has warned that Israel cannot afford for others to follow Sanchez’s lead. “We don’t have the economy to support it; if we don’t sell it to other countries, it will inevitably lead to damage of Israel’s defense,” he told CNN.

For now, Netanyahu seems to have time on his side. The Israeli Ministry of Defense reported $14.7 billion in export sales in 2024 – a 13% increase over the previous year – with more than half of its defense deals made with European countries.

Israel’s multibillion dollar arms industry sales are at a record high, in part, Yaron said, because their weaponry is known, “battle tested, battle proven, and people need it.”

Israel’s past two years of war in Gaza, as well as operations in Lebanon, Iran and Yemen, have helped to solidify the country’s standing as a leading global arms supplier. The Arrow missile interceptor made by Israeli arms manufacturer Israel Aerospace Industries (IAI) successfully intercepted Iranian ballistic missiles at high altitude during the 12-day conflict over the summer.

Israeli-made reactive armor used routinely on Israel Defense Forces (IDF) tanks and battle vehicles inside Gaza has also proved effective. The F-35I-Adir, the Israeli variant of the US origin F-35, is also drawing attention to Israeli-designed “upgrades.”

Arms fair protests

At one of the world’s largest arms fairs in London earlier this month, a CNN team witnessed crowds of interested customers lining up to talk to sales teams at some of Israel’s largest defense contractors – Elbit Systems, IAI, Rafael – as well as some smaller Israeli weapons makers.

One salesman at the Defense and Security Equipment International (DSEI) exhibition told CNN that business was “booming” because customers “like the way Israel protects its people” and buyers “want that battle-tested hardware.”

But Yaron warns the boom may be ebbing as political pressure mounts, saying that “as the war in Gaza drags on and on and on, it becomes more and more of a problem.”

Outside the London arms fair, dozens of pro-Palestinian protesters, including a nurse who has been to Gaza several times over the course of the war, protested the exhibition and what they alleged as the UK’s “complicity in genocide” in allowing Israeli firms to exhibit there.

Potential arms buyers ushered into the venue behind lines of riot-ready police officers as demonstrators called them “baby killers” and “murderers,” with “blood” on their hands.

The British government has also been taking heat from within its own ranks on the matter.

Inside parliament, more than two dozen lawmakers – many of them from the ruling Labour Party – signed a motion earlier this month calling on the government to rule out awarding any contracts to Elbit Systems UK, which is currently in the running for a 15-year, £2 billion (approximately $2.7 billion) training contract with the UK Ministry of Defence.

The motion’s primary sponsor, independent lawmaker Brian Leishman, claims Elbit’s involvement with Israel’s F-35 fighter jet program connects the company to “death right across Gaza,” which he says carries “global reputational, legal and moral consequences” for the British government.

Last year the British government suspended around 30 arms export sales to Israel but exempted components for F-35 aircraft.

Israel has 45 F-35s, and has ordered 36 more, according to the Campaign Against Arms Trade (CAAT). The F-35 has been used to drop 2,000-pound bombs on Gaza, including on an Israel-designated humanitarian zone in Al-Mawasi, according to Danish news outlet Information and Danish NGO Danwatch. The Israeli military was targeting elusive Hamas military chief Mohammed Deif.

‘More backlash’

Leishman’s motion is the political tip of an anti-war iceberg now further buoyed by young activists and pensioners, as well as sports and pop stars.

Against this backdrop, the British government banned Israeli government officials from attending the London arms fair, citing concerns over “the Israeli government’s decision to further escalate its military operation in Gaza.”

The Israeli government slammed the decision, calling it “a deliberate and regrettable act of discrimination” – but it is facing similar moves from a number of its allies.

This summer, the French government shut down stands for major Israeli arms companies, including Elbit Systems and Rafael, at the Paris Airshow – the world’s biggest aviation trade fair – for refusing to remove attack weapons from display.

And following Israel’s recent strike on Hamas negotiators’ residence in Doha, Qatar, the United Arab Emirates banned the Israeli government and defense companies from their Dubai Airshow, scheduled for November.

But Yaron cautions that Israel’s arms sales won’t suffer much by crimping access to such shows. Countries need arms, he said, and Israel is prepared for such blocks and will almost always sail through somehow, even if “it might cost them more, there may be more backlash, there may be more problems.”

Israel’s largest arms manufacturer Elbit Systems signed a 5-year, $1.6 billion contract with an undisclosed European country last month.

Matthew Savill, director of military science at the London-based Royal United Services Institute think tank, says Israel’s arms sales are protected in other ways too, with Israeli components woven into larger supply chains and Israeli companies setting up entities in customer countries.

The relationship is even more enmeshed through security and intelligence sharing, Savill said, bonds that won’t be cut easily. “Whilst you have this significant political disagreement over what’s happening at the moment, there will be many in both security systems who would want to avoid too much impact to the direct relationship,” he said.

For now, Israel can afford to keep fighting. The cost, however, is going up.

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