How the Israel–Iran war has lifted defence exports
The conflict demonstrated the effectiveness of Israel's multi-layered defence systems, particularly the Iron Dome.
Israeli defence companies may have been banned from the recent Paris Air Show, but governments around the world are apparently more interested in what they’re selling than ever.
The recently concluded two-week military confrontation between Israel and Iran has inadvertently become the ultimate testing ground for Israeli technology.
The conflict has delivered a powerful live fire demonstration of high-tech battlefield superiority that is already translating into unprecedented international demand for Israeli weapons systems.
The conflict, which began on June 13 and ended with a fragile US-brokered ceasefire on June 24, saw Israel launch surprise attacks on key Iranian military and nuclear facilities, followed by Iranian retaliation with missiles targeting Israeli cities and military sites.
It was a war fought in the air, in space, electronically and in cyberspace. Israel dominated them all, and the world has taken notice.
While the human cost was significant – Iranian authorities reported 610 killed and 4746 injured, while Iran’s attacks resulted in 28 Israeli deaths – the conflict served as an intensive demonstration of Israeli military capabilities.
Defence stocks soar
Israeli defence companies have emerged as clear winners, with the conflict validating their technologies in the most demanding combat conditions.
Israel’s military exports had already reached a record $US14.7 billion ($22.4 billion) in 2024, representing a 13 per cent increase over the previous year, but the recent hostilities are expected to drive even greater international interest.
The conflict demonstrated the effectiveness of Israel’s multi-layered defence systems, particularly the Iron Dome, which intercepted 90 per cent of rockets projected to hit populated areas during the 12-month period leading up to the conflict.
Israel Aerospace Industries (IAI), Elbit Systems and Rafael Advanced Defence Systems – Israel’s three defence giants – all report record order backlogs: $US25 billion ($38.1 billion), $US22.6 billion ($34.4 billion), and $US17.7 billion ($27.0 billion) respectively.
The companies have been operating 24/7 shifts to supply the Israel Defence Forces while continuing international sales.
Europe leads export surge
European governments may have taken a publicly dim view of Israel’s actions, with the French government walling several Israeli stalls at the recent Paris Air Show off, but that hasn’t stopped them buying what Israel is making.
European countries received 54 per cent of Israeli military exports in 2024, up from 35 per cent in 2023. This surge reflects Europe’s urgent desire to bolster its military capabilities amid regional security concerns about Russia.
Missiles, rockets and air defence systems now account for 48 per cent of Israel’s military exports, up from 36 per cent in 2023, while satellite and space systems exports leaped to eight per cent from just two per cent.
The proven battlefield performance of these systems during the Iran conflict is expected to accelerate this trend.
Defence Minister Israel Katz noted that the export success “reflects more than anything else the growing global appreciation for Israeli technology’s proven capabilities” and represents “a direct result of the successes of the IDF and defence industries against Hamas in Gaza, Hezbollah in Lebanon, the Houthis in Yemen, [and] the Ayatollah regime in Iran”.
The Australian connection
Australia’s defence relationship with Israel has grown significantly in recent times.
The two nations signed a memorandum of understanding on defence industry cooperation in October 2017, with Australia opening a Trade and Defence Office in Jerusalem in 2019.
In June last year, there were 66 military export permits active for the State of Israel. Australian defence exports include drone transponders, steel plates, vehicle parts and F-35 fighter jet components.
But direct, declared arms trade between Australia and Israel is relatively modest, with a few million dollars in direct annual flows in each direction.
Looking forward
Oil prices plunged and global stock markets rallied following the ceasefire announcement, signalling market confidence in regional stability.
Defence stocks have climbed, with the S&P 500 aerospace and defence index reaching record highs.
In the defence technology business, nothing sells quite like surviving a real war.
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