Germany increases defense exports to Israel amid industrial shifts

Germany has significantly increased its defense exports to Israel, with authorizations reaching nearly €800 million during the first half of 2026. This figure quadruples the total authorized in 2025. A major portion of these funds, approximately 67%, is dedicated to a naval project involving the INS Drakon, a large submarine built by ThyssenKrupp Marine Systems (TKMS). The contract for the submarine class is estimated at €3 billion, with the German government providing 20% in financing.

In a related industrial shift, Volkswagen has agreed to sell its Osnabrück plant in Germany to investor Aurelius Capital and the state of Lower Saxony. The facility will be converted into a defense and security manufacturing site. The new owners plan to partner with the Israeli defense company Rafael to develop systems and components for German and European defense needs. This transition aims to preserve approximately 1,200 jobs at the site while allowing Volkswagen to distance itself from direct defense manufacturing.