British and Canadian Defense Inquiries Threaten Israeli Arms Subcontractors
British and Canadian weapon manufacturers have begun probing Israeli suppliers over West Bank activities, mirroring broader economic sanctions and threatening the supply chain of critical defense components.
Defense manufacturers from the United Kingdom and Canada have sent questionnaires in recent weeks to a series of Israeli defense companies in an attempt to determine whether they operate or manufacture in the territories, purchase raw materials there, or maintain business relations with other companies and subcontractors operating beyond the Green Line. The background to this is the moves by 12 countries worldwide, including Britain, France, and Canada, to promote economic sanctions on products originating from settlements in Judea and Samaria in response to what British Foreign Secretary David Miliband defined a few weeks ago as "the Israeli government's turning a blind eye to Jewish terrorists carrying out ethnic cleansing."
The answers that manufacturers in Britain and Canada receive from Israeli companies may determine the nature of the business relations between them, as they are subcontractors of components necessary for the production of weapon systems. In other words, foreign companies might stop selling Israel systems whose components were manufactured in the territories or stop purchasing such systems from Israel. However, the consequences could be more severe.
"The real fear is from those foreign companies that might make a sweeping decision to halt trade with companies from Israel simply because they are Israeli. Those foreign companies are not entirely familiar with Israel's borders and they also will not want to rely on an answer received from a company that has an interest in claiming it does not conduct activity in the territories. They will want to widen their safety margins as much as possible to avoid violating the sanctions regime they are committed to. The election results in the country may dictate the pace of the trend," a source involved in the matter told Calcalist.
Apart from Britain, France, and Canada, the list of countries intending to restrict trade with companies operating beyond the Green Line includes Denmark, Finland, Norway, Iceland, Ireland, Portugal, Poland, Sweden, and Spain. The trade restrictions are set to come into effect in the coming months.
Meanwhile, Britain continues to intensify its moves against Israel in an attempt to pressure its government to curb settler violence in the territories. Two years ago, it suspended about 30 defense export licenses to Israel due to concerns the equipment would be used by the IDF in the fighting in Gaza. Since then, it has suspended six additional licenses and refused to approve dozens of further requests for export licenses, meaning that according to the British government, more than 80 licenses have been suspended or rejected so far.
Last month, London declared that from now on it would also refuse requests for the export of equipment and components that could be used by the IDF in its activities in the territories. Although Britain is not considered a major arms supplier to Israel, and the volume of defense trade between the two countries is negligible, the intensification of sanctions on its part could harm Israel. British companies supply complementary components necessary for the production processes of weapon systems used by the IDF, and the expansion of the embargo will force Israeli industries to seek an alternative in another country — or manufacture those components themselves.
Concerns That the Wave Will Reach the USA
Since the outbreak of the war on October 7 three years ago, defense industries have learned to improvise solutions capable of bridging the gap over military equipment whose export to Israel was blocked due to arms embargoes by countries around the world. However, improvising a component or replacing the supplier that manufactures it can delay urgent production processes required as part of improving the IDF's readiness for war for many long months.
According to a defense source, "Every integration of an alternative component in a weapon system, like a missile, requires a long series of tests and experiments and sometimes also updating the product." These are components related to fighter jets, helicopters, unmanned aerial vehicles, and communication systems.
Despite the emerging sanctions, Britain exempted F-35 fighter jets from them, after finding that halting the supply of components of its manufacture exclusively for the aircraft used by the Israeli Air Force is not feasible. The F-35 is manufactured by Lockheed Martin of the US, which manages a global pool of components and spare parts within the aircraft program, so in Britain's view, this is not a direct defense export to Israel.
In addition, it exempted from the list of products banned for export from its territory to Israel components related to air defense systems and the Navy's submarine fleet, since these are not used by the IDF in the war in Gaza and its activities in the territories, as well as raw materials and components used to manufacture weapons intended for a third country.
Despite these reliefs, the defense establishment expressed concern over the weekend about the feasibility of a spillover that will be created following Britain's moves, in a way that will also affect the American administration's policy regarding the supply of munitions to the IDF and force US defense manufacturers, which also sell in Europe, to adopt a tougher and more selective approach toward Israel.
The Dream of Becoming a "Super Sparta"
A year ago, Prime Minister Benjamin Netanyahu outlined his vision for Israel's security independence ahead of its transformation into a "Super Sparta," in the face of the political tsunami threatening it and the growing calls for a boycott of its products. Yet reality turned out to be more complex and tangled.
An expression of this was given just a couple of weeks ago, when it was reported in the US about a massive deal being promoted by the American administration to supply munitions to Israel at a cost of billions of dollars, at the center of which are tens of thousands of heavy air-to-ground bombs and dedicated guidance systems.
"With such a budget, it is impossible to be Sparta," said a senior official in a major defense company.
Alongside Israel's accelerated arming in the US, since the outbreak of the war Israeli industries have increased the production of military equipment needed by the IDF, centered on missiles used for air defense and other basic munitions, including air-to-ground bombs that Elbit Systems began producing as part of the "Blue and White" program formulated by Ministry of Defense Director General Amir Baram.
Several billion shekels have already been invested in the program, and it also includes accumulating stocks of essential components. However, the defense establishment estimates that the aforementioned "independence" will only be achieved in years, and in any case, it involves a steady stream of colossal budgets.
According to defense sources, even then the independence to which Israel aspires will be only partial and will focus on creating redundancy in specific types of munitions and components considered critical.
Budget Disputes and the Defense Burden
For now, the funds intended to finance the continued buildup have not yet arrived, due to prolonged budgetary disputes between the Ministries of Defense and Finance.
Netanyahu's plan for an addition of about 400 billion shekels to the defense budget base in a multi-year outline of at least 13 years was not approved, and decisions on it will be made only in the new government. This is while even a budgetary addition of 40 billion shekels demanded by the Ministry of Defense and the IDF to increase the defense budget for 2026 is proceeding sluggishly.
Just a couple of weeks ago, the Knesset Finance Committee approved the transfer of 15 billion shekels to the defense budget, even though a decision on this was already made in June. The transfer of the money is still subject to the approval of the Knesset's Foreign and Security Subcommittee — which is expected to convene this week. The transfer of an additional 25 billion shekels to the defense budget will be decided only in the next two months — in accordance with the scope of IDF expenses.
Budget additions, if transferred, will put Israel's defense budget at an unprecedented sum of 183 billion shekels. All this, while the Ministry of Defense's debts to major defense companies Rafael, Israel Aerospace Industries, and Elbit Systems amount to more than 17 billion shekels.
"At the current pace of the budget stream, it is impossible to be a 'Super Sparta,' nor even a 'half Sparta,'" a senior executive at a major defense company told Calcalist. "Mass production of weapon systems and critical components requires orderly multi-year orders based on which defense industries can purchase new robots and manufacturing machines, absorb numerous employees and train them, and stock up on very large quantities of raw materials. All this while the whole world is in an arms race and the demand for components needed to produce military equipment is at an all-time high."
Defense industries are concerned by the ongoing hardening of positions by European countries regarding Israel, but they also remember the data on the scope of Israel's defense exports from recent years. In 2025, it broke an all-time record when it totaled 19.2 billion dollars, with Europe alone accounting for 36% of it.
"As long as European countries are arming themselves against growing threats from Russia, they will continue to condemn us from the podium, while behind closed doors they will stock up on our air defense systems," a source at a defense company told Calcalist. "The problem will be felt in areas where Israel does not have an advantage and uniqueness relative to other industries in the world, such as in the field of drones, which can be purchased from other countries until European countries themselves beef up their arms production capabilities and within a few years are already major players in the global market."
