Europe is fighting today on three fronts. On its eastern flank, Russia's hybrid warfare in the Ukraine has reawakened old European fears of the Cold War. Heading south, the proliferation of intra-Islamic conflicts across the Mediterranean and the Levant is threatening Europe's "soft underbelly". Meanwhile, economic and diplomatic tensions inside the EU itself have fuelled populism and increased the sense of insecurity. All this looks like a Balzacian drama of social crisis that has important implications not just for Israeli business, but Israeli security concerns as well.
In Germany, Europe’s default crises manager, the intensification of these intertwined threats have triggered calls to ramp up efforts to spend more on defense and restock the Bundeswehr (Germany's military), which has been hampered by chronic procurement problems and defense cuts. At 1.3 per cent of its gross domestic product, Germany’s defense budget in the fiscal year of 2015 falls short of Nato’s 2 per cent target (only Estonia will spend 2 per cent of GDP on defense). Another development in Germany is the increased political backing for a more active military and responsible foreign policy that has been galvanised by Russian threats to European stability.
Leading the rhetorical charge is Ursula von der Leyen, Germany’s defence minister: “We should have no illusions. The Kremlin’s new policy began long before the crisis in Ukraine and will occupy us for a very long time", she stated earlier this month, announcing a planned new defence white paper. Berlin plans to boost the military budget by six per cent over the next five years, beginning with a €1.2 billion increase next year to €34.2 billion. As Johachim Gauck, Germany's president, said in the Munich Security Conference in February, history no longer shields Germany from the necessity of revising its security strategy to address the challenges it faces at home and abroad.
At present, however, Germany's political will and increased budget alone will not turn the Bundeswehr into an effective bulwark against possible threats overnight. So, how should Israeli defence companies utilize the current state of play in Germany?
Mindful of the fragile dynamics in the Middle East, Israeli Mittelstand (small and medium-sized enterprises) defense companies could shape the border control segment of German defence heavyweights whose arms exports to Germany's Middle East allies are essential to the industry's competitiveness. Israeli companies offer not only proven technology, but a practical and less expensive way to overcome a number of key short-to-medium term logistical, technical and arms procurement challenges facing Germany's defense industrial base.
Israeli companies that operate in the areas of aerospace, land and naval systems, surveillance and reconnaissance (C4ISR), electro-optics, signal intelligence (SIGINT) systems, have the ability to "scale-up" existing German military platforms and develop new technologies for German defense. In fact, such an approach could ultimately establish critical German military technology and equipment on its own. Down the road, this could help to narrow the gap between Berlin's level of ambition in foreign policy and the country's actual capabilities, not to mention the cooperation with Germany's worldwide allies.
In the wider Israeli perspective, the German element is geopolitically vital. Recent business endeavours between Germany and Israel such as the strategic UAV cooperation between Israel's IAI and Rheinmetall in the context of the Bundeswehr's ISAF Mission in Afghanistan, have become ever more instrumental in fuelling both countries' diversification and strategic drive into emerging markets. But it should go further.
In the two conflicts that most directly imperil Europe today, Germany has emerged as a diplomatic force. Chancellor Angela Merkel's stamina and calculated capacity have arguably prevented further escalation in the Ukraine crisis, even if temporarily, as well as staved off a "Grexit", the risk of a fragmentation dynamic in the Eurozone if Greece would exit.
Now, as Israel hears different noises coming from Washington, the real Israeli question is not what business potential can be realized with Germany, but whether Berlin can be drawn in to balance Washington's influence in a rapidly disintegrating Middle East?