The Other Side of Trade

On 10 August 2025, Germany announced it would suspend the export of offensive weapons to Israel, citing the risk of mass civilian casualties during Israel’s planned incursion into Gaza City. Chancellor Friedrich Merz emphasized that Berlin’s solidarity with Israel remains strong but is not unconditional.

A year and a half earlier, in 2024, Nicaragua requested provisional measures at the International Court of Justice (ICJ) to impose an arms embargo on Israel. Nicaragua argued that such exports could implicate Germany in genocide. The ICJ rejected Nicaragua’s request for provisional measures, and–although the case itself remains ongoing–issued no order. For now, it is Berlin rather than The Hague that has acted to restrict German arms exports to Israel.

Yet Germany’s military trade with Israel is a two-way street. As crucial as Berlin’s arms exports are its growing imports of Israeli weapons, military technology, and security expertise, including training.

This aspect of the relationship has gained prominence since Russia’s aggression against Ukraine, which heightened Germany’s own security anxieties. In the summer of 2022, Putin strategically exploited Germany’s energy dependence, memorably leading up to the Nord Stream pipeline sabotage in September. This inadvertently strengthened German economic ties with Gulf states. Similarly, current Russian threats are accelerating new flows of military technology from Israel, the so-called “start-up nation”.

Donald Trump’s second term in the White House comes with serious concerns over a potential decline in transatlantic relations. This has only bolstered Israel’s position when it comes to lucrative arms deals in Europe.

Despite the considerable legal and ethical concerns this raises, the inward flow of arms has thus far attracted far less legal scrutiny than Germany’s exports. Yet the two dynamics are intimately related. In recent years, high-profile arms deals have both deepened bilateral ties and created long-term strategic dependencies. Furthermore, commentators have predicted that changes in military export policies will influence the conditions under which imports are negotiated.

Policy considerations

The most striking defense import from Israel is Germany’s acquisition of the Arrow-3 missile defense system, valued at €3.5–4 billion. This is the largest arms deal in Israel’s history and a centrepiece of the European Sky Shield Initiative. Delivery is set for the end of 2025. Despite the fanfare, experts such as  SWP’s Lydia Wachs and Danish missile defense specialist Simon Petersen have criticised the deal, warning that it could weaken NATO cohesion – technically and politically –and undermine EU strategic autonomy.

The immediate threats posed by Russian systems are the Iskander and Kinzhal short and medium-range missiles. Arrow 3 could only intercept these under conditions of perfect early warning, as it is primarily designed to counter long-range ballistic missiles. Concerns about European and NATO cohesion have also been raised by  French President Emmanuel Macron, who cautioned that reliance on non-European defence systems, such as Arrow-3, could undermine the EU’s strategic autonomy.

A similar deepening of dependency is visible in the field of drone warfare. In June 2025, the Bundeswehr signed a significant contract for additional Heron TP armed drones and shifted pilot training from Israel to Germany. This step goes far beyond the acquisition of strike-capable drones (which have been repeatedly linked to civilian casualties in Gaza). By adopting the Heron TP system, Germany is also importing Israeli training, infrastructure, and potentially operational doctrine – embedding a foreign model of drone warfare into its own forces.

The result is long-term reliance on a single external supplier rather than a multilateral European consortium. This dependency extends to software, maintenance, and mission-planning systems that Germany cannot easily reproduce domestically. The pattern extends further,  including Berlin’s $57 million deal with Elbit Systems for the PULS rocket artillery system, expanding long-range strike capabilities. An even bigger deal for presumably $350 million was recently struck with Rafael for the Litening 5 fighter jet targeting pods.

Legal Considerations

The human-rights stakes of German arms imports from Israel are particularly high. Repeated investigations by media and human rights organizations documenting Israeli drone and airstrike campaigns in Gaza have provided compelling evidence of war crimes (see, e.g., Deutsche Welle, B’Tselem, Human Rights Watch, and Amnesty International). By adopting Israel’s drone architecture, Germany risks importing permissive targeting standards and militarized practices that diverge from its own normative commitments to international humanitarian law.

Under §4 of the Foreign Trade and Payments Act (AWG), the Federal Ministry for Economic Affairs and Climate Action (BMWK) has discretion to restrict or prohibit foreign trade transactions where they “endanger the essential security interests of the Federal Republic of Germany” or “disrupt the peaceful coexistence of nations.” In practice, this authority has mainly been exercised to implement EU or UN sanctions regimes, but the statute permits case-by-case intervention. In light of mounting evidence that Israeli weapon systems are being used in Gaza in ways that amount to grave breaches of international law, German imports could plausibly be reviewed under this standard. As one of us has noted elsewhere, Israel’s assault on Gaza amounts to genocide, or–as Hannah Pfeifer and Matthias Goldmann put it – “exhibits elements of genocide”.  A refusal to apply it here would suggest that the “peaceful coexistence” clause is only meaningful when directed at official adversaries, not close allies.

In addition, some of the procurements involve German private contractors acting as intermediaries, integrators, or service providers in major defense projects. In July 2025, for instance, Germany awarded Elbit Systems a €260 million contract for J-MUSIC infrared countermeasure systems on A400M transport aircraft. Elbit works closely with Lufthansa Technik on Hermes 900 Starliner drones for the German Navy, with Elbit manufacturing the drones and Lufthansa Technik handling training and maintenance. Dussmann Group’s subsidiary Code Blue by Dussmann has formed a joint venture with Israeli firm Code Blue Ltd in cybersecurity and crisis management. Rohde & Schwarz supplies communications and surveillance technology widely used by militaries, including Israel’s, though details of direct arms deals remain opaque. Finally, Renk AG has long held export permits for tank spare parts used in Israeli Merkava tanks.

Such companies fall within the scope of Germany’s Supply Chain Due Diligence Act (LkSG), and are legally obliged to identify and address human rights risks in their supply chains — obligations that could be directly engaged by sourcing from Israeli manufacturers implicated in alleged violations in Gaza. The LkSG (§3–10) requires covered companies to establish risk management systems, conduct regular risk analyses, adopt preventive measures, and take remedial action where human rights abuses are identified in their supply chains. The duty is triggered not only by abuses in the company’s own operations but also in those of direct suppliers.

For firms such as Lufthansa Technik or Dussmann partnering with Israeli defence contractors, the systematic targeting of civilians in Gaza would qualify as a “human rights risk” within the meaning of the Act. Failure to address such risks exposes companies to administrative fines of up to 2% of global turnover (§24 LkSG).

Even though the Act does not bind the federal government, Berlin’s reliance on such companies as integrators in major procurement projects effectively imports their compliance obligations into state policy. This may raise the broader question of why a lower standard should apply to the state than to its contractors.

With a growing list of eminent scholars, such as Omer Bartov, and civil society, including B’Tselem, arguing that Israeli policies amount to genocide, proceeding without robust oversight and parliamentary debate carries significant legal risks. After Chancellor Merz announced an export ban, Renk confirmed the existence of its permits and, according to the Financial Times, suggested it might relocate production abroad rather than comply. These procurements must be assessed against Germany’s legal obligations.

Conclusion

Germany’s recent decision to suspend the export of offensive weapons can neither be dismissed as a matter of principle nor shrugged off in terms of its consequences. As Ha’aretz’s Amos Harel recently reported, ahead of the major part of Israel’s offensive on Gaza, Israel has an equipment problem. The German “arms embargo” threatens to block engine replacements for Merkava tanks, limiting Israel’s ability to manoeuvre. This may very well prevent some war crimes and save civilian lives.

And yet, Germany cannot claim a “values-based foreign policy” while deepening military partnerships with a government whose Prime Minister is under investigation for war crimes and crimes against humanity. Historical responsibility toward the Jewish people does not include facilitating war crimes, which are themselves rejected by many Jews worldwide.

Israel’s policies, including the ethnic cleansing of entire communities and accelerated settlement building, are putting Jews in peril, rather than protecting them. As German public support for such cooperation declines, the Israeli government is working to entrench these ties through high-level lobbying and delegation visits designed to showcase military cooperation and cement institutional links.

Germany’s increasing reliance on Israeli military systems makes it harder for Berlin to exert pressure on Israel without jeopardizing its own defense capabilities. Israel benefits from this dependence, gaining greater strategic and political leverage. High-value imports such as Arrow-3 missiles, Heron TP drones, and integrated operational infrastructure embed Israeli expertise into German forces, creating long-term interdependence. This means that even as Germany limits arms exports, its growing imports could risk reducing its freedom of action and enhancing Israel’s influence over bilateral defense cooperation.

Recent European developments show that Germany is not alone in facing these choices. In August 2025, organisers of the Netherlands’ largest defence exhibition, NEDS, barred Israeli arms companies from participating. This step did not concern Dutch exports but rather the ability of Israeli firms to market their products in Europe — in other words, an import restriction. Similarly, France had earlier excluded Israeli exhibitors from Eurosatory. Together, these measures signal a tightening European stance on Israeli defence imports. Against this backdrop, Germany’s deepening reliance on Israeli systems appears increasingly out of step with an emerging European consensus.

The Bundestag now faces a decisive choice. It can treat the partial arms embargo as an isolated exception while allowing the deepening dependence on Israeli military systems to continue unchecked. Alternatively, it can turn this moment into a genuine policy shift by initiating a transparent and comprehensive review of all arms transfers with Israel, exports, and imports alike. Such a review should include (i) a parliamentary inquiry into import and export agreements, ensuring democratic oversight of Germany’s defense cooperation with Israel, (ii) the application of existing legal benchmarks under the Foreign Trade and Payments Act (AWG) and the Supply Chain Due Diligence Act (LkSG) to arms deals and associated private contractors, and (iii) a moratorium pending review, temporarily suspending new procurements and deliveries until their compliance with domestic, European, and international law is properly assessed. These measures would help ensure Germany’s full compliance with its legal obligations at the domestic, European, and international levels. Better late than never.

We would like to thank Prof. Ralf Michaels for his comment on an early draft of this post.