Israeli defense firms explore manufacturing hubs in Cyprus

Major Israeli defense corporations, including Elbit Systems, Israel Aerospace Industries (IAI), and Rafael Advanced Defense Systems, are actively exploring the establishment of manufacturing plants and administrative headquarters in the Republic of Cyprus. This strategic initiative, which also involves smaller firms specializing in artificial intelligence and electronic warfare, was a focal point during the visit of Israeli President Isaac Herzog to Nicosia on September 10, 2026, where he discussed potential collaboration with Cypriot President Nikos Christodoulides.

The primary motivation behind this interest is to gain improved access to the European Union’s defense sector, particularly the 150-billion-euro SAFE program. By producing military equipment within an EU member state, these companies aim to integrate more deeply into the European market. The proximity of Cyprus to Israel, combined with its status as an EU member, serves as a significant logistical and operational advantage for these defense giants.

While the Turkish newspaper Hürriyet suggests that the proposal has received initial approval during high-level meetings, the project is framed as part of an ongoing effort to expand industrial footprints in the EU, similar to existing operations in Germany and Romania. Future developments will depend on the finalization of bilateral agreements and further integration into the European defense framework.