There has been intense interest in Israeli defense companies at the Dubai Airshow including from buyers and countries that don't have diplomatic relations with Israel. But this success has been marred by the failure of Israel's Iron Dome to win the lucrative short range missile defense deal from the UAE.
There is major frustration at Rafael Advanced Defense Systems and Israel Aerospace Industries Elta unit and other Israeli companies involved in the Iron Dome system after the UAE announced that it has chosen to buy a rival South Korean short range missile defense system.
The UAE Defense Ministry announced today that it is buying the South Korean MSAM system in a $3.5 billion deal. According to reports in the UAE, the decision was made after the failure of talks with Israel's Ministry of Defense to buy Iron Dome to protect the UAE from missile attacks.
An Israel-UAE Iron Dome agreement was meant to be the flagship transaction between the two countries. Talks began soon after the Abraham Accords were signed last year but the negotiations dragged on despite the high expectations. Israeli defense companies told "Globes" that Ministry of Defense bureaucracy and faulty conduct have seen many deal lost including one worth billions for drones and UAVs as well as the Iron Dome deal.
Israel's Ministry of Defense dismisses this criticism and presents data about the rise in the number of deals and the many meetings held by Ministry of Defense director general Amir Eshel with senior figures from the Gulf in order to promote cooperation on defense exports. Israel's Ministry of Defense controls all deals, among other things, because it must approve every deal and in effect it manages the negotiations rather than the defense companies themselves.
Partly because of this disappointment, there has been an impressive Israeli presence at the Dubai Airshow. Israel's Ministry of Defense and several of the leading Israeli defense companies set up pavilions and the aim is to try and realize the potential in the huge defense market of the Gulf nations, which has so far brought only a few results.
Optimism in the pavilions
One of the reasons for Israeli optimism is the number of senior UAE figures who have visited the Israeli pavilions. UAE Crown Prince Mohammed bin Zayed visited the IAI pavilion at the Dubai Airshow. Bin Zayed lingered a long time and spoke at length with IAI CEO Boaz Levy. Thosew present said that bin Zayed showed great interest and broad knowledge about IAI's capabilities in space, UAVs, air defense and in the commercial sector conversion of passenger aircraft to cargo aircraft. Deals have been signed between IAI and Emirates and Etihad Airways for such conversions.
Boaz Levy told "Globes" that Bin Zayed was friendly and showed a broad understanding and familiarity on topics as well as with IAI's abilities. He wished IAI luck on the conversion deal and after the meeting Levy is cautiously optimistic. He said, "The Emirati see us as a partner both in military and commercial terms due to our unique capabilities. The reactions here to us have been beyond what we imagined and hoped. There are huge aviation companies here and the connection with them is an opening to expand business in the commercial sector."
And what about the military sector? Levy said, "There is a substantial difference between commercial and military deals, which more greatly depend on permits and government connections. It took government bodies time to get ready and the start was difficult with government bodies moving more slowly but it now looks like things are progressing and the Ministry of Defense and SIBAT (The International Defense Cooperation Directorate of the Israel Ministry of Defense) are giving us full backing and support."
According to Levy the change is taking place, among other things, because of Emirati interest in solutions that include the future battlefield in which IAI specializes on not only for specific protection against this or that threat. Levy revealed that the IAI pavilion was visited by no few people from Arab countries in the region that have no diplomatic relations with Israel and connections were made for the future.
Within this context, "Globes" revealed earlier this month that sources familiar with the matter said that Saudi Arabia had given the green light to expanding deals with Israeli companies via the UAE and Bahrain.
A very competitive market
Other Israeli pavilions at the Dubai Airshow included Elbit Systems Ltd. (Nasdaq: ESLT; TASE:ESLT), which yesterday received a visit from UAE Minister of State for Defense Affairs Mohammed Ahmed Al Bowardi who met with CEO Bezhalel Machlis and SIBAT head Yair Kulas.
One Israeli pavilion that has enjoyed enormous success is that of Skylock Systems (part of the Avnon Group) which specializes in counter-drone technologies. The Skylock Dome system detects, verifies and neutralizes unauthorized drones.
The system was exhibited in February in the UAE at IDEX and afterwards several deals were signed. UAE company IGG has also signed a deal and overall the Skylock Dome has been purchased in 27 countries including Morocco and East Asian nations.
Skylock CEO Itzik Huber said that unlike the very large companies, Skylock specializes in simple and relatively cheap defense systems that are extremely effective and provide individual as well as broad protection against the growing threat of attack drones. Huber said that the huge potential Gulf market is very interested in such systems.
Skylock demonstrates how small and medium size companies can successfully reach many markets through their flexibility.
Published by Globes, Israel business news - en.globes.co.il - on November 18, 2021.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.