Defense industry source: Companies may have to look elsewhere for spare parts.
The Ministry of Defense is keeping mum about threats by the UK of a partial arms embargo against Israel. The UK government’s announcement said that if fighting between Israel and Hamas resumes, it would suspend 12 defense export licenses for arms and components of systems and technologies used by the IDF in the fighting in Gaza.
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An announcement by the UK Department of Business, Innovation, and Skills said that the export licenses concerned components and spare parts for tanks, warplanes, and radar, after all the licenses for defense exports to Israel had been carefully evaluated in recent weeks. The licenses not included in the threat of suspension pertain to components and systems that the IDF is not using in the fighting in Gaza.
The Ministry of Defense, like many defense industries in Israel, refused to comment officially today on the British announcement. Through a special agency, the Ministry of Defense leads production of the Merkava tank used by the IDF, and Elta Systems, an Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) subsidiary, deals with radar systems. If the UK carries out its threat, these activities could be affected, although it is unclear to what extent. IAI also refused to comment on the announcement. Elta also makes the radar system for Iron Dome, to which any change in British defense export licenses will not apply.
“Iron Dome will not be affected, but if the UK carries out its threat, both Elta and other companies are liable to experience a serious hitch, ” a defense industry source told “Globes” today. “It is possible that in this case, those companies will have to look elsewhere for their components and spare parts, or to turn to the prime minister and minister of foreign affairs and ask them to intervene with their UK counterparts in order to change the decision.”
Some defense companies were initially concerned that the suspension of licenses by the UK would also apply to components used to produce unmanned aerial vehicles (UAVs). Two leading companies in this market are Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) and IAI. The Israeli air force makes extensive use of these UAVs in both wartime and in regular operations in the Gaza Strip. Elbit said today that the UK announcement did not refer to UAVs.
Published by Globes [online], Israel business news – www.globes-online.com – on August 13, 2014