IsraelStrategist.com, May 2012–The success of Israel’s defense sector is no surprise, considering the country’s history of having to confront violent conflict on its borders and consistent existential threats. Israel’s innovative defense technologies were born of these conflicts. What is remarkable is the extent to which Israeli innovation in the defense arena has integrated into other sectors of the economy. Israeli defense companies rank as some of the largest in the world, contributing significantly to Israeli industry and economy. Hundreds of Israeli-developed technologies have been patented in the United States and adapted for use in and out of the defense sector. All over the world, and from high-tech to green-tech, we are seeing the fruits of Israeli innovation in the defense-technology arena.

Israel’s success at technological innovation stems in part from a cultural emphasis on education and science, and from high government spending in the defense sector. Israel’s population has the highest percentage of engineers in the world and, according to 2010 OECD data on government expenditure, Israel contributes a higher percentage of GDP to education than the United States, the United Kingdom, Germany, and Sweden, at 7.2%. Waves of immigration from Europe over the years have supplied Israel with an abundance of skilled labor. Though natural resources are scarce, human capital has become Israel’s most abundant and valuable resource.

Israel’s emphasis on education and innovation coupled with its government’s financial support has propelled Israel’s defense sector into a thriving market. According to OECD statistics, in 2010 Israel allocated 6.6% of GDP on defense, a total of 14.4 billion dollars. Regional neighbors such as Saudi Arabia, Oman, and Qatar out-contribute Israel with percentage allocations nearing 9%. By contrast, the United States operates on a military budget of only 5.0% of GDP.

Israel’s defense companies are some of the largest in the world, with five companies ranked in the international top one hundred. According to the Samuel Neaman Institute, the defense industry in Israel accounts for 25% of industrial output and 20% of employment in the industrial sector, contributing significantly to the country’s domestic economy. Between 1963 and 2010 Israel was granted over 20,000 patents by the USPTO, only 3,000 fewer than Australia, a country with three times its population.

Israeli innovation in the defense industry ranges from weapons technology to transportations vehicles, medical supplies, and unmanned drones. Defense exports reached a record high in 2010 at $7.2 billion, making Israel one of the top four arms exporters in the world. Israel leads the market in development and production of unmanned aerial vehicles, mini satellites, and the refurbishment of various types of commercial and military aircraft. It has established joint ventures and partnerships in North and South America, Asia, and India.

Israel’s most groundbreaking defense-related products include:

Uzi Submachine Gun – Designed in 1949 by an Israeli lieutenant, this gun has been adopted by over 90 countries around the world for military use and law enforcement. The design is simple and inexpensive to produce, and with few moving parts it is easy to repair, even on the field.

Galil Assault Rifle – Developed 30 years ago, this short, lightweight assault rifle is highly reliable under adverse and extreme conditions. Air-cooled, gas operated, magazine fed, no tools required to strip the weapon on the field. Used by 27 countries world wide including India, Indonesia, Italy, Mexico, Portugal and South Africa.

The Corner Shot Gun – A gun which allows the user to shoot around corners with its flexible front section, allowing a solider to shoot without being exposed. The gun is equipped with a camera suitable for low light and the ability to also function as a normal handgun. Used by the Beijing SWAT team in China, the Indian National Security Guard, and South Korean Special Forces.

Multi-Purpose Modular Armored Vehicle – A 4×4 tactical vehicle with the strength to “absorb the deformations generated by mines and IED blasts” protecting the soldiers inside.

Emergency Field Bandage – Used widely in the United States and abroad to stop blood loss on the field before soldiers can reach the nearest hospital. These bandages have played a major role in disaster relief, emergency surgical tents and field medicine.

Unmanned Aerial Vehicles (UAV) – Non-rocket propelled aircraft which do not require humans on board and thus prevent loss of life. Used in counter terrorism and missile defense.. Technology sold abroad to Chile, Singapore, India and the Unites States.

Reactive Armor Tiles – Tiles fastened to the outside of tanks allowing them to withstand direct hits from munitions. The tiles use a high-energy explosive causing them to explode outward, protecting the soldiers inside. Tile sets made specifically for the US Bradley Tank, among others. A congressionally mandated study of these tiles was done in 1999, and in 2010 a $33 million order was placed by the US government.

Iron Dome Missile Defense System – Mobile defense for countering short range rockets. Project given $205 million in funding by the US government this year. Obama has promised 9 units by 2012.

Israel’s defense companies straddle the line between public and private, applying national security solutions to the private market. Though in many cases founded originally as part of Israel’s government agencies, they have become commercial and facilitated the production of revolutionary products for civilian use:

Israel Aerospace Industries, IAI, is Israel’s largest aerospace and defense company, as well as the largest industrial exporter in Israel. The company takes on projects ranging from aeronautics and nano-materials and processes to space, ecology and security. Its most popular exports include business jets integrated into the Gulfstream family and Unmanned Aerial Vehicles for civil and military use. IAI also considers renewable energy and green-tech in its designs and developments, particularly in the areas of wind and solar technologies, industrial waste-water cleaning systems, and environment-friendly coatings. In January of 2012, IAI signed its largest ever defense deal with India: over $1.1billion worth of missiles, anti missiles systems, UAV’s, intelligence and other systems. According to estimates, defense trade between India and Israel amounts to almost $9billion.

Rafael Advanced Defense Systems Ltd is a self-proclaimed “hi-tech” defense company which develops, manufactures and supplies a wide range of systems for air, land, sea, and space. Established 60 years ago as a part of the Israeli Ministry of Defense, Rafael has a special relationship with the IDF, developing products according to soldiers’ specific needs in the field such as the aforementioned Iron Dome project. The company has formed partnerships with civilian counterparts to develop commercial applications for its technology, and currently 9% of sales are devoted to research and development. Rafael invests heavily through RDC, the Rafael Development Corporation, in civilian and commercial ventures and start-ups. These ventures include Given Imaging, a NASDAQ-traded company famous for its development of the PillCam, a unique, and swallow-able video-imaging capsule, and Medingo Ltd, famous for its insulin micro pump, which caters to the needs of insulin-dependent patients.

Israeli Military Industries, IMI, is a government owned defense systems house. It was established in 1933 andspecializes in “the development, integration, manufacturing and life cycle support of modern land, air and naval combat systems”. IMI employs 3,200 personnel and in 2008 generated an annual turnover of $650 million, of which 60% was attributed to exports.  The company’s most prominent customers include the IDF, US Military (Air Force, Army and Navy) and the NATO nations. It specializes in armor protection and survivability, primarily for vehicles, personal applications and combat mobility, offering “highly mobile and protected combat vehicles or upgrading programs for existing platforms”.

Elbit Systems Ltd is a very diverse, NASDAQ traded, international defense electronics company operating in the areas of “aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (“C4ISR”), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios.” Though Elbit focuses primarily in the field of defense and homeland security, it has adapted to the changing face of warfare to supply technology for low intensity conflict. Its American arm, Elbit Systems of America, focuses on homeland security and defense; its subsidiaries include medical device design and manufacturing via KMC Systems. Tadiran Electronic Systems and Tadiran Communications, both Israeli sub companies of the Elbit Systems subsidiary The Elisra Group, are some of the world’s largest suppliers of military tactical radios and communications systems.

As a result of Israel’s unique economy and national security situation, equipment designed for government military use has not only been commercialized, but also adapted for civilian use. Perhaps the best example of this adaptation is Better Place, an Israeli company that uses technology developed for the Israeli Air Force and applies it to a system of battery powered cars. Better Place uses technology developed to load and unload missiles from F-16 fighter jets, and applies it to the efficient and effective installation and replacement of lithium-ion batteries into electric vehicles. The company has developed a global model–including battery switch stations, charge stations, servicing and network software advertising as an affordable and easy-to-use alternative to fossil fuels. Better Place currently operates in Israel, Denmark, Australia, North America, Japan and China.

Internationally recognized for its aviation security, Israel exports techniques for airline screening to countries all over the world including to the U.S.—the TSA uses these Israeli techniques. Also looked to as global leaders in emergency management, Israeli Defense companies and the Israeli government are consulted by FEMA and the US National Guard for hi-tech solutions in emergency management, many of which are included in the list above on Israeli military technologies. Israel is at the forefront of disaster relief and field medicine. It was one of the first countries to respond and send forces after the earthquakes in both Haiti and Japan and was the first to set up fully functional field surgical tents complete with scanners.

In short, because of its experience in having to defend itself, its cultural emphasis on education, and the Israeli government’s generous defense spending, Israeli defense companies have become some of the largest in the world, exporting defense technology globally, and applying it on and off the battlefield.

The face of global warfare is changing rapidly. Direct conflict is becoming less common as armies fight elusive terrorists, and strikes are often carried out by unmanned drones and through technological means. Israel is already ahead of the curve on these fronts, and other nations are beginning to turn to Israelis for their expertise and innovations. The conflict with Iran has posed challenging questions to Israel’s defense strategists, particularly because of the negative media attention surrounding a military strike. It is through this state of affairs, however, that innovations are born, and Israel is known to thrive under pressure.

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