EU Commission and states indirectly fund Israeli military industry report says
Israel’s largest state-owned defence company, which is directly involved in the war on Gaza, has received millions of euros in EU defence funding, an investigation has revealed.
Israel Aerospace Industries (IAI) is participating in EU-funded projects through the Greek company Intracom Defense, which it acquired in May 2023.
According to a report published on Wednesday by Investigate Europe, the French newsroom Disclose and the Greek outlet Reporters United, Intracom Defense is currently involved in 15 European Defence Fund (EDF) projects worth at least €15m (around $17.5m).
Seven of them were awarded after October 2023 and its sale to IAI. Among them are the Triton and Marte projects, which started in December 2024 to develop AI-driven cybersecurity technology and tank systems for combat.
Intracom Defense’s most significant involvement is as the lead coordinator of Actus, a four-year programme aimed at developing drone technologies for weapon integration and other capabilities for European use.
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Launched in December 2024, the project will design, test and certify Nato-compliant drones that can track and identify people as potential targets in real time.
Actus is focused on weaponising France’s Patroller drone and certifying Greece’s surveillance drone Lotus for operational use.
In total, Actus is funded to the tune of €59m. The European Commission has allocated €42m in public funding to 23 manufacturers responsible for the tactical development of the drones.
'We have a state that denounces violations of international law and [yet] is prepared to collaborate with a company owned by the Israeli state'
– Amnesty International France
According to the investigation, seven European defence ministries are also funding the project: France, Belgium, Greece, Norway, Sweden, Cyprus and Finland.
Intracom Defense and Safran, the companies behind the two drones, received more than half of the €42m released by the European Commission. Intracom Defense was allocated €14m while Safran, in which the French state is a shareholder, received €10m.
While Intracom Defense is registered and based in Greece, 94.5 percent of its shares are owned by Israel Aerospace Industries (IAI), which holds 100 percent of voting rights in the Greek firm.
‘Strengthening the Israeli war machine’
IAI is the arms company at the heart of Israel's war on Gaza. It manufactures the Heron surveillance and armed drones used by the Israeli Air Force.
While the EDF aims to promote domestic innovation, a clause in article 9 of its regulations states that firms need only to be based in Europe to be eligible for funding, as long as they provide guarantees to the government where they are registered.
These guarantees, which include ensuring that sensitive information is not transferred to the foreign owner, are sent to and approved by the government where the company is based, in this case Greece, one of Israel’s closest European allies.
The revelations that a subsidiary of an Israeli military firm is involved in developing Europe’s defence systems raise security concerns.
Belgian leftist MEP Marc Botenga, a member of the European Parliament Committee on Security and Defence, told the report’s authors that the arrangement reflects a “structural security issue”.
Human rights advocates are also likely to highlight the contradiction with the tougher stance adopted by European governments vis-a-vis Israel in recent weeks. Several of those funding the IAI-linked project are also reportedly among those calling for a review of the EU-Israel Association Agreement.
In May, French President Emmanuel Macron declared that if Israel did not respond appropriately to the humanitarian situation in Gaza "in the coming hours and days... we will have to harden our collective position" and "apply sanctions" on Israel.
Meanwhile, according to the investigation, the French government is doubly involved in Actus: as a co-financier and as a beneficiary, through the drone manufacturer Safran.
“On the one hand, we have a state [France] that denounces violations of international law and, on the other, it is prepared to collaborate with a company that is owned by the Israeli state,” Aymeric Elluin, an arms trade campaigner at Amnesty International France, said in response to the findings.
'Self-certification in this sector is obviously insufficient at best, a joke at worst'
– Marc Botenga, Belgian MEP
"How can you advocate the establishment of peace when, at the same time, through a fund supposed to strengthen European defence, you are bringing into play the Israeli industry, which is committing a crime of genocide and whose leader is the subject of an arrest warrant for crimes against humanity?" he added.
In November 2024, the International Criminal Court issued an arrest warrant against Israel’s Prime Minister Benjamin Netanyahu.
More than 55,000 Palestinians have been killed as a result of Israel's war on Gaza, which several countries, as well as many international rights groups and experts, now describe as genocide.
"Indirectly, the European fund and the states are strengthening the Israeli war machine," Tony Fortin, researcher at the French think tank Armaments Observatory, told Disclose.
Coveted Israeli know-how
According to the investigation, the inclusion of an Israeli subsidiary in the EDF reflects the EU's pressing need to improve its military power through specialist knowledge and skills.
“We need the Israeli know-how that we lack. In my opinion, that explains the Intracom manoeuvre,” said a global defence expert. “We want to develop our own loitering munitions [drones that can crash into targets], and we also want an ‘Israeli input’ in this segment.”
While there is no evidence to suggest that products developed in these projects will be used by IAI in the Palestinian territories, there are no strict ethical guidelines surrounding the export of technology produced via EDF projects, the authors said.
Article 7 of the EDF regulations only states that projects shall comply with relevant national, EU and international law, requiring companies to conduct a project self-assessment, which can be examined by the Commission and a panel of “independent experts” whose identity is not made public.
“The EDF regulation is extremely weak on ethics and transparency… Self-certification in this sector is obviously insufficient at best, a joke at worst,” Botenga said.
“It is clear that the EDF's current framework does not sufficiently prevent EU-funded projects from contributing to violations of international humanitarian law.”
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