The Media Line: German Defense Company Considers US Shift to Avoid Israel Arms Embargo  

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German Defense Company Considers US Shift to Avoid Israel Arms Embargo  

By The Media Line Staff 

German defense manufacturer Renk is weighing plans to move part of its production to the United States to continue supplying components for Israeli tanks, following Berlin’s decision to halt certain arms exports.  

Chancellor Friedrich Merz announced last week that Germany would suspend the sale of military products that could be used in Gaza, citing concerns that expanded Israeli operations might lead to a full reoccupation of the enclave and hinder ceasefire efforts with Hamas. The move, made without consulting his cabinet or party colleagues, has triggered political backlash, particularly from members of his own Christian Democratic Union and its Bavarian sister party the Christian Social Union. Critics argue the suspension undermines Germany’s longstanding commitment to Israel’s security and could be seen as rewarding terrorism.  

Alexander Sagel, Renk’s chief executive, told the Financial Times the company is assessing the impact of the embargo but remains committed to ensuring Israel can maintain its military deterrence “not only in Gaza but also at other borders.” Renk, based in Bavaria, manufactures gearboxes used in Israeli tanks and armored vehicles, with Israel accounting for 2–3% of its sales.  

“If the ban is confirmed by Germany’s security council, our Plan B is to relocate production of these specific transmissions to the US,” Sagel said. While stressing that Renk will comply with German law, he indicated that alternative arrangements are under active discussion to fulfill existing contracts for “hundreds” of gearboxes.  

The suspension comes amid broader international criticism of Israel’s conduct in Gaza. Norway’s $2 trillion sovereign wealth fund recently divested from a fifth of the Israeli companies in which it held stakes and ended relationships with certain Israeli fund managers over concerns about financing the conflict.  

Renk reported first-half 2025 revenues of €620 million, a 22% increase from the previous year, boosted by higher European defense spending. Adjusted earnings before interest and tax rose 29% to €89 million. Sagel said that if the embargo proceeds, it could reduce operating profit by a mid single-digit millions of euros in the second half of the year.  

Armin Papperger, chief executive of Rheinmetall, another major German defense group, told the FT his company was not currently exporting weapons to Israel.