A draft proposal for the EU’s new 150 billion Euro defense initiative could leave Israeli weapons makers watching from the sidelines.

Dubbed “Readiness 2030”, the new proposal would require that 65% of defense procurement must remain within EFTA countries (EU members plus Norway, Iceland, Switzerland, and Liechtenstein) and Ukraine. The remaining 35% would only be available to nations with formal security and defense partnership agreements with the EU. For context, EU countries currently spend almost 80% of their defense budgets outside the bloc, primarily in the US.

For Israel, this could be a major problem. While South Korea, Japan and the UK are expected to sign such agreements, Israel’s strong security alliance with the United States likely prevents it from meeting EU requirements, potentially blocking Israeli firms from billions in sales opportunities.

According to Globes, France, with its robust domestic arms industry, pushed hard for a “Made in Europe” approach while Germany’s representatives on the council fought back, having already committed billions to Israeli systems like the Arrow 3 and various UAVs.

Israel’s largest defense companies alone have secured contracts worth nearly $1 billion in recent months. Elbit Systems, Israel’s largest defense firm with a $9.1 billion market cap, has claimed $930 million in new contracts both domestically and internationally. Meanwhile, ImageSat International locked in $84.5 million in satellite service deals, and Ashot Ashkelon secured $23.5 million in component manufacturing orders.

However, the proposal must secure approval from all 27 EU members before implementation, leaving room for potential revisions.