German defense manufacturer Renk Group AG is preparing to relocate production for Israeli contracts to its US facilities, following Berlin's decision to halt certain military exports to the Jewish State.
“We started to develop a plan B because we have long-term delivery contracts,” said Renk CEO Alexander Sagel on Wednesday, according to Bloomberg. The company specializes in gearboxes and transmission systems used in military vehicles.
The move comes in response to Chancellor Friedrich Merz’s recent decision to impose an indefinite suspension on arms deliveries that could be used in IDF operations in the Gaza Strip.
Renk, which supplies propulsion and drive systems for armored vehicles, warned of potential consequences.
“For the Israelis, it really is a pain,” Sagel said, noting that the company is in contact with both German and Israeli authorities.
Though the overall impact may be limited, the announcement represents the first sign of concern among German defense contractors.
According to Sagel, contracts with Israel account for approximately 2% to 3% of Renk’s business.
Prime Minister Benjamin Netanyahu spoke with Merz after his announcement of the arms embargo and expressed his disappointment with the decision.
“Instead of supporting Israel's just war against Hamas, which carried out the most horrific attack against the Jewish people since the Holocaust, Germany is rewarding Hamas terrorism by embargoing arms to Israel,” said a statement from the Prime Minister’s Office.
“Prime Minister Benjamin Netanyahu said that Israel's goal is not to take over Gaza, but to free Gaza from Hamas and enable a peaceful government to be established there,” it added.
Merz’s decision has also drawn sharp criticism from within his own political bloc.
The Christian Social Union (CSU), the Bavarian branch of Merz’s Christian Democratic Union, said it had not been consulted before the Aug. 8 announcement and questioned the policy shift.
“The CSU was not involved in this decision, and we consider it questionable,” said Alexander Hoffman, head of the CSU’s Bundestag faction. He called the move “a departure from decades of foreign policy continuity toward Israel” and said it would be discussed within the governing coalition.
CSU lawmaker Stephan Pilsinger warned the decision could have consequences for Germany’s own security. “Currently, we feel like we benefit more from Israel in terms of security policy than Israel benefits from us,” he told the Augsburger Allgemeine.