European Defence Fund millions benefiting Israeli state-owned drone manufacturer

An Israeli state defence company directly involved in the Gaza conflict is benefiting from millions in EU defence funding, thanks to an exemption allowing foreign-owned entities to participate in the bloc's military projects, Investigate Europe and Reporters United can reveal.

The European Defence Fund (EDF) is designed to enhance the continent’s military capabilities by financing domestic innovation, yet at least €15m has been awarded to Greece’s Intracom Defense, since it was acquired in May 2023 by Israel’s largest state-owned aerospace and defence company. 

Israel Aerospace Industries (IAI), which is controlled by the government of Israel, acquired the firm to capitalise on an “ever-increasing demand for air defense” systems in Europe, according to IAI’s press announcement at the time.

Intracom Defense is currently involved in 15 EDF projects, the investigation found.

Seven of them, including one co-funded directly by European governments, were awarded after its sale to IAI and the start of the war in Gaza in October 2023, where IAI surveillance drones have been used in Israeli military operations in the territory.

While Intracom Defense is registered and based in Greece and has a Greek presence on its board, its financial records for 2024 show that 94.5 per cent of shares are owned by IAI, and according to the Israeli firm’s latest records it holds 100 per cent of voting rights in Intracom Defense. 

The EDF outwardly promotes domestic innovation but a clause in article 9 of the regulation states companies need only to be based in Europe to be eligible, as long as they provide guarantees to the government where they are registered. These include ensuring that sensitive information is not shared with the mother company. This allows entities like Intracom Defense, though owned by an Israeli state-owned company, to access European defence funds. 

Intracom Defense failed to answer questions sent by Investigate Europe, Reporters United and partners regarding the EDF guarantees and its ownership by IAI.

A spokesperson said the company participates in EU projects in full compliance with national and international laws, adding it is “a Greek company registered and operating in Greece and has been one of the leading Greek companies in the defence and security sector in Europe for more than 20 years.”

IAI did not respond to requests for comment by the time of publication. 

Belgian MEP Marc Botenga said the arrangement reflects a “structural security issue” with the EDF that permits non-EU, third-party involvement.

“If you were to accept the logic of the EDF as a European programme, for it to be true to its name, entities controlled by a third country or by a non-associated third country entity should be excluded from funding. This means cutting out all loopholes currently present, in amongst others article 9 of the Regulation,” said Botenga, a MEP from the Left group, who sits on the committee on security and defence.

Despite IAI being part of Israel’s military industrial complex, its subsidiary has secured a leading role in a multi-million euro EDF project launched in December 2024 to develop drone technologies for weapon integration and other capabilities for European use. 

Intracom Defense has been designated the lead coordinator of the €59m four-year drone programme, Actus, which also involves French defence company Safran and 21 European entities. The Commission has co-funded Actus with €42m. The origin of the remaining €17m has not been made public, but seven European defence ministries are known co-funders: France, Belgium, Greece, Norway, Sweden, Cyprus and Finland.

Greek guarantees

A spokesperson for the European Commission said that based on the guarantees approved by Greece, they considered Intracom Defense as “eligible for participating in EDF projects”, adding that the guarantees could not be made public due to their sensitive nature. 

They added that projects were selected only after “thorough technical and legal evaluations […] conducted independently of political developments and based strictly on project eligibility”. All EDF projects were evaluated on ethical grounds, the spokesperson said, adding that the EDF does not fund projects in breach of international law. 

The Greek ministry of defence said Intracom Defense and IAI have signed “a special security agreement prohibiting the transfer between the two parties of classified information … technology, materials, and other sensitive information.” A ministry spokesperson added that Intracom Defense must provide guarantees and an “ownership control declaration” when participating in an EDF project, but provided no further details by the time of publication.

The revelations that an enterprise in the orbit of the Israeli military is building Europe’s future defence systems have stoked security and ethical concerns among campaigners and analysts, and come amid heightened criticism in the EU of Israel’s actions in Gaza.

European governments have sharpened their stance on Israel in recent weeks, with several of those funding the IAI-linked project also reportedly among those calling for a review of the EU-Israel Association Agreement, a pact defining trade and diplomatic relations.

Human rights advocates highlighted the hypocrisy of governments for effectively funding an Israeli arms company linked to the conflict in Gaza, where more than 50,000 people have been killed since October 2023, according to Gaza’s health ministry.

“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.

Analysis of EU tender databases reveals Intracom Defense has received at least €15m to participate in EDF projects since being purchased by IAI. The Triton and Marte projects, for example, both starting in December 2024, will develop AI-driven cybersecurity technology and tank systems for combat, respectively. The latter involves Leonardo, the defence giant part owned by the Italian government.

But its most significant involvement is as coordinator of Actus, a project that 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.

Safran and Intracom Defense, the companies behind the two drones, received more than half of the €42m released by the European Commission for the project. Intracom Defense took €14m. 

Only three of the 22 entities involved in the project alongside Intracom Defense responded to requests for comment.

In its response, Safran only referred to the involvement of its Norwegian business in the project. A spokesperson said it was aware of Intracom’s ownership and the company “remains deeply committed to strict adherence to the regulatory framework” of the defence fund. The other replies came from Finnish firms Patria Aviation and Robonic. Both said they knew about IAI’s ownership of Intracom and that they followed all EDF guidelines and policies.

Four of the government co-funders, France, Belgium, Finland and Sweden, were among 17 member states to back a Dutch proposal in May calling for a review of the EU-Israel Association Agreement, over Israel’s offensive in Gaza and its failure to lift a two-month aid blockade.

Norway, another Actus co-funder and whose firms have received around €2m for EDF projects alongside the IAI subsidiary, has publicly condemned Israel’s actions in Gaza, describing them as “brutal warfare”. 

Sweden’s foreign minister said the review should go further and called for EU sanctions against Israeli ministers (its companies have taken more than €3m for projects launched after December 2024 involving Intracom Defense).

“The Israeli government's blind violence, the blocking of humanitarian aid have turned Gaza into a place for dying, not to say a cemetery," French foreign minister Jean-Noel Barrot said in May, according to Reuters. At the same time, Safran, a company part-owned by the French state, is working with IAI-owned Intracom Defense on the drone development programme.

"How can you advocate the establishment of peace when, at the same time, through a fund supposed to strengthen European defense, 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?," said Amnesty International’s Elluin, referring to the International Criminal Court arrest warrant issued in November 2024 against Israel’s prime minister Benjamin Netanyahu.

The Israeli government have denounced the ICC arrest warrants and rejected all claims of genocide made by Amnesty and others. 

All seven governments were contacted for comment. Norway’s ministry of defence said it provided funding of €118,536 to the two Norwegian participants in Actus, and none went to Intracom Defense. A spokesperson said that questions on EDF eligibility were a matter for the commission, adding: “Norway expects that no action taken by any partner can contribute to violations of international law, including humanitarian law.”

The Finnish ministry of defence said its funding was also only for national participants, but did not say how much was awarded. A spokesperson said there was a “mutual sincere trust” between member states on such co-operations, adding: “We have no reason to question that  potential risks of third country control would not be addressed through the guarantee process”. 

The Belgian government did not respond to questions about its co-funding of the project, and said that questions about the guarantees were for the commission and Greek government. The Swedish government said it gave 3 million SEK (€274,000) in co-funding to local firm Saab Aktiebolag, and did not comment on the involvement of Intracom Defense. 

The governments of France and Cyprus did not respond to requests for comment by the time of publication.   

Israeli involvement in EU-funded schemes has come under scrutiny since the latest conflict in Gaza started. More than €1.1bn in research grants have gone to its companies and institutions under the EU Horizon research programme, a recent investigation led by Dutch outlet Follow the Money found. 

But Israeli links to specific European defence projects have until now largely remained under the radar. 

The European Commission committed €910m to the EDF last year in an effort to meet its Rearm Europe Plan 2030 and “strengthen pan-European defence capabilities”. The scheme’s Eurocentric ethos, however, is limited to geography as companies based in Europe but owned abroad can also receive funds.

A company owned by a third country, such as Intracom Defense, is eligible as long as it provides guarantees including that sensitive information is not transferred to its foreign owner. These guarantees are sent to and approved by the government where the company is based, in this case Greece, a close ally of Israel.

“It's not surprising that those states which do not take actions against Israel, do not see cooperating with Israel as a threat to European security,” said Laetitia Sedou, EU project officer from the European Network Against Arms Trade. “[it] is not a huge amount of money, of course, for the size of the industry or for a country. It's a form of support, it's a form of extremely dramatic and problematic support.”

'Israeli know-how'

The admittance of companies owned abroad into the EDF reflects Europe’s urgent need to enhance its military power, and tap into specialist knowledge and skills from overseas. Not least in Israel where the European defence industry has long-established military trade partnerships.

“We need the Israeli know-how that we lack. In my opinion, that explains the Intracom maneuver. We want to develop our own loitering munitions [drones that can crash into targets], and we also want an ‘Israeli input’ in this segment,” said a global defence expert, who asked to remain anonymous.  

IAI’s reputation is built off the back of their military expertise, specifically drone technology, some of which has been deployed in Gaza. The company manufactures the Heron surveillance and armed drones used by the Israeli Air Force.

“Many squadron reservists are IAI employees tasked with developing, manufacturing, and operating the Heron family of UAS,” an IAI press release read in December 2023. A month earlier CEO Boaz Levy said that the Heron drones “played a pivotal role in the Iron Swords War”, referring to Israel’s assault on Gaza following the 7 October 2023 Hamas attack. 

There is no evidence to suggest that products developed in Actus or the other EDF projects involving IAI-owned Intracom Defense will be utilised by IAI in Israel. However, there are no strict ethical guidelines surrounding the export of technology produced via EDF projects. Although member states are bound by EU and national export controls for military goods and technology. 

Article 7 of the EDF regulation states that projects shall comply with relevant national, EU and international law, including the Charter of Fundamental Rights of the European Union.  

Companies are required to conduct a project self-assessment under the ethical and other grounds of Article 7, 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,” Belgian MEP Marc 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.”

On 16 May 2025, Intracom Defense announced three new projects funded by the EDF, taking its total involvement to 15 projects.

This piece was first published by Investigate Europe.

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