European Research Grants support the War on Gaza

30 May 2024

Israeli Arms Manufacturers Receive Research Funding from the EU to Develop Assault Drones

Ahmad Ashour
With contribution from Abdullah Taha

“One night we had 30 injuries when drones fitted with sniper guns were sent to shoot at people trying to get to Al-Ahli hospital. One was a 9 year old boy shot in the neck. He bled-out in the ER. Germany hasn’t banned them (Israeli weapons manufacturers)”.

This is a witness statement from Ghassan Abu Sittah, Palestinian doctor and current Rector of the University of Glasgow. He wrote it on X (formerly Twitter) on 9 May, 2024, referencing the news related to plans by the Israeli company Xtend to expand its business, after it has managed to collect $40 million “after its drones successful use in Gaza”. Abu Sittah was also commenting on the decision to deny him entry to Germany to participate in a conference in support of the Palestinian cause.

Xtend is the developer of the surveillance and assault drone Skylord, which the Israeli army openly acknowledged using in operations in the Gaza strip.

The company had received in the past, research funding from the European Union to conduct market and feasibility research for Skylord. Xtend is not the only Israeli company specialized in making weaponry and military equipment to have benefited from this sort of funding.

What is the connection between the European Union and research funding of Israeli arms companies?

In the course of Israel’s ongoing war in Gaza, that started on October 7, 2023, the Israeli Defence Forces (IDF), deployed an arsenal of weapons including drones and F-16 and F-35 warplanes.

These American-made fighter jets rely on Israel Aerospace Industries (IAI), which supply parts of their military aerostructures, while receiving research funding (for scientific development research) from the EU. The same F-16s and 35s take part in military operations associated with rights violations such as bombing hospitals, schools and residential neighbourhoods in Gaza.

Commercial databases list the export of 69 shipments from Israeli IAI, to American Lockheed Martin, containing “planes, helicopters or drones parts”. Lockheed Martin notes with pride the prominent role it plays in safeguarding the security of Israel, by supplying it with F-16, and F-35 fighter jets.

A Closer Look at European Research Funding

In 2018, the Horizon 2020 research scheme sparked controversy in the heart of the European Union. The European Commission had suggested the scheme’s activities should not be confined to civilian applications, whereas the European Parliament and Council of Europe were adamant on its use for civilian applications only.

In some of Horizon 2020 research projects, Israeli firms linked to armament and military activities participated In some of Horizon 2020 research projects, namely Israel Aerospace Industries (IAI) and Elbit Systems, in addition to several Israeli startups.

According to the European Commission, it is very difficult to draw a clear lines between civil and defence applications of dual-use technologies. In advanced scientific research context, dual-use technologies could either be developed immediately, or upon the introduction of substantial or non- substantial adaptations, even if these technologies were initially strictly geared towards either civilian or military applications.

The term “dual-use” describes software and technology that could be used for either civilian or military purposes. And based on the research projects’ final reports, information published on the official websites of certain Israeli firms and other relevant sources, this investigation found that certain “dual-use” technologies, developed within the framework of the EU Horizon 2020 scheme, have served specific sectors within some Israeli companies. These sectors are partially active in manufacturing military products used in military operations, given the lack of legal regulation to monitor their use upon or beyond the project’s completion.

Furthermore, the EU export control list of dual-use technologies was not updated when the scheme was launched. This resulted in awarding research funding grants to Israeli companies for the research and development of dual-use technologies without imposing any restrictions on their future use upon the conclusion of the scheme.

Aerostructures Technology

Israel Aerospace Industries (IAI) expresses pride on its official website about receiving international research grants for the development of composite materials used in manufacturing civilian and defence aerostructures. This led this investigation to research and investigate further the role of European research schemes in this domain.

In February 2017, Israel Aerospace Industries (IAI), was awarded € 213,000 (USD 232,000) in funding to develop, manufacture, and test non-structural landing gear parts made of composite material, based on advance carbon fibre material system, in partnership with the German company CirComp.

IAI relied in this project on Resin Transfer Moulding (RTM), used in automated manufacturing, combined with Tailored Fiber Placement (TFP) in the design and manufacturing processes.

An EU research project defines RTM technique as a closed-mould technique for manufacturing high-performance composite components used in various fields, including the aerospace industry.

Research suggests that this technique is employed to produce medium-sized composite parts (less than 3 meters usually) for military aircrafts.

Israel Aerospace Industries (IAI), plans to harness the project outcomes in developing composites related to aircrafts landing gear. The project also has helped both the Israeli and the German firm, in the discovery of new technologies that may contribute to introducing further developments to structural parts, and reducing production costs.

The EU Control List of “dual-use” items requiring export authorization includes, under articles 1A002 and 1C010, composite structures containing “epoxy resin impregnated carbon; fibrous or filamentary materials”. Those articles exempt from this condition, components used for the repair of civilian aircrafts.

According to Ruxandra Mihaela Botez, Professor of Aircraft Modelling and Simulation at the École de Technologie Supérieure in Quebec, Canada, the process of civilian aircraft manufacturing can be applied to military aircrafts. The only difference between the two are the properties of the landing gear related to their weight, dimensions and other properties, depending on the plane model.

Therefore, the technology of composites used in an aircraft’s aerostructures can be applied for the production of both civilian and military aircrafts alike.

This was not the only research project in which the Israeli company participated in and involved RTM use to produce high-performance composites. Under Horizon 2020, IAI was granted approximately € 290,000 (USD 315,000) between 2019 and 2022 to develop water-soluble materials instead of the costly metal core tools in RTM.

Which sectors benefited from these grants?

The website of Israel Aerospace Industries (IAI), notes that its composite components manufacturing division, under LAHAV Aero-Structures centre, uses Resin Transfer Moulding (RTM), and other techniques that the European research scheme grants covered, with the aim to reduce manufacturing costs.

The website remarks that the centre participates in international research and development programs to improve composites and the techniques used in this regard.

LAHAV Aero-Structures specializes in the design and manufacturing of metal and composite aerostructures and landing gear equipment, which the European funded research scheme focused on.

It is also highlighted on the IAI website, that its in-house composites production processes are used in making aircraft aerostructures, including those for F-15, F-16 and F-35 jets.

The IAI website further adds that LAHAV uses RTM technique in the preparation of composite materials that go into the production of military aircraft aerostructures, such as F-15, F-16, T-38 and other military and commercial helicopters.

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Both F-16 and F-35 fighter jets are produced by the US company Lockheed Martin. IAI says it supplies the American company with military and commercial aerostructures for F-16 and F-35.

Lockheed Martin also claims that it supports the use of RTM in its fighter jets since the early 2000s. And as it mentioned on its website, it has “successfully applied the use of an advanced resin transfer moulding (RTM) process to build a standard component for an advanced fighter aircraft”.

In February 2024, during the Israeli war on Gaza, the Dutch court of appeals ordered the government to block all exports of F-35 fighter jet parts to Israel “over concerns they were being used to violate international law during the war in Gaza”.

This investigation has not received any comments from the European Commission regarding its findings, despite reaching out to the commission according to the right of reply.

Connection to the Israeli Government

Israel Aerospace Industries (IAI), is entirely state-owned. The company specializes in aerospace industries, missile and homeland security systems, unmanned aerial systems (UAS), and the provision of various technologies to manufacture aircraft parts and aerostructures.

Weapon systems make up the largest portion of IAI sales. The company’s 2022 revenue from sale of military equipment constituted 82% of its gross income.

The company allocates a portion of its spending to research and development activities. Boaz Levy, IAI President and CEO, said in this regard: “Developing advanced technological capabilities, to help preserve the IDF’s operational advantage and its ability to deal effectively with changing challenges, continues to form the centre of our activities, and for that purpose we are increasing the resources dedicated to research and development.”

The IDF relies on two, IAI-developed, unmanned aerial systems (UAS): The Heron TP, and the Heron.

Israel Aerospace Industries (IAI) has been used to receiving European research grants, and those amounted to €10 million (around $10.8 million) under the Horizon scheme.

IAI received an estimated € 4, 526,000 (about $ 4,57 million) in EU research grants for projects classified under “security,” according to the Open Security Data Europe, established by the European Network Against Arms Trade (ENAAT).

Top of its projects in the security sector is the “ResponDrone” project. Both the Israeli Ministry of Defence and IAI took part in this project to develop “a multi-UAS platform” for crisis response. And this project has been classified as dual-use.

Guidelines on Dual-Use Technology

To support the EU’s external security policies, the European Council adopted a decision- subject to specific conditions- on conducting dual-use research. Council decision 743 for the year 2013, which regulated the first version of the Horizon 2020 scheme, stipulated that “whereas research and innovation activities will have an exclusive focus on civil applications, coordination with European Defence Agency (EDA) will be actively pursued in order to strengthen cooperation with EDA, notably through the already established European Framework Cooperation (EFC), recognising that there are areas of dual-use technology.”

As per the explanatory note concerning the “exclusive focus on civilian use applications,” under the Horizon regulations, “If the technologies/products/services concerned are intended to be used in non-military activities or aim to serve non-military purposes, they will be considered as having an exclusive focus on civil applications. Research directed towards military applications is to be excluded from funding.”

The EU defines dual-use items, as components, software and technology that can be used for both civil and military purposes.

In the event that dual-use technology is being developed, the scheme sets conditions for this to be specifically noted in the project proposal, and for the research purpose to be geared towards civilian application. Additionally, the project should abide by the scheme’s ethics standard, and obtain an authorization to export its technology according to Council Regulation (EC) No 428/2009, related to export authorization for dual-use items.

Nonetheless, a white paper issued by the European Commission in 2024, shows that while “future fields of application of research results are not always known at the start point of the project, medium and high Technology Readiness Levels (TRL) could develop technologies with dual-use potential immediately, with non-substantial or more substantial adaptations, even if these technologies are originally intended for purely civil or defence applications.

Conversely, defence research and development may have civil applications, also with adaptation scope where needed.” This echoes what the European Defence Agency’s website noted concerning the civil-military synergies in dual-use research. It explained that there were “numerous examples where defence research has led to spin-offs for the civilian world, but equally so can technologies developed by funding schemes from civilian research programmes bring benefits to cutting-edge defence systems.”

Despite the agreement not stipulating special monitoring for the dual-use technology, the European Commission could work with national authorities on inspection and audit processes mentioned in the project agreement, as part of the project’s technical review, to ensure research activities are confined to civilian applications only. But this monitoring process is restricted to the duration of the project.

This makes monitoring the use of this technology based on the EU list of exporting dual-use items – once the project has run its course- crucial. This is what the project coordinator should do. A coordinator is appointed in every joint project under Horizon.

IAI was the coordinator of both previously-mentioned projects.

Dr. Machiko Kanetake, director of the Master Programme in Public International Law at Utrecht University reaffirms this point. She says that institutions participating in Horizon 2020, within Europe commit to the EU lists on exporting dual-use technology.

However, in the case of Israeli institutions, Kanetake- who conducted numerous research on dual- use technology export controls – notes that with Israel being outside the EU, it does not abide by the list of dual-use items in the first place. However, there are three cases where Israeli institutions abide by these lists under Horizon. First, if they imported dual-use technology from European institutions participating in the research. Second, if Israeli institutions developed this technology on EU soil and want to transfer it to Israeli. Third, when abiding by the ethics code of the program, which requires adherence to the export control list of dual-use items. But it is unclear how this code affects non-European participants.

The agreement concerning Israeli institutions’ participation in the program does not impose any restrictions on the use or export of dual-use goods. It merely stipulates that Israel should abide by the program guidelines, as European institutions participating in it do.

While the Commission or donor reserves the right to object to dual-use technology transfer to any third country, this does not apply to states participating in the program, including Israel.

Commenting on this, Mark Ackerman, researcher in the Dutch campaign to stop arms exports says that the legal framework regulating Israeli companies’ participation in European funding schemes is limited to banning the participation of institutions present inside the occupied territories. As for Horizon, Israel only abides by the project guidelines.

Once the project concludes, he adds, Israeli institutions may use the technology they developed as part of the project, any way they see fit. This is especially true since Israeli companies conduct their research within their territories and do not need to issue export authorizations.

These rules that both Kanetake and Ackerman mentioned are reflected in the use of the ResponDrone project results, in which IAI was a participant.

Disaster-Response Drones

Between May 2019 and 30 April 2022, Israel Aerospace Industries (IAI), and the Israeli Ministry of defence were involved in the ResponDrone project’s research. The project aimed at developing a multi-unmanned aircraft system (UAS) platform for first responders to enhance their situation awareness. The project “developed a suite of software that will be integrated into the developed drones, in addition to developing control centres and stations.” This technology will be subject to dissemination to key stakeholders and the general public.

Despite confirming that the project was geared towards the civilian use of drones, the “exploitation strategy and business planning” report, explicitly noted that the EU’s export control framework on dual-use technology applies to the project findings.

IAI expressed its interest in further developing the drone system, as created within the project, as part of an exploitation agreement with project partners. Later those partners worked to obtain an export authorization under the EU export control list, governing the transfer of this technology.

As for the technology developed by the Israeli company itself, i.e. the web-based multi-mission management platform, ready for immediate use, the project allowed the Israeli company to exploit it.

Article 28 of the partnership agreement stipulates that all grant beneficiaries must take the necessary measures to ensure the “exploitation” of their findings.

IAI Drones for Emergency Response

On its website, Israel Aerospace Industries (IAI) presents its Unmanned Aerial Systems (UAS) for natural disaster response. The company uses the example of the Greek armed forces that deployed its Heron version of drones for surveillance operations, as part of their efforts to combat and contain forest fires that erupted in July 2023.

The same drone was mentioned in a December 2022, Human Rights Watch (HRW) report documenting its use by the European Agency for the Management of Operational Cooperation at the External Borders (FRONTEX) to intercept migrants in the Mediterranean sea instead of rescuing them.

The deal through which FRONTEX obtained Heron drones raised questions in 2020, from EU members, as HRW had already documented IDF using the same drones to target Palestinian civilians in 2009.

Controversial Participation

The ongoing Israeli war in Gaza, which started on October 7, 2023, brought the issue of Israeli arms companies’ participation in the Horizon 2020 scheme back for discussion in the European Parliament.

On October 25, 2023, a Podemos MP (a Spanish political party), part of the leftist coalition in the European Parliament Idoia Ruiz, submitted a written question concerning the contribution of funds received by Israel’s military firms to the competitiveness, health, and security of European citizens. She also inquired about the extent to which military research projects in Israel have been funded by Horizon 2020.

The question directed at the Parliament also mentioned, in addition to IAI, Elbit systems, as a beneficiary of European research grants. This same company was the subject of another question in 2015, regarding Horizon funding its research activities, while it was supplying the IDF with technological systems used in building the separation wall and settlements. The EU and the UN consider Israel’s wall a “violation of international law”.

Elbit is a privately owned Israeli company, whose revenues from arms sales constituted about 90% of its gross revenues in 2022.

The company is known also for its engagement in controversial military activities in the occupied territories. This led over 70 investment institutions to divest from it, for various reasons, including concerns over human rights violations, according to the Financial Exclusion Tracker database.

And due to the recent war in Gaza, Japan’s Itochu Corp ended its partnership with Elbit following the International Court of Justice ruling that “Israel must take all reasonable measures within its power to prevent genocide” in Gaza. This was followed by closure of an Elbit Systems factory in Britain as a result of pressure rejecting its work.

Quantum Computing Program

Under Horizon 2020, Israel’s Elbit Systems was awarded 3 research grants amounting to €1,66 million approximately ($1,717 million), € 559,000 of which were allocated to the quantum technology-linked Coherent Optical Parallel Computing (COPAC) project. Work on the project took around 4 years (from August 2017 until April 2021).

While quantum technology is listed as a dual-use technology in the UK, it is still not classified as such in the EU list. The project was therefore not classified as “dual-use”.

This was despite a European Commission report published in October 2023, noting the high risk associated with quantum technologies. “Quantum technologies have a vast potential to transform multiple sectors, civil and military, by enabling new technologies and systems that make use of the properties of the quantum mechanics,” the report says.

International Law professor, Dr. Kanetake, says that the European list does not include all dual-use products, therefore, “dual-use technology” developed under research schemes and not listed on it, may not be subject to export restrictions.

Coherent Optical Parallel Computing (COPAC) project aims to develop a novel area of computing, instead of using the traditional ways of computing, involving coherent information transfer using laser and Quantum Dots (QD) – a semiconductor particles with sizes of a few nm- to process information at super high speed, permitting huge volume treatment of data simultaneously. The project developed a novel prototype device that utilizes this technology.

According to the project reports, Elbit Systems developed this prototype, and thus has the right to use it under article 28 of the grant agreement.

Under “project results” published on the EU website, Elbit’s participation in scientific societies is noted, as the company is a part of the adviser group concerned with industrial aspects of the Israeli National Quantum Initiative (INQI), under the umbrella of the Israeli Innovation Authority.

Elbit was not the only Israeli participant. The Hebrew University of Jerusalem, whose board of governors is chaired by the largest shareholder in Elbit, was also a participant. Additionally, the Hebrew Univresity takes part in the Innovation Authority’s quantum computing activities.

KILOLAMBDA Technologies Ltd- classified as a military company in Israel- also participated in the project before Elbit acquired it in 2018.

When looking into the Israeli Innovation Authority’s reports, we discovered it has helped Israeli companies in obtaining EU grants totalling €89 million ($97 million).

The Israeli Innovation Authority’s official website says it assists companies in exchange for certain fees. Elbit also noted in its yearly reports that it pays fees to that Authority in exchange for research grants.

Upon researching the Israeli National Quantum Initiative (INQI), we found that the Israeli Innovation Authority was part of a consortium implementing the “national quantum technologies” plan.

When this investigation reviewed the national program, conceived in 2018, we discovered that the Israeli Ministry of defence took part in drafting it, together with both the Ministries of Science and Finance, and the Israeli Innovation Authority worked on setting up the national program for quantum technologies.

Dr. Daniel Gold, Head of the Directorate for defence Research and Development, at the Israel Ministry of Defence, said: “Israel, as an established world power in the field of cyber, regards the field of quantum science as a strategic objective to become a major player in its world market.”

In 2022, the Innovation Authority and the Ministry of defence announced the establishment of a Quantum Computing Centre as part of the National Quantum Science and Technology Program.

This came after the National Cyber Security Authority issued a report identifying the risks of using quantum computing in data leaks and cyber attacks, and recommending- among other proposed measures- to counter these risks through conducting research in this area.

As part of the program, Elbit leads the design of quantum applications for the government sector, and assigns specialized teams to develop them.

We reached out to the European Commission under its right of reply, but did not receive any comments on this investigation findings.

Supporting Start-ups

The Horizon project allocated financial support for start-ups, that some Israeli companies benefited from. We have documented the connections some of these companies had to the defence sector.

Among the companies that received funding in 2018, is CENS, which specializes in making Lithium-Ion batteries. According to the project description, electrodes based on carbon nanotubes bring great gains in lithium–ion batteries performance, as it increases their (storage) capacity. However, the inability to efficiently disperse carbon nanotubes on electrodes has hindered their extensive use on batteries. The EU-funded IonDrive project by CENS therefore aims to develop a cost-effective dispersion process based on ultrasonic technology that should allow the separation and homogeneous application of carbon nanotubes within the powdered electrode material. This should help increase batteries storage capacity by 50 %, without degrading the mechanical properties of the electrode.

Lithium-Ion batteries were not listed among dual-use products in the EU’s list of items requiring export authorization. Nevertheless, the European Defence Agency is conducting research on harnessing the potential of lithium-ion batteries technology in military platforms.

The batteries manufacturer has links to Elbit systems. According to the registry book of Israeli companies, CENS was established in October 2013, before joining Incubit Ventures, Elbit Systems technological incubator, in March 2014.

The incubator was set up as part of the Israeli Innovation Authority’s Incubators Program to support startups. In the criteria it defined for joining the incubator, Elbit listed the synergies between the startups’ technologies and Elbit’s fields of interest.

An article published on the company’s website quotes Eli Friedman, Vice President for Innovation in Elbit, as saying that the incubator is specialized in dual-use technologies. The startups that join the Incubators, work on developing solutions that cover a wide range of sectors, many of which were not originally connected to the military field.

Also on the company’s website, this investigation found that CENS-made lithium-ion batteries, are used in unmanned aerial vehicles (UAV): “with CENS Nanotechnology’s unique ability to increase batteries storage capacity, UAVs can operate for longer times and fly longer distances”.

Highlighting the military application of the CENS-made batteries, Yehoshua Yehuda, Executive Vice President and Chief Technology Officer at Elbit Systems, and Incubit Chairman said: “CENS solution is groundbreaking, addressing the growing demand for low cost, effective electrical energy. We believe this breakthrough has a wide range of applications, among others in the defence sector which strives for innovative energy solutions, including, for example for the fighter’s ability to stay connected to the command and control centre”.

A European Commission source that insisted on anonymity notes that CENS received the funding allocated to start-ups, which is only meant for conducting a feasibility and market study for its civilian technologies. He added however, that research fundings could contribute to the development of dual-use technology and the switch from civilian to military use may have taken place after the conclusion of the project.

This led this investigation to look into the company’s archives on the Elbit incubator, where we found that in 2018, when the EU grant was first awarded, the technology made by the company served defence markets, and not only civilian ones.

From Europe to the US by way of Gaza

In early 2020, the Israeli start-up Xtend was awarded € 50,000 (almost $54,000) in funding from Horizon 2020, to “carry out a feasibility study to verify the technical, commercial and financial viability of the new Skylord Xtender drone system”.

An article by StateWatch in partnership with Informationsstelle Militarisierung (based on western newspapers articles) reveals that the start-up, founded in 2018, sells its Skylord drone system to the US Department of defence. It also notes that IDF uses these drone systems in Gaza. The article used this information as evidence that the research funding offered by the EU to Xtend is associated with military purposes.

To confirm this point, this investigation had examined Xtend’s contracts with the US government. The company received- whether directly and indirectly- three such contracts amounting to $ 278,000 in total value.

A further look at the nature of these contracts reveals contract 1149969; concluded by the US defence Logistics to acquire Skylord drone system. The FBI also made a single source award, under procurement contract number 15F06721P0003531 with the company, to buy two Skylord/Griffon drone systems.

The Israeli Directorate of defence Research and Development (MAFAT), which oversees research and development for arms and technological infrastructure under the Ministry of defence, wrote on its LinkedIn page “We congratulate XTEND for being selected as one of Israel’s top ten most promising startups for 2024 by Globes Magazine”. The post added that the company’s drones are used in the ongoing Swords of Iron War in Gaza.

The IDF acknowledges using the Skylord system in its military operations, as seen in a promotional video published on MAFAT’s official Facebook page.

The same European Commission source adds that Xtend received the funding allocated to start- ups, which is only meant for conducting a feasibility and market study for the Skylord system, originally developed for civilian applications. However, he remarked that research findings could contribute to the development of dual-use technology, and the transformation from civilian to military use may have taken place after the conclusion of the project.

This has led this investigation to examine Xtend’s website archives. We found that at the time it received the funding, the company was already presenting its Skylord drone system as a military system. It illustrated the system overview page with a background picture of a soldier using the said drone.