Germany and Israel Deepen Defense-Tech Ties with New Cooperation Agreement

22 December, 2025

The MoU combines innovation, technology transfer, and startup collaboration, signaling a renewed warming of bilateral defense relations following the lifting of Germany’s arms embargo

Germany’s Minister for Economic Affairs, Katherina Reiche, signed last week a memorandum of understanding (MoU) during an official visit to Israel aimed at strengthening cooperation in the defense-tech sector. The agreement focuses on fostering innovation, technology transfer, and closer ties between Israeli startups and German industry. The MoU was also signed by Aharon Appelbaum of Israeli defense-tech investment fund Kinetica and Michael Wöltz, founder of the German startup incubator SouthWestX. As part of the initiative, a “Startup Leaders” program will be launched to facilitate knowledge exchange, business connections, and joint projects between companies in both countries.

Kinetica is an Israeli investment fund specializing in defense-tech and dual-use technologies, operating at the intersection of security, advanced industry, and artificial intelligence. Beyond capital investment, the fund emphasizes strategic guidance, access to international markets, and partnerships with global corporations and defense organizations. Its activity reflects the growing global momentum in defense-tech, driven by rising demand for solutions in areas such as autonomy, sensing, cybersecurity, and advanced defense systems.

SouthWestX, for its part, is a German innovation hub and startup incubator focused on connecting technology ecosystems across Europe, Israel, and the United States, with an emphasis on strategic industries including defense, aerospace, energy, and smart manufacturing. Based in southwestern Germany—an area known for its strong industrial and defense manufacturing base—the incubator acts as a bridge between early-stage startups and large corporations, research institutions, and government bodies. The partnership with Kinetica is designed to leverage Israel’s innovation capabilities alongside Germany’s industrial infrastructure, regulatory framework, and market access.

Reiche’s visit also carried clear security and geopolitical significance. She was accompanied by an unusually large delegation of senior executives from Germany’s defense industry, signaling a renewed strengthening of defense relations between Berlin and Jerusalem after a period of strain. Tensions peaked in August, when the German government under Chancellor Friedrich Merz imposed a partial arms embargo on Israel over disagreements related to the fighting in Gaza. The embargo was lifted in recent weeks, and around the same time Germany operationally deployed the Arrow 3 air defense system purchased from Israel—a strategically significant move, albeit one that was not accompanied by high-profile public political appearances.

Overall, the newly signed MoU reflects a dual track of technological and entrepreneurial cooperation alongside a clear political and security signal, positioning defense-tech as a central pillar in the deepening relationship between Germany and Israel in the years ahead.

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Posted in: Aerospace & Defense , Business , News , Technology

Posted in tags: Germany , Kinetica , SouthWestX