A New Strategic Chapter: How Geopolitical Shifts Are Fueling German-Israeli Cooperation in Infrastructure, Energy, and Defense – an Article by Nadia Davidzon
The tariffs, announced by U.S. President Donald Trump, have created economic uncertainty across the European Union, with the potential to trigger a broader economic crisis. Among the 27 EU member states, Germany is among those most exposed, as its exports to the United States reached 10% of total outbound trade in 2023 - a 20-year peak, according to data from the German Federal Statistical Office. The new economic policy of the U.S. Republican administration, bordering on a trade war, along with growing concerns in Germany about the risks associated with financial dependence on China, provides Israel with significant economic opportunities. In recent decades, relations between Germany and Israel have strengthened considerably. As noted by the German Ambassador to Israel, Steffen Seibert, in an interview with Maariv newspaper upon taking office in 2022: “Israel and Germany are destined to be partners.” Large-scale deals in recent years, such as Germany’s US $3.5 billion purchase of the "Arrow 3" air defense system and the mega-deal between Biolojic Design and pharmaceutical giant Merck, valued at up to €346 million, highlight only a fraction of this growing potential.
Germany’s trade barriers with the American market, and its cautious stance toward the Chinese market, arise in the context of its significant need for infrastructure upgrades. A recent Bundestag decision amended the Basic Law to establish a fund for infrastructure and investments aimed at achieving climate neutrality. To this end, Germany has authorized the allocation of credit for investments in infrastructure, transportation, green energy, and climate-related projects totaling approximately €500 billion over the next 12 years. The typical “debt brake” that applies to new loans in the Federal Republic of Germany will be lifted specifically for additional investments in infrastructure and for projects required to achieve climate neutrality by 2045.
Israel is likewise focused on infrastructure development and is moving forward with a range of complex international projects, the majority of which are executed under the PPP (Public-Private Partnership) framework, including financing, design, construction, operation and maintenance. Notable projects include the recently announced congestion tax initiative, the metro project, waste-to-energy facilities (designated to generate electricity from waste), storage initiatives, and more. It is no secret that Israel-Germany relations remain influenced by historical context, which continues to shape the positions Germany’s central political parties. The April 2025 coalition agreement between the CDU, CSU, and SPD explicitly reaffirmed that Israel’s security is a fundamental principle of German policy. However, the bilateral relationship is equally driven by shared democratic and liberal values, as well as mutual economic and security interests.
For years Germany and Israel have maintained deep bilateral cooperation in the security sector. The Russia-Ukraine war, combined with the growing uncertainty regarding continued reliance on the American deterrence capabilities, has heightened security concerns and spurred aspirations to enhance the military capabilities of the German armed forces. These developments create fertile ground for further strengthening of security cooperation between Germany and Israel. This also extends to broader economic collaboration, particularly in infrastructure and renewable energy.
Ultimately, the geopolitical shifts set in motion since President Trump’s administration present a rare opportunity to shape Israel-Germany relations with a forward-looking perspective building on historical ties while advancing new strategic and economic partnerships.
Adv. Nadia Davidzon is the head of the Infrastructure, Energy and Project Finance Department and the German Desk at Naschitz, Brandes, Amir; and a member of the German-Israeli Chamber of industry & Commerce (AHK Israel).