“Rockets are landing in Israel. Are we really going to travel?,” a journalist from a leading Bulgarian media asked me several days before departing on the board of El Al as part of a media trip organized recently by Rafael Advanced Defense Systems (RAFAEL) with reference to its participation in the modernization of the Bulgarian armed forces. “Don’t worry. We’ll not expose you to excessive risk and even if the rocket attacks go on, Iron Dome will take care of them”, I tried to calm him down and I wasn’t kidding with him.
IDF + entrepreneurship + technologies = an economic miracle
Israel never ceases to amaze, starting from the defense and security, passing through technologies, innovation, medicine, science and agriculture and finishing with the serial entrepreneurship scene which differentiates the small country extremely on the world stage. No matter whether we’re talking about lifesaving medical technology, cyber security innovations or game-changing apps, tiny Israel has been positively influencing the way the world at large works. Moreover, the world has been turning to the Middle East country for innovative solutions to global problems more than ever. It’s not a surprise that dry and water-scares Israel offered Bulgaria its support and expertise in the context of the water crisis in the Balkan country. Recently an Israeli-made machine that creates fresh drinking water from air was named the “Energy Efficiency Product of the Year” in an US ranklist. Additionally, not long ago the Bulgarian president Rumen Radev expressed publicly his admiration to the cyber security system built by the government in Jerusalem. The Israeli economy is a real miracle no matter that the country has existed less than a century. The GDP per capita of Israel is 5-times higher than the one of Bulgaria, and the startup and innovation phenomenon as well as the rise of the serial entrepreneurship are among the main pillars of the magic economy.
Only Tel Aviv boasts 2500 tech startups in a city of only 435 000 inhabitants that makes it #1 in the world in terms of startups per capita. Furthermore, today Israel leads the world in the percentage of its GDP that goes in R&D, creating both a technological edge critical to national security and a civilian tech sector that is the main engine of the economy. The small country is by no doubt still streaking ahead in hi-tech advances. The magic of the startups has penetrated so deeply among Israeli citizens that visitors in the country are now offered innovative walking tours that provide them with the opportunity to explore the local startup buzzing scene and delve into the mainframe of the Israeli innovation.
Israel’s economic success is often attributed largely to the country’s defense sector – an image well deserved as the military forces have produced successful spin-off companies and serial entrepreneurs in a way no other country in the world has done it. Israel Defense Forces’ improvisational and antihierarchical culture follows Israelis into their start-ups and has shaped Israel’s economy. This culture, when combined with the technological wizardry Israelis acquire in elite military units and from the state-run defense industry, forms a potent mixture. A lot of tech breakthroughs and innovations in Israel have come exactly from the defense sector and due to the hard creative work of engineers and tech talents employed in the military sector. Israel Defense Forces (IDF) are a brilliant example why technologies and innovations play a key role in the military sector. Nowadays they operate rather like hi-tech units of Google, Amazon, Apple and Microsoft than like the usual combat forces that we used to know in 20th century.
Many experts would argue that no country, even Israel, could develop sustainably and achieve prosperity if it relies only on startups and without large, national champions. Large companies are important not only because of the size. They are useful for the national prosperity because they create a specific ecosystem that often boosts a wide range of startups, suppliers and vendors around. Moving from a startup nation to a scaleup nation is not an easy task since many starting companies are great at innovation but have a lot of challenges scaling up, but if there are sectors where Israel has already invented not only national but world champions, the defense and security one is among them for sure.
The state-owned Rafael Advanced Defense Systems (RAFAEL) is one of these Israeli champions and one of the three largest defense-technology contractors in the country that invents cutting edge defense systems and technologies. This is the company that provides the Israeli company with cyber security that amazed the Bulgarian president. It is one of the players that turned tiny Israel into a mighty power on the modern battlefield.
RAFAEL is participating now in the BGN 1.46B project for the supply of 150 8×8 wheeled infantry fighting vehicles (IFVs) to the Bulgarian land forces, teaming up with GDELS, one of the main contractors in the tender, the majority shareholder of which is the US-based General Dynamics, the largest supplier of IFVs globally that has produced 12 000 vehicles so far. The two partners have worked together for over 15 years and have prior joint projects in other EU countries (Spain and the Czech republic). GDELS will bring in the platform while the Israeli company has to produce the turrets and the weapon stations.
Just to imagine what type of a company RAFAEL is, recently, Forbes magazine has published a ranklist of the 12 most important defense systems globally of the past decade in the world. Two out of these 12 game-changing and world-class systems – Iron Dome & Trophy, are owned and developed by RAFAEL. Iron Dome air defense system is a milestone and may be the only effective countermeasure in the world against short-range rockets. It directly saves lives with its 95% success rate, calculates the business magazine. It’s so efficient that some of the military people in Israel are kidding that some local citizens prefer to take pictures of Iron Dome in cases of missile attacks instead of hiding themselves in the bomb shelters “We’re proud to have our systems lauded, but we’re even more proud of producing systems that save lives every day”, RAFAEL’s representatives commented on this issue, quoted by The Jerusalem post.
The Israeli state-run company relies predominantly on its R&D activities in order to invent and develop cutting-edge defense technologies, investing over 8% of its annual sales in this direction. It has built 30 centers of excellence around the country. “We have to attract the top talented people in the country,” Dr. Ran Gozali, head of the company’s R&D and Engineering Division (since January 15th a vice president and the new head of the company’s Land and Naval Systems Division), states. The division managed by Gozali comprises of 2500 scientists, researchers, technicians and engineers.
The value proposition to Bulgaria
In December RAFAEL opened the gates of its production facilities for the Bulgarian media and showcased some of its state-of-the-art defense systems that are supplied in numerous countries around the world and could be delivered to Bulgaria, too, bringing know-how for key Bulgarian export-oriented companies, further increasing the export potential of our country.”Bulgaria, being part of the EU, is an important market for RAFAEL,” Maj. Gen. Yoav Har-Even, CEO and president of RAFAEL, notes. In relation to the Bulgarian Ministry of Defense’s (MoD) tender for the supply of the IFVs, RAFAEL offers to supply our land forces with Samson 30mm remote weapon stations (RWSs) with US-made Bushmaster Mk 44 gun, 7.62mm coaxial machine-gun and dual Spike-LR ATGM launcher, regarding the combat vehicles that would be 90 out of the 150 vehicles altogether. Compared to the manned turrets Samson RWSs enable ammunition reloading and stoppage handling under armor from within the hull.
Concerning the rest 60 light and supporting vehicles to be delivered to Bulgaria, RAFAEL will provide our country with Samson Mini with similar to the other Samson RWS’s functions, including a coaxial machine-gun and a Spike ATGM launcher.
Additionally and although it’s not part of the current tender, Bulgaria could purchase SPIKE anti-tank guided missile systems, 30 000 of which have been already sold in 31 countries around the world. These missiles have no analogue and thanks to their sophisticated electro-optic CCD they can strike the target at its most vulnerable location with pinpoint precision.
In addition to modern weapon systems RAFAEL could also provide the Bulgarian land forces with its BNET communication system, one of the world’s most advanced products of its kind surpassing by far the expectations that an army could have towards such systems. “RAFAEL is one of the leading companies in the communications systems in the world and BNET is top notch“, Maj. Gen. Mike O’Leary, director of survivability and lethality for DRS Land Systems at RAFAEL, assures. And with RAFAEL you get a whole solution and everything at one place,” Mike O’Leary added.
Industrial cooperation as a key benefit and a driver for growth
The potential strategic partnership with RAFAEL goes far beyond supplying weapons and defense systems for the army. One of the Israeli company’s main strengths lies in its ability to create cooperation and transfer production, knowledge and technology in the countries where their partners are located that boosts local employment and growth. “We’re not just selling. We’re developing industrial cooperation. It’s part of our strategy to find partners in every country we do business with,” Maj. Gen. Yoav Har-Even points out. Actually, RAFAEL conducts a wide range of offset activities globally and has many years of experience in production transfer programs (PTP) worldwide. Its PTPs have been implemented successfully with more than 50 companies worldwide, including the U.S, India, UK, Canada, Romania, Germany, Spain, Italy, Poland and others. Adding Bulgaria to the list would create new opportunities for Bulgaria.
RAFAEL’s engagement in the tender for the supply of 150 wheeled 8×8 armored vehicles in Bulgaria will facilitate local production and transfer of technology and knowledge to the country. “The strategic cooperation that we established, specifically designed for Bulgaria’s plan to modernize its armed forces, could be an excellent option for the country’s upgrade of its land forces with modern defense technologies,” Moshe Elazar, executive vice president and head of RAFAEL’s land and laval division (since January 15th the new CEO of Aeronautics, recently purchased by RAFAEL, and substituted by Dr. Ran Gozali), said. “Furthermore, our strategic partnership presents new benefits and opportunities for the Bulgarian economy to strengthen its national industry base in this important sector, including export opportunities. Additionally, the solutions RAFAEL is able to deliver to the Bulgarian armed forces go far beyond the combat vehicles project and cover the whole spectrum of defense solutions a modern army requires nowadays,” Elazar added.
The Israeli state-owned contractor intends to actively cooperate with Bulgarian companies with reference to its plan to participate in the modernization of the Bulgarian Army and in order to develop new common projects in the area of defense industry. The company has already signed cooperation agreements with three Bulgarian companies for joint development and production of air, land and naval systems – the private ones Opticoelectron Group and Samel-90 as well as the state-owned TEREM. The first will be engaged in the manufacturing, supply and maintenance of EO sights for RAFAEL’s RWSs. The second Bulgarian company will be integrated in the mechanical manufacturing process for the RWS and the supply of additional subsystems. Terem will provide the assembling of the RWS and their future maintenance in cooperation with the Bulgarian MoD. “Furthermore, we want to build a production and integration line in Terem,” Maj. Gen. Mike O’Leary mentioned.
Last, but not least, a partnership with RAFAEL will trigger a closer strategic cooperation with Israel that could boost the economic development of Bulgaria. Our country wants to transform our economy, turning to higher added value sectors. This is something that Israel has already done and could share the know-how to do it with us.