German manufacturer mulls relocating to US to avoid arms embargo against Israel

German automotive manufacturer Renk, which produces tank transmissions and engines for the Israeli military, is considering moving production to the US after the German arms embargo on Israel.

Renk CEO Alexander Sagel mentioned the prospective shift on a post-earnings call, as reported by Reuters on Wednesday.

The call comes five days after German Chancellor Friedrich Merz announced the country would freeze military exports to Israel that could be used in the Gaza Strip, amidst an Israeli plan to occupy the entire Palestinian enclave. 

Israel’s war on Gaza has drawn international condemnation, and its plan to empty Gaza City of its one million inhabitants has drawn criticism even from staunch Israeli allies such as Germany. If enforced, the plan would amount to the forced expulsion of Palestinians, an illegal move under international law. 

Renk produces tank transmissions and engines for the Israeli military, accounting for two to three percent of the company’s business portfolio.

These parts are essential components in Israel’s main Merkava battle tanks, which were used in the killing of six-year-old Hind Rajab and her family, as well as Namer armoured personnel carriers.

“If we cannot produce [transmissions] in Germany, we will relocate these volumes to a different plant, for example, to the US,” Segal said. “This might take maybe 8 to 10 months, but if there's no move forward, we will do it because we have this business.”

Renk has seen rising profits from its vehicle mobility solutions department in recent months, as Israel’s genocide in Gaza continues.

German embargo

Chancellor Friedrich Merz said on Friday that the exports were frozen “until further notice” and expressed concern for the plight of Gaza’s Palestinians, who are suffering under Israeli-imposed starvation.

Germany is Israel's second-largest supplier of weapons, following the US. 

Merz said it was Israel's right to disarm Hamas and seek the release of its captives in Gaza, but that these goals have become harder to achieve due to Israel's planned military action.

"The German government believes that the even tougher military action in the Gaza Strip decided upon by the Israeli cabinet last night makes it increasingly difficult to see how these goals can be achieved," Merz said in a statement.

Politically, Germany is one of Israel’s closest allies. The country has not recognised Palestine and has committed to ignoring the International Criminal Court’s arrest warrant against Israeli Prime Minister Benjamin Netanyahu.

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Germany has also cracked down on pro-Palestine speech by banning symbols associated with the movement, such as the inverted red triangle, and by withholding public funds from individuals and organisations that boycott Israel.

After Israel’s cabinet approved a plan to occupy the entire Gaza Strip, Germany announced it would halt “any exports of military equipment that could be used in the Gaza Strip until further notice”.

If enforced, a German arms embargo could represent a significant step in Israel’s growing international isolation. 

Yet according to the Palestinian-led Boycott, Divest and Sanctions movement, on the same day Germany’s arms embargo was announced, the country issued a licence to export a submarine to Israel.

On 31 July, Slovenia became the first European Union country to impose an arms embargo on Israel.

Citing the failure of the EU to impose restrictions itself, the central European country unilaterally banned the export or import of weapons to Israel.