Funding 'paused' to Scottish defence companies with ties to Israel

First Minister John Swinney told MSPs the government would direct Scottish Enterprise and the Scottish National Investment Bank to halt all investment to defence firms if they cannot prove they have no links to Israel.

But while tightening restrictions for Israel, he also announced his government would lift a ban on public funding for munitions, allowing for increased support for Ukraine.

Addressing MSPs in Holyrood - as the Palestinian flag flew over Scottish Government buildings in Edinburgh - he urged the UK Government to recognise the state of Palestine immediately, and saying there was a "prima facie case of genocide in Gaza" said it should cut military ties and end the free trade agreement between the two countries.

The Israeli government of Benjamin Netanyahu has denied a genocide is taking place.

The UK government has said it will recognise a Palestinian state this month if Israel does not meet certain conditions, including a ceasefire.

Mr Swinney said: "Previously, we have provided business grants and investment support to companies involved in the design, production, supply and support for military equipment, technologies and services.

"We do so because we recognise that defending our country, defending our continent, is a duty of Government - anyone watching the war in Ukraine would, I hope, recognise the reality of the importance of defence."

But he added: "In recognition of that changed international landscape, the Scottish Government will lift the restriction that we have applied on the use of support for the production of munitions, but in the face of genocide, there can be no business as usual.

"We will pause new awards of public money to arms companies whose products or services are provided to countries where there is plausible evidence of genocide being committed by that country - that will include Israel."

The pause will cover the Scottish Government itself, the Scottish National Investment Bank and the nation's enterprise agencies. Money already pledged for apprenticeships will be honoured.

Along with the shift on funding for arms companies, the First Minister said 20 children injured in the crisis will be brought to Scotland for medical treatment, while £400,000 will be spent on the creation of a rapidly deployable hospital for use in Gaza.

Reacting to Mr Swinney's statement, Scottish Conservative leader Russell Findlay said he had no doubt of the First Minister's sincerity, but would prefer him to concentrate on matters closer to home such as the drugs death crisis.

Scottish Labour leader Anas Sarwar said the situation in Gaza was "beyond intolerable", adding: "The illegal occupation and genocide must end now."

And the Scottish Greens welcomed what it called Scottish Government support for its calls for boycotts, divestment and sanctions against Israel and "companies complicit".

Patrick Harvie MSP said: “Palestinians are being starved and massacred every day as part of a campaign of collective punishment and ethnic cleansing. There is an obligation on all of us to take action to end it.

“The principle is one we should all agree on. If a company is profiting from apartheid and genocide against Palestinians it should not be allowed to profit here in Scotland.

“It has taken a lot of work by campaigners to get to this point, and I hope that it sets a precedent that will be followed by governments across Europe and beyond."

Amnesty International’s Acting Scotland Programme Director Liz Thomson said it had been raising "grave concerns about the risk of complicity" with Israel's actions in Gaza, and the move by Mr Swinney was "long overdue".

“Companies financed here in Scotland produce components with high risk of end use to commit genocide in Gaza and war crimes in Yemen - that was never acceptable," she said.

"We recently communicated clearly to Scottish Enterprise why we believed continued funding for these companies would risk violation of international human rights obligations, so we welcome today’s news but look forward to receiving more detail. It will be vital that action is taken to end support immediately."

The UN's top court, the International Court of Justice (ICJ), is currently considering a case brought by South Africa that argues that Israel is committing genocide. The ICJ, which is yet to deliver a ruling, has granted Israel an extension until January 2026 to present its defence. Israel has alleged that the ICJ case is motivated by antisemitism.

The UK government has been contacted for a response but talks with Israel to upgrade the UK-Israel free trade agreement were suspended in May, with Foreign Secretary David Lammy calling the Israeli treatment of Palestinians "an affront to the values of the British people".