Home Europe US approves historic $3.5B Arrow 3 missile system deal between Israel, Germany

US approves historic $3.5B Arrow 3 missile system deal between Israel, Germany

Arrow 3 test launch
Photo: Israeli defense ministry

Israel and Germany have received green light from the US for Israel’s sale of Arrow 3 missile defense systems to Germany, with a total valuation of $3.5 billion.

The US approval will allow senior officials from Israeli and German defense ministries to sign a Letter of Commitment (LOC) on what is expected to become Israel’s largest-ever defense deal. An allocated $600 million will enable the project’s immediate initiation.

All contract details have been settled between the Germany and Israel, awaiting final approval from the German government and legislature. The final contract is anticipated to be signed around November 2023.

Utilizing a hit-to-kill strategy, the system is designed to intercept ballistic missiles in the exo-atmospheric realm and make direct physical damage to the target. Israel requires US approval for the sale as the system was developed produced collaboratively by the Israel Missile Defense Organization (IMDO) and the United States Missile Defense Agency (MDA), with Israel Aerospace Industries (IAI) leading the industrial team.

IAI serves as the primary developer for the weapon system, ‘Arrow’ interceptors, and radar detection system, while ‘Elbit Systems’ is responsible for the control and monitoring system. Subsequently, the government entity ‘Tomer’ and defense industry company company Rafael will act as key subcontractors for the interceptor’s development and production.

“This is a historic agreement with far-reaching implications. The deal is another pillar in strengthening the strategic-security relations between Israel and Germany and recognizing the quality of the Israeli defense industry. The largest defense export deal in the country’s history will soar to a peak new Israeli defense exports, which only last year recorded a record of 12.5 billion dollars,” said Israeli general director of the MoD, Major Gen. Eyal Zamir.

CEO of IAI, Boaz Levy stated “IAI happily received approval from the US Department of Defense, our partners in the project alongside the Israeli Ministry of Defense, to develop the best air defense system in the world – Arrow 3, for Germany.”

In mid-June, the German parliament greenlit an initial advanced payment of €560 million to Israel as part of the acquisition for the Arrow 3 missile defense system. Israeli Ambassador to Germany, Ron Prosor, lauded the development, characterizing it as a significant boost in bilateral relations.

At the time, Prosor also highlighted the potential for mutual gains, underscoring the benefits Israel’s advanced defense industry could offer to both the nation and Europe.