Germany Expands Arrow 3 Deal with Israel to $6.7B

Germany will expand its agreement with Israel to procure the Arrow 3 long-range missile defense system, increasing the total value of the deal to about $6.7 billion, Israel’s defense ministry announced on December 17.

The German Bundestag has approved an additional $3.1 billion tranche, enabling a significant increase in the production of Arrow 3 interceptor missiles and launch systems for delivery to Germany.

The Arrow 3 system was originally ordered in 2023 under an intergovernmental agreement valued at about €3.6 billion. On December 3 this year, the first Arrow 3 battery officially entered service in Germany and was integrated into the country’s national air defense network.

The procurement is directly linked to concerns over the ballistic missile threat posed by Russia. Israeli officials say Arrow 3 has sufficient range to intercept Iskander ballistic missiles while they are still over Russian territory.

Arrow 3 is designed to intercept medium- and long-range ballistic missiles at altitudes exceeding 100 km, destroying targets outside the Earth’s atmosphere using a hit-to-kill method. The system includes a command post, control and management systems, multifunctional radars, and launchers equipped with interceptor missiles.

The system was developed by Israel and the U.S. Missile Defense Agency, with Israel Aerospace Industries (IAI) as the prime contractor. Together, the original and expanded contracts constitute the largest defense export deal in Israel’s history.