Israel signs its largest-ever defense contract

Israeli Defense Minister Yoav Gallant signed a contract to give Germany Israel’s Arrow 3 missile defense system on Thursday in Berlin.

The sale is the biggest of its sort in Israel’s history, with an estimated value of $3.5 billion.

By the fourth quarter of 2025, Israel Aerospace Industries (IAI) is expected to deliver to the Germans the first missile battery, complete with radar, launch, and interception management systems. The system was initially purchased by Germany.

Designed to intercept ballistic missiles during the exoatmospheric portion of their trajectory at altitudes above 100 kilometers (62 miles), Arrow 3 is the top-tier layer of Israel’s missile defense system.

Israel’s use of it began on January 18, 2017. German lawmakers approved advance payments for the system of up to €560 million ($606 million) in June. IAI is the main contractor for the system’s integration and development, and it collaborates with additional Israeli and American defense companies.

Israel has been working behind the scenes to convince Washington to approve the sale ever since German Chancellor Olaf Scholz and then-Prime Minister Naftali Bennett made the initial request for the system in a meeting in March 2022. The Israeli Missile Defense Organization and the United States jointly developed the system, which is among the most cutting-edge of its kind. Missile Defense Agency, hence selling to a foreign buyer requires American consent. On August 17, the United States gave the go-ahead.

The European Leadership Network (ELNET), a non-governmental organization, works to improve ties between the EU and Israel. Countries, in a statement on Thursday, expressed their appreciation for the historic signing of the purchase deal, which they claimed “brings Europe closer to Israel in the fight against similar challenges and the protection of citizens.”

In order to facilitate a visit by a group of members of the Bundestag’s security committee who “were impressed for the first time by the Arrow 3 system,” ELNET served as a “direct partner” in the project.

According to Steffen Seibert, the German ambassador to Israel, Arrow 3 “will add a very substantial element to our military relationship,” he told JNS in August. Additionally, it will increase two-way traffic, a trend that started with Germany using Israeli drone technology to defend our soldiers on international missions.

Although the system will primarily serve to defend Germany, according to Seibert, the eventual goal is “to integrate the system into European air defense, so Arrow 3 will also protect neighboring European countries.”