The German Ministry of Defence and the Bundestag’s Budget and Defence Committees have approved the acquisition of the Arrow-3 air and missile defence system. 

The system, developed by Israel Aerospace Industries (IAI), is part of Israel’s multi-layer defence array and offers protection against longer-range threats, particularly those carrying weapons of mass destruction.

Protection, at the highest of layers of defence

With a reported price tag of almost $4.3bn, the Arrow-3 deal represents the largest defence sale in Israel’s history.

Germany has stepped towards procuring Israel’s advanced Arrow-3 missile defence system. Reuters has reported that the German Bundestag and Budget Committee have agreed to release advance payments of up to $610m, marking the initial phase of the procurement process. 

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The acquisition of the Arrow-3 system comes in response to the growing need for robust ground-based air defence systems in the wake of Russia’s war in Ukraine.

With shortages of existing defence systems in Western nations, Germany aims to bolster its defence capabilities by acquiring the Arrow-3, which offers protection at the higher layer of air defence. 

While the medium layer is covered by systems like Raytheon’s Patriot units and the IRIS-T, the Arrow-3 interceptor ensures defence against ballistic missiles outside Earth’s atmosphere.

The funds for this acquisition will be sourced from a special EUR100bn fund initiated by German Chancellor Olaf Scholz following Russia’s war on Ukraine.

Tristan Sauer, aerospace, defence, and security analyst at GlobalData, made a point on the matter: “When German Chancellor Olaf Scholz announced a $109bn investment to modernise the Bundeswehr’s capabilities following the invasion of Ukraine in early 2022, many observers expressed scepticism that this commitment would amount to any tangible changes, with the lack of major purchases in 2022 only further legitimising this view.”

A relationship steeped in infamous history

Negotiations between Israel and Germany regarding acquiring the Arrow-3 system gained momentum last year following the conflict in Ukraine. Israeli Prime Minister Benjamin Netanyahu discussed the potential deal with German Chancellor Olaf Scholz in Berlin earlier this year. 

According to GlobalData’s “Israel Defence Market 2023-2028” report, due to Germany’s historical responsibility for the Holocaust and its aftermath, the two nations enjoy a special relationship that makes Germany one of Israel’s strongest defence partners in Europe. 

The Israeli Ministry of Defense and Israel Aerospace Industries (IAI) welcomed the German approval and affirmed their commitment to finalising the procurement contract. 

The joint statement from Defense Minister Yoav Gallant, the Israel Ministry of Defense, and IAI highlighted ongoing discussions with German counterparts and maintained communication with the American administration to ensure the necessary sales approval.

If the deal fell through, Germany would forfeit part or all of its down payment, compensating Israel for the work done thus far.

With the approval from the German Parliament, the Arrow-3 deal paved the way for enhanced defence capabilities and deepened cooperation between Germany and Israel.