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Germany - Arrow 3

Israel said the United States on 17 August 2023 approved the "landmark" sale of the Arrow 3 hypersonic missile defence system to Germany, in the country's biggest military deal worth $3.5 billion. The Arrow 3 system -- an interceptor designed to shoot down ballistic missiles above the Earth's atmosphere -- is jointly developed and produced by Israel and the United States. Berlin expects the Arrow 3 system to be delivered in the final quarter of 2025. Israel's defence ministry said in a statement the US State Department had notified it of the US government's approval for Germany to procure the Arrow 3 system. "The Israeli Ministry of Defence, German Federal Ministry of Defence, and Israel Aerospace Industries will sign the landmark $3.5 billion defence agreement, marking Israel's largest ever defence deal," it said.

Germany planned to acquire the Israeli Arrow 3 missile defense system by the end of the year, at a cost of around $4.3 billion. The government should approve an initial payment of $495 million as early as mid-June 2023. The sophisticated system was designed to intercept ballistic missiles outside the earth’s atmosphere. It reportedly functions as the upper layer of Israel’s missile defense shield, which extends from the Iron Dome for short-range rockets, up to the Arrow 3 in order to stop any unconventional missile warhead at a safe altitude.

Germany chose the Israeli defense system over its rival, the US-manufactured Terminal High Altitude Area Defense (THAAD) by Lockheed Martin Corp. Arrow 3 missile systems would come into operation for German defense in 2025 and could ensure safety also from Poland, Romania and the Baltic countries.

In March 2022, German Chancellor Olaf Scholz officially expressed an interest in purchasing the system during his meeting with former Israeli prime minister Naftali Bennett. Following the meeting, Israeli Defense Minister Benny Gantz contacted the US administration to ask for its approval of the sale. However, the request was rejected, even after several attempts. US approval is mandatory, considering US taxpayers have covered 80 percent of the project’s budget, investing up to $2.2 billion in research and development efforts towards IAI.

Scholz renewed his interest in the system during his meeting with Israeli Prime Minister Yair Lapid in Berlin on 12 September. “We are very keen to work with Israel, including in the area of air defense where Israel has a very effective product with the Arrow 3 system,” Scholz said in a joint press conference with Lapid. The public remarks came as a shock to Lapid, as Israel often goes out of its way to keep the details of possible arms exports secret. Ariel Kahane reported in Israel Today that Lapid did not take Scholz’s explicit reference to “Israeli missiles” well, and refused to provide him with any technical information.

Germany has received permission from Israel and the United States to purchase the Arrow 3 missile defense system, according to The Jerusalem Post 05 April 2023. German lawmakers have in the past insisted on acquiring Israel’s Iron Dome air defense system. However, the head of the German Air Force, Lieutenant General Ingo Gerhartz, said that Arrow 3 is the most relevant system for countering the threats facing the European nation.

“The Iron Dome is used for short-range threats, we have a strong industry, and we will provide the systems ourselves”, Gerhartz said. “And to intercept at a higher altitude, we have a Patriot weapon system, which we will modernize. But if it’s a threat in the range of 15,000 km, it’s an exoatmosphere, we have nothing. So, I took a close look at Arrow 3, and we’re really interested in the system”.

Israel Today reported on 18 September 2022 that US President Joe Biden’s administration blocked the sale of the advanced Israeli air defense system to Germany. According to the details, Israel failed to sell its exo-atmospheric hypersonic anti-ballistic missile system, Arrow 3, to Germany, despite its numerous attempts to get US approval. The system is a US-Israeli defense project funded by the annual foreign aid to Israel. It is jointly developed and produced by Israel Aerospace Industries (IAI) and Boeing.

Israeli Defense Ministry spokesman Moshe Fatal said 21 April 2023 that a potential sale of the missile defense system was a significant milestone and another step in strengthening relations between Israel and Germany. “We still have weeks of work ahead before the negotiations are completed and the contract is ready for signing,” the Israeli official added.