US greenlights Israel's $3.5B sale of Arrow 3 air defense system to Germany

The biggest military export agreement in Israel’s history will proceed after the United States agreed to back Germany’s $3.5 billion purchase of the state-of-the-art Arrow 3 air-defense system.

Israel’s defense ministry announced in a statement Thursday that senior German and Israeli officials will sign a letter of commitment in the coming weeks for the system, which was developed jointly by the Israel Missile Defense Organization and the United States Missile Defense Agency and manufactured by Israel Aerospace Industries. 

Announcement of the signing ceremony follows the US State Department informing Israeli Defense Minister Yoav Gallant and other senior defense ministry officials that Washington had approved the sale of the system, Gallant’s ministry said. The full $3.5bn contract will be signed by the end of the year, the ministry added, after final approval of the deal by the German and Israeli parliaments. Germany anticipates delivery of the system in the first quarter of 2025.

“This is a significant decision which will contribute to Israel’s force buildup and economy,” Gallant said in a statement to Bloomberg. “It is also particularly meaningful to every Jewish person that Germany is acquiring Israeli defense capabilities.”

The Arrow 3 is Israel’s most advanced long-range missile defense system, able to intercept ballistic missiles while they are outside the earth’s atmosphere. It can take out aerial weapons from a distance of up to 2,400 kilometers (1,490 miles). A more advanced system, the Arrow 4, is currently under development.

Germany has been seeking to strengthen its defense capabilities since Russia’s invasion of Ukraine in February 2022. Berlin has been trying to acquire the Arrow 3 for around a year now. 

For many years, Germany kept defense spending lower than some other NATO allies, such as the United States and the United Kingdom, but Chancellor Olaf Scholtz decided to increase funding in the sector in light of Russia’s recent skirmishes with the transatlantic alliance. Germany's defense spending is set to rise in 2024 by €1.7 billion, to some €51.8 billion ($56.4bn).