Germany Expands Arrow 3 Defense Deal with Israel to $6.5 Billion, Marking Israel's Largest Defense Export

Historic Defense Deal Expansion Approved

The German Bundestag has officially approved an expansion of its contract with Israel for the advanced Arrow 3 defense system, elevating the total value of the agreement to approximately $6.5 billion. This makes it the largest defense export deal in Israel's history. The announcement was made on Wednesday, December 17, 2025, with the expanded contract expected to be formally signed on Thursday, December 18, 2025, in Germany.

The initial purchase agreement, signed approximately two years ago, was valued at around $3.5 billion. The newly approved expansion adds an additional $3.1 billion to the deal. This significant increase is intended to substantially boost the production rate of Arrow 3 interceptors and launchers destined for Germany, thereby enhancing its air and missile defense capabilities.

The Arrow 3 System: A Strategic Asset

The Arrow 3 is an advanced exoatmospheric anti-ballistic missile system, jointly funded, developed, and produced by Israel and the United States. Israel Aerospace Industries (IAI) serves as the prime contractor for its development and production. The system is designed to intercept ballistic missiles, particularly those potentially carrying weapons of mass destruction, outside the Earth's atmosphere.

Key capabilities of the Arrow 3 include:

• Exoatmospheric interception: Engages threats during their space-flight trajectory before atmospheric reentry.
• High altitude and long range: Operates at altitudes over 100 km and has a reported flight range of up to 2,400 km.
• Hit-to-kill technology: Destroys incoming warheads through direct kinetic impact rather than explosives.
• Rapid interception: An Arrow 3 battery can intercept salvos of more than five ballistic missiles within 30 seconds.

The system was declared operational in January 2017 and has demonstrated impressive operational capabilities, including successful interceptions during recent conflicts.

Germany's 'Zeitenwende' and European Security

This expanded acquisition is a cornerstone of Germany's 'Zeitenwende' (turning point) policy, a comprehensive transformation of its national defense priorities initiated after Russia's invasion of Ukraine. The move aims to address a critical gap in Europe's long-range missile defense capabilities. The first Arrow 3 system was delivered to Germany on December 3, 2025, and deployed at Holzdorf Air Force Base, marking the first time a foreign country has received independent access to these advanced systems.

Israeli Defense Minister Israel Katz lauded the Bundestag's approval, stating it represents a 'first-tier strategic partnership rooted in a long-term defense strategy' and an expression of Germany's profound confidence in Israel's technological capabilities. The deal is expected to strengthen Israel's defense industry and economy while bolstering the Israel Defense Forces' force posture.

Key Officials Involved

The contract expansion signing is anticipated to involve key figures such as Moshe Patel, Director of the Israel Missile Defense Organization (IMDO), and Annette Lehnigk-Emden, Director General of the German Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support. Representatives from the Israel Ministry of Defense (IMOD), the German Federal Ministry of Defense (BMVg), and Israel Aerospace Industries (IAI) are also expected to attend.