The newspaper reported that the two submarines of the Dolphin class will be built in Kiel at a cost of USD 1.17 billion.
The German federal government, which is being replaced on Thursday by a new coalition headed by Angela Merkel, will cover a third of the cost.
Germany granted Israel two Dolphin submarines in the nineties soon after the Gulf War in a sign of goodwill and in order to strengthen the friendly ties between the two countries. Israel bought a third submarine of the same brand soon after the donation.
Schroeder’s Social Democrat-Greens government had long been hesitant about selling more submarines, according to German media reports,
But according to Israeli security sources, the dispute was over whether Germany should charge the full price. Der Spiegel and Focus magazine said on Saturday that Germany had indeed long resisted Israel’s request to help finance the cost of the submarines.
The deal is the second of its kind struck by Schroeder’s government over the last two months. Tow weeks ago a multi-million dollar arms sale deal was agreed upon with Turkey.