Israel Aerospace Industries signed a second multibillion-dollar deal with Germany on Wednesday, a $3.1 billion agreement to expand Berlin’s air defense with the Arrow 3 missile system and further deepen defense ties between the two nations.
Germany previously signed a $3.5 billion agreement in 2023 to purchase the Arrow system in what was then the largest defense export deal in Israel’s history. Each of the two contracts, and both combined, rank among the largest transactions ever completed by Israel’s defense industry, Israeli officials said.
The Arrow 3 system was jointly developed by the Defense Ministry's Missile Defense Organization, known as the Homa Directorate, the U.S. Missile Defense Agency and Israel Aerospace Industries, which serves as the prime contractor for development and production.
The expanded deal was finalized after Germany completed the deployment of the first Arrow 3 system it received. Under the agreement, the Israeli and German defense ministries agreed to significantly increase the production rate of Arrow 3 interceptors and launchers to enhance Germany’s air defense capability.
The Defense Ministry said the deal aligns with its broader strategy to expand defense exports and strengthen the global standing of Israel’s defense industries, particularly following the war, during which the systems’ operational performance was demonstrated.
Defense Ministry Director-General Maj. Gen. (res.) Amir Baram said the expansion of the Arrow agreement represents another major step in strengthening the strategic partnership between Israel and Germany, which he described as Israel’s central partner in Europe. “The deal will reinforce Israel’s standing as a global defense power and, above all, will expand and accelerate Arrow production for the IDF as well,” Baram said, adding that it would inject billions of dollars into Israel’s defense industries and support development of future generations of air defense systems.
Israel Aerospace Industries CEO Boaz Levy said the company’s central role in Germany’s air defense architecture and the trust built with the German government were reflected in the delivery of the Arrow 3 system within just two years of signing the original contract.
Levy said advanced technological capabilities demonstrated during recent combat operations, along with adherence to production schedules, led Germany to approve the follow-on deal. He said defense cooperation between the two countries is based on mutual responsibility and a shared commitment to protecting civilians. “This strategic partnership will provide all of Europe with the most advanced air defense capability in the world.”