Israel's $4 billion sale of Arrow-3 takes Germany ties to new heights - Gallant

The Arrow 3 deal between Israel and Germany is taking the countries’ relations to new heights, Defense Minister Yoav Gallant told German Defense Minister Boris Pistorius by telephone on Monday.

On August 17, the United States approved Israel’s sale of its Arrow 3 missile-defense system to Germany. The US State Department notified Gallant, Defense Ministry Director-General Eyal Zamir, and former Defense Ministry Directorate of Defense R&D (DDR&D) Director Daniel Gold about the Biden administration’s backing.

On Monday, Gallant told Pistorius the deal had “great significance for Israel and Germany from security, economic, and not least, symbolic perspectives.”

The two defense ministers also discussed Iran’s destabilizing activities in the Middle East and how important Jerusalem feels it is for Berlin to support it against threats posed by the Islamic Republic.

They also discussed security challenges for Europe and other defensive deals between the countries.

The Arrow 3 missile-defense system is designed to intercept exo-atmospheric ballistic missiles, making it the long-range missile-defense tier of Israel’s multitiered missile-defense against Iran, Hezbollah, and others.

The deal is expected to eventually be worth $3.5 billion to $4b. and will include a wide variety of technological infrastructure that Israeli officials said would cover defending all of Germany from missile strikes and not just specific pieces.

“With its exceptional long-range interception capabilities, operating at high altitudes above the atmosphere, it stands as the top interceptor of its kind,” the Defense Ministry said in August. “The system employs a hit-to-kill approach for intercepting incoming threats. The Arrow 3 system is co-developed and co-produced by the Israel Missile Defense Organization (IMDO) and the United States Missile Defense Agency (MDA). The industrial team is led by Israel Aerospace Industries (IAI).”

Letter of Commitment

Israel and Germany have started to work on next steps to move the deal forward and to use the already allocated commitment of $600 million for immediate initiation of work on the project. Although initially a signing ceremony for a letter of commitment was expected to be held in late August or early September, for unexplained reasons, the ceremony appears to have been delayed. There have been many past delays due to complex issues in the US or Germany, however, and after a period of weeks or months, the deal has eventually moved forward at every stage.

In August, Israel, Germany, and IAI said they would finalize the agreement’s details, along with various parliamentary approvals, with a full contract expected to be signed by the end of 2023, possibly as early as November. It was unclear whether the current delay might push that date back.

Initial delivery of the system is expected in 2025, and it is supposed to be fully operational by 2030.

The negotiations for the procurement agreement are being led by Missile Defense Organization Director Moshe Patel, IAI president and CEO Boaz Levy, and Col. Carsten Koepper, head of the Arrow 3 to Germany Program.

IAI is the primary contractor responsible for the development of the weapons system, Arrow interceptors, and radar detection system. Elbit Systems developed the BMC command and control system. Additionally, Tomer, a government-owned company; Rafael Advanced Defense Systems, and Stark Aerospace, Inc, a US subsidiary of IAI; are the main subcontractors responsible for the development and manufacturing of the Arrow 3 interceptor.

In mid-June, the German parliament approved a first advanced payment to Israel toward the acquisition of the Arrow 3 anti-missile system.

In August, Gallant said: “The US government’s approval of the delivery of the Arrow 3 missile-defense system [to Germany] is an expression of confidence in the excellent capabilities of Israel’s defense industries. This is a significant decision that will contribute to Israel’s force buildup and economy. It is also particularly meaningful to every Jewish person that Germany is acquiring Israeli defense capabilities.”

“We are proud of this defense agreement – the largest in Israel’s history,” he said. “This is an opportunity to express gratitude and appreciation to our industries – the engineers at Israel Aerospace Industries who have broken new records as a result of their creativity and talent. Arrow 3 is a groundbreaking system, the most advanced of its kind in the world, as well as a force multiplier in Israel’s air defense – soon in Europe as well.”