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US okays $3.5 billion sale of Arrow 3 system to Berlin

The defense deal is Israel's largest ever.

An Arrow-3 missile interceptor. Credit: Israeli Ministry of Defense Spokesperson’s Office.
An Arrow-3 missile interceptor. Credit: Israeli Ministry of Defense Spokesperson’s Office.

The United States has approved Israel’s sale of the Arrow 3 missile defense system to Germany, the Israeli Defense Ministry announced on Thursday.

The $3.5 billion military contract is Jerusalem’s largest ever. Berlin wants the system, which is capable of intercepting exo-atmospheric ballistic threats, to defend against the threat of Russian missiles.

“The U.S. government’s approval of the delivery … is an expression of confidence in the excellent capabilities of Israel’s defense industries. This is a significant decision, which will contribute to Israel’s force buildup and economy,” said Defense Minister Yoav Gallant in a statement Thursday.

“[It is] particularly meaningful to every Jewish person that Germany is acquiring Israeli defense capabilities,” he added.

The Arrow 3 was jointly developed by the Israeli Missile Defense Organization and the U.S. Missile Defense Agency, and is manufactured by Israel Aerospace Industries.

In June, German lawmakers approved advanced payments of up to €560 million ($606 million) for the system, which will be transferred to Israel after a letter of commitment is signed in the coming weeks.

The full contract of $3.5 billion (previously reported to be $4.3 billion) will be signed by the end of this year, subject to approvals from the Israeli and German parliaments.

The German Air Force is slated to take delivery of the Arrow 3 by the fourth quarter of 2025.

German Chancellor Olaf Scholz made an initial request for the system in a meeting with then-Prime Minister Naftali Bennett in March 2022, with Israel working behind the scenes since then to persuade Washington to allow the sale.

Because the system was jointly developed, Israel requires American approval to sell it to a third party.

The Arrow 3 is operational in Israel, as part of the country’s multi-tier air-defense program. Israel Aerospace Industries is now developing the Arrow 4, which will operate both within and above the atmosphere.

Israel’s defense exports in 2022 accounted for a record $12.6 billion.

A recent survey conducted by the European Leadership Network (ELNET) found that 62% of Germans favor buying the Arrow 3 from Israel.

Fourty-four percent believe Berlin should seek closer defense ties with Israel, and 43% support closer cooperation between NATO and the Jewish state, according to the poll of 2,500 persons representing a cross-section of the German public.

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