Jerusalem, 17 December, 2025 (TPS-IL) — The German Bundestag has approved an expansion of the deal to purchase Israel’s Arrow 3 missile defense system, adding an estimated $3.1 billion to what is already the largest defense export agreement in Israel’s history, Israel’s Ministry of Defense announced n Wednesday.
The expansion completes a $3.6 billion sale signed two years ago, bringing the total value of the Arrow 3 deal between Israel and Germany to more than $6.7 billion. According to the ministry, the agreement represents the highest-value defense deal ever reached by the State of Israel.
Arrow 3 is an exo-atmospheric missile defense system designed to intercept long-range ballistic missiles. It was jointly developed by the Defense Ministry’s Missile Defense Agency, the US Missile Defense Agency, and Israel Aerospace Industries (IAI), which serves as the prime contractor for development and production.
The system scored its first operational success when it shot down a ballistic missile fired by Iran-backed Houthi rebels in Yemen in November 2023. It is widely believed to be the first time a missile was intercepted in outer space, though Israeli officials have not confirmed this.
Under the expanded agreement, the Israeli and German defense ministries have agreed to significantly increase the production rate of Arrow 3 interceptors and launchers.
The formal signing of the expansion agreement is expected to take place on Thursday in Germany.
“The Bundestag’s approval of the expansion of the Arrow 3 deal is a clear expression of the deep trust that Germany places in the State of Israel, in its technological capabilities and in our shared commitment to protecting our citizens in the face of increasingly severe threats,” Defnese Minister Israel Katz said. He described the agreement as “a strategic partnership of the highest order,” adding that revenues from the deal would support advanced development programs and help ensure Israel’s qualitative military advantage for years to come.
IAI CEO Boaz Levy said Germany’s approval of the follow-up deal was driven by proven performance and reliability. “The delivery of the Arrow 3 system within only two years from the date of signing to delivery reflected the mutual trust and advanced technological development capabilities,” Levy said, adding that the partnership would help provide Europe with some of the most advanced air defense capabilities in the world.
International demand for Israel’s military technology has surged as European countries increased their defense budgets in response to Russia’s war in Ukraine. Israel set a new all-time record for defense exports in 2024, with sales reaching $14.79 billion.
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