In a ceremony to be held in Germany today attended by the defense leadership of both countries, Israel’s Arrow 3 exoatmospheric anti-ballistic missile defense system will be declared operational. The Arrow 3 system will offer “Made in Israel” air defense to the residents of Germany, against the tangible threats of ballistic missiles.
Israel Aerospace Industries (IAI) CEO Boaz Levy tells “Globes,” “We signed the agreement in September 2023, ten days before October 7. We never imagined that the world would turn upside down. We promised two things – that Germany would receive a system ‘as it is in Israel,’ as the German Chancellor himself requested; and that we would deliver it within two years. The fact that during a war, IAI and the Israeli side gave it a central priority and succeeded in this mission is a managerial and technological achievement. It shows dedication to meeting the goals that we are committed to. And as we were asked, Germany will receive a system in which all the lessons of the war in Israel, and the missile attacks on it, are embedded. A system like the one the Israeli Air Force uses.”
Over the past two years, engineers and employees of IAI, together with representatives of the Ministry of Defense, the Israeli Embassy in Berlin, the Israeli Air Force, and Israeli companies, have worked on the rapid deployment of the Arrow-3 system on German soil. An Israeli “village” was set up near the German Air Force base where the German Arrow battery is stationed, dozens of soldiers were sent for apprenticeship and training in Israel.
“European standard”
The project required deep Israeli involvement of all security agencies, led by Israel’s Ministry of Defense, which sees Germany becoming the first international customer of the advanced air defense system as “part of the strategic alliance with Germany.” A diplomatic source told reporters at a briefing on the eve of the system’s declaration as operational that Germany constitutes a “European standard,” through which Israel and its defense industries gain access and many options in many countries in Europe and worldwide.
After the outbreak of the war in Ukraine, and due to Russia’s extensive use of ballistic missiles, the Germans were determined to close their air defense gap as quickly as possible. The country has spent €3.5 billion on procuring the system. Former German Chancellor Olaf Scholz traveled specifically to Washington to ask US President Joe Biden for permission to buy the system, with Israeli encouragement, and received it. Subsequently, the system’s successful operation against hundreds of missiles launched from Yemen and Iran against Israel proved to the Germans that their investment was a success.
From the Israeli side, a senior defense official who attended the briefing explained, the current deal – the biggest in the history of Israel’s defense industries – had an additional benefit. “We must understand that once there is another customer, and a significant one like Germany, the increase in the required production also serves Israel, both in terms of quantity and in terms of lowering the price. This proved itself in the war with Iran in June.”
RELATED ARTICLES
Germany in talks with IAI for follow-on Arrow 3, Heron deals
Greece close to $3.5b deal for Israeli air defense systems
Rafael signs huge Defense Ministry Iron Dome deal
According to the official, the Israeli arsenal of interceptors was larger at the beginning of the war with Iran as a direct result of the deal. “So both sides benefit.” The system’s configuration has also been adjusted and changed, and the wider range of options should help deal with threats.
In the shadow of the arms embargo
Israel’s Ambassador to Germany Ron Prosor said before the ceremony. “This year we are celebrating 60 years of diplomatic relations between Israel and Germany, Our partnership is strategic, and Germany is the most important country for Israel in Europe.” According to him, the launch of the system is “another milestone in this relationship.”
This weekend, current German Chancellor Friedrich Merz will make his first visit to Israel. The historic milestone, in which Israeli weapons will protect Germans ,eight decades after the end of World War II and the Holocaust, is overshadowed by the partial arms embargo that Merz imposed on Israel last August. The Chancellor decided to stop the supply of defense equipment due to the war in Gaza. “There’s nothing to say, the German move hurt us,” says a senior defense official. Germany is the second largest arms exporter to Israel after the US, and among other things, the decision led to a halt in shipments of tank engines. There is no doubt that an embargo should not have been imposed on Israel, not when we are in an existential conflict.”
The Israeli side say they “understand the internal pressures” that led to Merz’s move, and that they hope, “This will not happen again in the future.” The Israeli side was ordered to continue deploying the Arrow system at full speed after August and received clarifications from the German side that the embargo would be lifted as soon as possible. Last week, the German government canceled the embargo due to the ceasefire in Gaza.
“From what the Germans told me, they are very satisfied,” adds IAI CEO Levy, “We showed them the performance in the war. They were impressed by the technological capabilities. Urgent visits by Germans to Israeli soil meant that they also experienced for themselves the protection that the system provides. In addition, the fact that we delivered the system on the day we committed is of great importance to them. It illustrates our commitment, and the strong alliance between us and Germany.”
On possible competition from other countries or companies, Levy says, “At the time of the Iranian attacks, there were two other Western systems in use in Israel – the THAAD and the SM-3. I think, in all modesty, that the Arrow system proved its superiority in interceptions. Before the war, there were also question marks about the cost of interception. I have always said that the price of the attacking missile should not be compared to the price of the intercepting missile. The potential damage that one missile causes should be compared. Today, everyone in Israel knows what happens if a missile with a half-ton warhead gets through, without being intercepted.”
The world also understands this, while the Israeli side believes. “It’s also a question of development time. The current threats are immediate, and regardless of the technological development capacity of countries, in the end they have to decide whether to use the knowledge that already exists or try to develop it themselves,” says the senior security official.
“We manage to make this clear to the countries we are in contact with,” confirms Levy, “Compared with any other system in the world, the price of interception is relatively low for the possible damage, and the operational potential of the Arrow system is high.”
Other customers on the way
On other countries that may procure the Arrow, the Israeli side is in no hurry to provide details or speculate about additional countries. Part of this probably stems from the fact that the US invested in the project and part of the production takes place there, and that any deal to export the Arrow needs US approval. “It is important to mention that the US government invested in the Arrow project and is a partner in it. A country that is an ally of Israel and the US, such a country can buy the Arrow system. But it is important to clarify that there is a deal here that involves three governments,” says Levy.
Germany is earmarking a role in the European Defense System (ESSI), but the Israeli side is in no hurry to talk about new customers, not even Germany’s neighbors. In the meantime, the relationship with Berlin is deepening. “As the public knows, during the conflicts with Iran we used the Arrow 3 and the Arrow 2, to deal with threats at different ranges and altitudes,” says Levy. “Now we are replacing the Arrow 2 with the Arrow 4. And the Germans will probably be interested in this system as well (this was stated in an official statement by the German Ministry of Defense).
On the possibility of additional countries purchasing the system, Levy says: “The use of missiles has become more available. More countries feel threatened. Every leader who wants to protect his country thinks about the Arrow. The potential is very large.”
Published by Globes, Israel business news – en.globes.co.il – on December 3, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
