Israel Finalizes Largest Defense Deal Ever With $6.5 Billion Arrow 3 Agreement

Israel has officially secured the largest defense export agreement in its history, following the German Bundestag’s approval of an expanded contract for the Arrow 3 missile defense system valued at $3.1 billion. This expansion adds to a previous $3.5 billion agreement signed two years ago, bringing the total value of the deal to approximately $6.5 billion.

The Arrow 3 system, developed by Israel Aerospace Industries and overseen by the Israel Missile Defense Organization, is a cutting-edge air-defense platform capable of intercepting ballistic missiles in space before they reenter the atmosphere. Its successful operational performance especially during the recent war against Hezbollah and Iran has made it a cornerstone of Israel’s multi-tiered missile defense.

“The agreement will reinforce Israel’s position as a global security leader,” said Maj. Gen. (res.) Amir Baram, Director General of the Ministry of Defense. “It will accelerate Arrow production for the IDF and channel billions into strengthening our defense industrial base and advancing next-generation air defense capabilities.”

Defense Minister Israel Katz hailed the Bundestag’s decision as “a clear expression of Germany’s profound confidence in Israel, our technological capabilities, and our shared commitment to protecting our citizens against escalating threats.”

According to the Defense Ministry, the deal will not only enhance the IDF’s long-range interception readiness but will also fund the next stage of research and development in missile defense, ensuring Israel maintains its qualitative military edge.

The formal signing of the expanded agreement is expected to take place Thursday in Germany. It will be led by Moshe Patel, director of the Israel Missile Defense Organization, and Annette Lehnigk-Emden, head of the German Federal Office of Bundeswehr Equipment. Representatives from Israel Aerospace Industries and both governments will attend the ceremony.

Earlier this month, the first operational Arrow 3 system was delivered to the German Army at an air force base near Berlin, signaling the start of a deeper military partnership between the two countries. The system represents a leap in Europe’s air-defense capabilities amid growing regional threats.

Israel’s strategy of leveraging intergovernmental agreements to fund its own arms industry is yielding significant results. In the past year alone, 21 defense deals have been signed under this model. As reported by Calcalist, the state is increasingly prioritizing defense exports as a tool for financing innovation and ensuring long-term military sustainability without burdening taxpayers.

This latest deal is more than a commercial success. It reflects the enduring trust placed in Israeli innovation and strategic reliability by a key European ally. In a time of global uncertainty, Israel stands tall an indispensable partner in global security and technological leadership.

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