Published by Global Banking and Finance Review
Posted on December 18, 2025
1 min readLast updated: January 20, 2026
Israel and Germany have signed a $3.1 billion contract to expand the Arrow air defence system, marking a historic defence export deal for Israel.
Dec 18 (Reuters) - Israel and Germany signed a contract worth around $3.1 billion to expand the Arrow-3 air and missile defence system manufactured by Israel Aerospace Industries, Israel's defence ministry said on Thursday.
Germany first purchased the Arrow system in 2023, as it sees Russia's intermediate-range missiles as the primary threat to its population and critical infrastructure.
"Combined, the two agreements total approximately $6.7 billion, representing the largest defence export deal in Israel’s history," the ministry said.
Germany in December became the first European nation to deploy the Arrow air defence system, built to intercept intermediate-range ballistic missiles such as Russia's Oreshnik, as it seeks to counter what it views as a growing threat from Moscow.
The system, developed by IAI in cooperation with the U.S. Missile Defence Agency, is used as the upper layer of Israel's missile defences, together with the Iron Dome, which takes out short-range threats.
(Reporting by Yomna Ehab and Enas Alashray; Editing by Susan Fenton)
The Arrow air defense system is a missile defense system developed by Israel Aerospace Industries, designed to intercept and destroy incoming ballistic missiles.
Ballistic missiles are weapons that deliver explosive payloads over long distances, following a ballistic trajectory, typically used in military applications.
Military technology refers to the equipment, systems, and processes used by armed forces to enhance their capabilities in warfare and defense.
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