The largest defense export in Israeli history marks a paradigm shift in European missile defense

On 3 December 2025, the German Air Force formally received its first operational Arrow 3 battery at Holzdorf Air Base in eastern Germany, approximately 120 kilometers south of Berlin. The ceremony marked not merely the completion of a procurement contract, but the culmination of a fundamental transformation in German defense thinking and the beginning of a new era in European air and missile defense capability.
The €4 billion acquisition represents Israel’s largest defense export in history. More significantly for Europe, it provides NATO’s central anchor state with an exoatmospheric interception capability that no other European nation possesses. Germany can now detect and engage ballistic missiles in space, at altitudes exceeding 100 kilometers and ranges of up to 2,400 kilometers, before they ever enter European airspace.

The Catalyst: Russia’s Invasion and Germany’s Zeitenwende

The intellectual and political foundations for Germany’s Arrow acquisition were laid in the immediate aftermath of Russia’s full-scale invasion of Ukraine on 24 February 2022. Three days later, Chancellor Olaf Scholz addressed an emergency session of the Bundestag with what became known as the “Zeitenwende” (turning point) speech, announcing a fundamental rupture with decades of German strategic culture.
Scholz’s speech contained several revolutionary commitments by German standards. He announced a €100 billion special fund (Sondervermögen) for Bundeswehr modernization, to be enshrined in the German constitution. He committed Germany to exceeding NATO’s 2% GDP defense spending target. He acknowledged that Germany’s armed forces had been chronically underfunded and underequipped for decades. Most fundamentally, he recognized that the post-Cold War assumption of security cooperation with Russia had collapsed irretrievably.

The €100 billion figure was striking in a country that had spent approximately €50 billion annually on defense in recent years. However, knowledgeable observers immediately recognized that even this sum would barely begin to address the Bundeswehr’s accumulated capability gaps. Germany’s armed forces had been systematically hollowed out since reunification, with readiness rates for major equipment often falling below 50%. Spare parts shortages were endemic, munitions stocks were dangerously depleted, and entire capability categories had atrophied.

Among the most critical gaps was long-range air and missile defense. While Germany operated Patriot systems, the country possessed no capability against ballistic missiles in their midcourse phase of flight. Against a Russian adversary equipped with the Iskander-M short-range ballistic missile system, deployed notably in the Kaliningrad exclave within range of multiple NATO capitals, this represented a significant vulnerability.

The European Sky Shield Initiative

Chancellor Scholz first publicly articulated the concept of a European air defense initiative during a speech at Charles University in Prague on 29 August 2022. The proposal responded directly to the demonstrated Russian capability to conduct sustained missile and drone strikes against Ukrainian infrastructure. By mid-2023, Russia had launched over 5,000 missiles and drones at Ukraine, demonstrating both the scale of threat and the inadequacy of existing European defenses.

The European Sky Shield Initiative (ESSI) was formally established on 13 October 2022, when defense ministers from 14 NATO member states plus Finland signed a Letter of Intent during a NATO ministerial meeting in Brussels. The founding members included Belgium, Bulgaria, the Czech Republic, Estonia, Germany, Hungary, Latvia, Lithuania, the Netherlands, Norway, Romania, Slovakia, Slovenia, and the United Kingdom, alongside then-non-NATO member Finland.

ESSI’s core premise was cooperative procurement. By jointly acquiring interoperable air defense systems, participating nations could achieve economies of scale, standardize training and maintenance, and create a genuinely integrated defensive network. The initiative adopted a multi-layered approach: IRIS-T SLM for short-to-medium range threats, Patriot for long-range threats, and critically, Arrow 3 for the exoatmospheric tier against ballistic missiles.
The initiative expanded rapidly. By February 2024, Greece and Turkey had joined. Denmark and Sweden signed on in February 2023. Neutral Austria and Switzerland joined in July 2023, raising questions about the practical meaning of neutrality in an era of strategic ballistic missile threats. By late 2025, ESSI comprised 24 member states stretching from the Arctic to the Mediterranean.

France conspicuously declined to participate. Paris objected to the initiative’s reliance on non-European systems, particularly the exclusion of the Franco-Italian SAMP/T system from ESSI’s architecture. This criticism reflected broader French concerns about European strategic autonomy and the appropriate balance between transatlantic integration and European defense industrial development.

The Arrow 3 System: Technical Capabilities

The Arrow 3 represents the uppermost tier of Israel’s multi-layered air defense architecture, operating above the Arrow 2 (upper atmosphere), David’s Sling (medium range), and Iron Dome (short range) systems. Unlike its predecessors in the Arrow family, Arrow 3 is designed specifically for exoatmospheric interception, engaging threats during their space-flight trajectory before atmospheric reentry.

Development of Arrow 3 began in 2008 as a joint project between the Israel Missile Defense Organization (IMDO) and the U.S. Missile Defense Agency (MDA). Israel Aerospace Industries (IAI) serves as prime contractor, with Boeing responsible for 40-50% of production content, including motor cases, canisters, propulsion systems, inertial navigation units, and various avionics packages. The system was declared operational with the Israeli Defense Forces on 18 January 2017.

Arrow 3 employs hit-to-kill technology, destroying incoming threats through direct kinetic impact rather than explosive fragmentation. This approach eliminates the risk of debris or fallout from destroyed warheads, a critical consideration when engaging missiles potentially carrying nuclear, chemical, or biological payloads. The interceptor features a two-stage solid-fuel booster and a separating kill vehicle with thrust-vector control, enabling the extreme maneuverability required for space-based interception.

The system’s published specifications are formidable. Interception altitude exceeds 100 kilometers, placing engagements firmly in the exoatmospheric domain. Flight range reaches approximately 2,400 kilometers, enabling protection of vast geographic areas from a single battery. The interceptor achieves hypersonic velocity, exceeding Mach 9. A single battery can engage salvos of more than five ballistic missiles within 30 seconds.

Critically, Arrow 3 can be launched into an area of space before the target missile’s destination is known. Once the threat’s trajectory is determined, the interceptor redirects using its thrust-vectoring nozzle to conduct the interception. This “launch on remote” capability provides tactical flexibility unavailable in systems requiring precise target tracking before launch.

The ground segment comprises the EL/M-2080S Super Green Pine radar, developed by IAI’s Elta subsidiary, providing long-range detection and fire control. The Citron Tree battle management center handles command, control, communications, and intelligence functions, including threat assessment, launch point estimation, and impact point prediction. The Hazelnut Tree launch control center manages the mobile launchers, each capable of holding six interceptor canisters.

The Procurement Process: From Interest to Contract

German interest in Arrow 3 emerged publicly in September 2022, shortly after the Zeitenwende speech and ESSI’s establishment. Unlike most European air defense procurements, the Arrow acquisition faced an unusual requirement: U.S. government approval. Because Arrow 3 was jointly developed with American funding and contained U.S.-origin technology, export required explicit State Department authorization.
Throughout late 2022 and early 2023, trilateral discussions proceeded between German, Israeli, and American officials. Germany’s Defense Ministry examined alternatives, but Arrow 3’s unique combination of exoatmospheric capability, combat-proven performance, and relative cost-effectiveness made it the clear choice for the ESSI upper tier. No American system was available for export that offered comparable strategic-level capability at similar cost.

On 17 August 2023, the U.S. State Department formally approved the export. The Israeli Ministry of Defense immediately announced that senior officials would gather to sign a letter of commitment, with the full contract expected by November 2023. This represented the culmination of months of bureaucratic processing within two allied governments and marked a significant decision by Washington to permit the first export of its most advanced collaborative missile defense technology to a NATO ally.
The letter of commitment was signed on 28 September 2023 in Berlin, just days before the 7 October Hamas attack on Israel that would dramatically reshape the Middle Eastern security landscape. Defense Minister Yoav Gallant and his German counterpart Boris Pistorius oversaw the signing, with Israeli Defense Ministry Director General Eyal Zamir and German procurement chief Annette Lehnigk-Emden signing the formal documents.

The emotional resonance of the occasion was not lost on participants. Gallant, speaking as Israeli defense minister on German soil, noted the common thread of Iranian aggression threatening both nations through proxies and direct action. “Today, more than ever, we share common threats,” he said. “The Iranian fingerprint is everywhere.”

The German Bundestag had authorized nearly €4 billion for the Arrow 3 acquisition in June 2023, with an initial tranche of €560 million released to initiate production. The parliamentary approval represented a significant political achievement, given Germany’s historical reluctance to invest heavily in defense procurement and the scale of the commitment involved.

The final contract was signed on 23 November 2023 in Tel Aviv. Director General Zamir affixed his signature to what would become Israel’s largest-ever defense export agreement. Under the contract terms, Germany would receive four complete Arrow 3 fire units, each comprising multiple launchers (with four launchers per unit, each holding six ready-to-fire interceptors), Super Green Pine radars, Citron Tree battle management systems, and substantial interceptor inventories. The first battery would be delivered by the end of 2025, with full operational capability by 2030.

Combat Validation: Arrow in War

The timing of the German contract proved fortuitous in ways no one anticipated. Just two months after the final contract signing, Arrow 3 achieved its first operational wartime interception on 9 November 2023, destroying a ballistic missile launched by Iran-backed Houthi forces in Yemen toward the Israeli city of Eilat.
This was not the first combat use of the Arrow family. Arrow 2 had achieved its first operational interception on 31 October 2023 against a Houthi-launched missile, in what analysts described as the first exoatmospheric combat engagement in history. Arrow 3’s November interception demonstrated the system’s capability against real threats under actual combat conditions.
The subsequent year provided extensive additional combat validation. On 13-14 April 2024, Iran launched its first direct attack against Israel, firing approximately 300 missiles and drones. Arrow 3 interceptors engaged multiple Iranian ballistic missiles, operating as part of a multi-layered defense that included Israeli Arrow 2, David’s Sling, and Iron Dome systems, augmented by U.S., British, French, and Jordanian assets.

Further Iranian attacks in October 2024 and during the 12-day conflict between Israel and Iran in June 2025 provided additional operational data. Israeli officials reported Arrow 3 interception rates approaching 86% during the June 2025 conflict, with hundreds of ballistic missiles engaged. The system demonstrated its ability to handle multiple simultaneous threats and to operate effectively within an integrated multi-tier architecture.

For German procurement officials, this real-world validation was extraordinarily valuable. The system they had contracted to purchase was no longer theoretical or based solely on test data. It had proven itself against actual Iranian ballistic missiles in multiple engagements, precisely the class of threat that European planners feared might one day be turned against NATO.

Delivery and Deployment: Making Arrow Operational

Despite Israel’s simultaneous involvement in multi-front combat operations following the 7 October 2023 attacks, the Arrow delivery schedule remained on track. Israel Aerospace Industries maintained production schedules, and coordination between Israeli and German officials continued throughout 2024.

On 4 May 2025, Inspector General of the German Air Force Ingo Gerhartz formally received the first system components at IAI facilities in Israel, including the central communication element. This milestone initiated the transfer process that would culminate in the December handover.
A high-level coordination meeting in June 2025 brought together Moshe Patel, head of the Israel Missile Defense Organization; Colonel Carsten Koepper, head of the Arrow 3 Program for Germany; and Yaakov Galifat, general manager of IAI’s MLM Division. Representatives from Israeli companies Elta and Elbit Systems attended alongside German technical consultancy IABG and missile manufacturer MBDA.

German Air Force personnel received extensive training from Israeli specialists throughout 2025, preparing them to operate the system independently. This training covered radar operation, battle management, launcher operation, and system integration with existing German air defense networks.

The handover ceremony on 3 December 2025 at Holzdorf Air Base marked the formal transfer of the first operational battery. The Israeli delegation included Defense Ministry Director General Amir Baram, the chief of the ministry’s Directorate of Defense Research & Development Danny Gold, IAI CEO Boaz Levy, and IMDO director Moshe Patel.

The ceremony carried profound historical symbolism. Baram, a second-generation Holocaust survivor, addressed the assembled officials: “I stand here deeply moved because a ballistic missile defense system, developed by the finest Jewish minds in Israel’s aerospace industry, out of our existential necessity, will now help defend Germany.”

Israeli Ambassador to Germany Ron Prosor, whose family fled Germany before the Holocaust, added: “My family, who fled Germany on the eve of the Holocaust, could never have foreseen this.”
IAI CEO Boaz Levy spoke of closing personal and historical circles. He had begun his career as a guidance and control engineer writing the Arrow missile’s autopilot, later becoming chief engineer and eventually head of the Arrow program. “The world’s first ballistic missile was developed in Germany by Dr. Wernher von Braun,” he noted. “And now the State of Israel is delivering a ballistic-missile defense system designed by the son of a Holocaust survivor, brought to German soil to protect it from ballistic threats.”

German Defense Minister Boris Pistorius characterized the system’s significance: “For the first time, this gives us the capability for early warning and protection of our population and infrastructure against long-range ballistic missiles.”

Deployment Architecture: A National Shield

Germany’s Arrow deployment will ultimately comprise three batteries at geographically dispersed locations to maximize coverage. The first battery at Holzdorf Air Base in Saxony-Anhalt provides initial coverage for central and eastern Germany, including the capital region. Additional batteries are planned for Schleswig-Holstein in the north and Bavaria in the south, with full deployment expected by the end of the decade.

This geographic distribution creates a national network from the Baltic to the Alps, multiplying interception angles and engagement windows. The extended range of Arrow 3 means that even the initial single battery provides coverage extending well beyond German borders, contributing to allied defense throughout Central Europe.

The system integrates into Germany’s broader multi-layered air defense architecture. Arrow 3 provides the exoatmospheric upper tier against ballistic missiles. Patriot systems, which Germany operates extensively, handle long-range atmospheric threats. The domestically developed IRIS-T SLM addresses short-to-medium range threats from aircraft, helicopters, cruise missiles, and precision-guided munitions. Shorter-range systems like the Rheinmetall Skyranger-30 provide point defense against drones and low-altitude threats.

Integration with NATO’s broader missile defense architecture is proceeding in parallel. The NATO Ballistic Missile Defense (BMD) network in Europe currently includes a command center at Ramstein Air Base in Germany, a U.S. BMD radar at Kürecik in Turkey, an Aegis Ashore site at Deveselu Air Base in Romania, and an operational Aegis Ashore site at Redzikowo Air Base in Poland. Spain hosts four BMD-capable Aegis destroyers at Rota. Germany’s Arrow 3 adds a significant new capability to this architecture, providing exoatmospheric interception from a central European location.

Cost and Value Considerations

The approximately €4 billion contract represents a substantial investment, funded from the €100 billion Sondervermögen established in the Zeitenwende speech. Germany ultimately earmarked €5 billion for the Arrow system, suggesting provision for additional interceptors, training, and sustainment costs.

Arrow 3 interceptors cost approximately $4 million each according to available estimates, though actual contracted prices remain classified. This represents a significant cost advantage compared to the American SM-3 Block IIA, which costs approximately $27.9 million per interceptor. While direct comparisons between systems with different operational parameters require caution, the cost differential is substantial.

Arrow 3’s 2,400-kilometer range exceeds the SM-3 Block IIA’s advertised 1,200-kilometer capability. Combined with its combat-proven effectiveness and comparatively favorable unit costs, Arrow 3 presented a compelling value proposition for European procurement officials seeking to establish exoatmospheric capability on limited budgets.

For Israel, the German contract validated the export potential of Arrow 3 and opened European markets for Israeli missile defense technology. The deal demonstrated that NATO allies would choose Israeli systems when they offered superior capability-to-cost ratios, even when American alternatives existed.

Looking Ahead: Arrow 4 and Expanded Procurement

Germany’s Arrow ambitions extend beyond the initial procurement. In May 2025, Lieutenant General Lutz Kohlhaus, vice chief of the German Air Force, announced at the Ground-Based Air Defense Summit in Berlin that the Luftwaffe had decided to acquire the Arrow 4 system, currently under development.

Arrow 4, whose development began in February 2021 as a joint project between IAI, IMDO, and the U.S. Missile Defense Agency, is designed to intercept advanced threats including hypersonic missiles. It will operate in the endoatmospheric layer between Patriot’s ceiling and Arrow 3’s exoatmospheric domain, addressing a capability gap in the current architecture.

Critically, Arrow 4 will use existing Arrow infrastructure, including the Super Green Pine radar and launcher systems, making it a cost-effective addition to Arrow 3 batteries rather than a completely new system. This compatibility influenced Germany’s interest, as it allows expansion of the capability spectrum without duplicating ground infrastructure investment.
Additionally, Germany is negotiating follow-on Arrow 3 purchases beyond the original three-battery contract. Reports emerged in November 2025 that Berlin was in discussions with IAI for additional interceptors and potentially additional fire units. This reflects both satisfaction with the initial procurement and recognition that three batteries, while providing initial capability, may prove insufficient for the strategic requirements of Germany’s central position in European defense.

Strategic Implications for European Defense
Germany’s Arrow acquisition carries implications extending far beyond Berlin’s own defense posture. As the founder and leader of ESSI, Germany’s choice of Arrow 3 for the exoatmospheric tier effectively shapes the trajectory of European integrated air and missile defense.

The selection of an Israeli system, developed with American partnership, over potential European alternatives reinforces transatlantic defense industrial ties at a moment when European strategic autonomy advocates sought greater independence. France’s refusal to join ESSI reflects this tension. Paris sees German leadership of an initiative centered on non-European systems as undermining European defense industrial development and potentially locking the continent into long-term dependency on Israeli and American technology.

From a capability perspective, Arrow 3’s deployment fundamentally changes the European defensive equation. Prior to German procurement, no European nation possessed exoatmospheric ballistic missile defense capability. Russia’s ability to threaten European capitals with Iskander missiles, or potentially longer-range systems, faced no dedicated defensive response. Germany’s Arrow changes this calculus, introducing uncertainty into any Russian planning for missile strikes against Central Europe.

The system’s combat-proven effectiveness in Israeli hands provides credibility that purely test-demonstrated systems cannot match. Russian military planners must now account for the demonstrated capability of Arrow to intercept ballistic missiles under actual combat conditions, a factor that enhances deterrence beyond what untested systems could provide.

For NATO’s integrated air and missile defense, Germany’s Arrow adds a critical node in a previously underdeveloped part of the continent. The Aegis Ashore sites in Romania and Poland provide coverage for southeastern and northeastern Europe respectively. Germany’s Arrow completes coverage for Central Europe, creating a more comprehensive defensive network.

Limitations and Challenges

Arrow 3’s capabilities, while impressive, are not unlimited. The system is optimized for exoatmospheric interception of ballistic missiles in their midcourse trajectory. It is not designed to engage threats that remain within the atmosphere throughout their flight, such as cruise missiles, drones, or depressed-trajectory ballistic missiles.

Russian systems specifically designed to evade exoatmospheric interception present challenges. The Iskander-M employs a quasi-ballistic trajectory with maneuvering capability that may keep it below Arrow 3’s engagement envelope. The Kh-47M2 Kinzhal air-launched ballistic missile similarly operates at altitudes potentially below Arrow 3’s floor. The 3M22 Zircon hypersonic cruise missile presents entirely different intercept challenges that Arrow 3 was not designed to address.

This underscores the importance of multi-layered defense architecture. Arrow 3 addresses a specific threat category, exoatmospheric ballistic missiles, but must operate within a broader system including Patriot, IRIS-T, and point defense systems to provide comprehensive coverage. No single system can address all aerial threats, and Germany’s investment in Arrow 3 represents one layer in a necessary multi-tier approach.
Interceptor inventory management presents ongoing challenges. Each engagement consumes interceptors that cost millions of euros and require months to manufacture. Combat experience from Israel demonstrates high consumption rates during intensive operations. Germany must maintain sufficient stockpiles to conduct multiple engagements while sustaining the industrial capacity to replenish expended interceptors.

Integration with existing German and NATO systems requires extensive technical work. Data-sharing protocols, command authority arrangements, and coordination procedures must be established and exercised. The “any sensor, any shooter” concept underlying ESSI requires that Arrow 3’s Super Green Pine radar data be shareable with other systems and that Arrow interceptors be launchable based on tracking data from other sensors in the network.

Conclusion: A New Era in European Air Defense

Germany’s Arrow 3 acquisition represents a watershed moment in European air and missile defense. A capability that did not exist on the continent two years ago is now operational, providing NATO’s most populous and economically powerful European member with strategic-level ballistic missile defense.

The procurement reflected broader transformations in German strategic thinking catalyzed by Russia’s invasion of Ukraine. The Zeitenwende speech acknowledged decades of underinvestment and strategic complacency. The €100 billion special fund provided resources. The European Sky Shield Initiative provided multilateral framework. Arrow 3 provided capability.

For the German Air Force, the system marks the beginning of a new mission area. Personnel trained in Israel now operate independently, maintaining readiness to engage threats that no European force could previously address. Additional batteries will deploy in the coming years, extending coverage and redundancy.
For Israel, the deal validated decades of missile defense investment and opened significant new export markets. The combat effectiveness demonstrated against Iranian missiles provided unprecedented real-world validation that enhanced export competitiveness. The German procurement, followed by interest in Arrow 4 and additional Arrow 3 units, suggests the beginning of a long-term relationship rather than a single transaction.

For European defense, Arrow 3 establishes a new standard. The exoatmospheric tier that Germany now possesses will increasingly be seen as essential rather than optional for nations facing ballistic missile threats. ESSI partners may follow Germany’s lead, potentially creating a continent-wide network of interoperable exoatmospheric defense.

The ceremony at Holzdorf on 3 December 2025 closed historical circles in ways that transcend strategic calculation. Holocaust survivors’ descendants, both Israeli and German, stood together as technology developed from Israel’s existential necessity was transferred to defend the nation their ancestors fled. In that moment, the Arrow became more than a missile defense system. It became a symbol of transformation, of reconciliation, and of the complex threads that bind democracies together in common defense against shared threats.

The missiles in their canisters at Holzdorf stand ready. For the first time in its history, Germany can reach into space to defend its people against ballistic attack. The Arrow has arrived in Europe.

Image: Arrow anti-ballistic missile launch. Original image caption: 040729-N-0000X-001 Point Mugu, Calif. (July 29, 2004) – An Arrow anti-ballistic missile is launched as part of the on going United States/Israel Arrow System Improvement Program (ASIP). The missile successfully intercepted a short-range target during tests at the Point Mugu Sea Range in Calif. This was the twelfth Arrow intercept test and the seventh test of the complete Arrow system. The objective of the test was to demonstrate the Arrow system’s improved performance against a target that represents a threat to Israel. The test represented a realistic scenario that could not have been tested in Israel due to test-field safety restrictions. U.S. Navy photo (RELEASED)

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