Germany is negotiating with Israel Aerospace Industries (IAI) for additional Arrow 3 interceptor missiles and an extension of the Heron TP unmanned aerial vehicle (UAV) agreement. The discussions follow the operational deployment of Germany’s Arrow 3 air defense system, acquired in 2023.
Strengthening Air Defense with Arrow 3
Germany is concerned that its current Arrow 3 stock may be insufficient due to threats from Russia. Each Arrow 3 interceptor costs approximately $2 million, making it the most expensive component of Israel’s multi-layered defense system. Historically, follow-on acquisitions after strategic defense deals are common for IAI, as seen in India’s 2017 Barak 8 procurement.
Future of the Heron TP UAV Agreement
Negotiations also cover Germany’s continued use of the Heron TP UAV. Since 2019, the “Red Baron” squadron at Tel Nof base has trained German operators on the platform. The agreement includes leasing seven drones and an additional €170 million for airport and airspace usage. Given the Heron TP’s battlefield performance and prior investment in operator training, Berlin is expected to continue the program.
Germany-Israel Defense Cooperation Expands
The recent Gaza ceasefire has created a more favorable environment for German-Israeli defense collaboration. This is reflected in Chancellor Friedrich Merz’s decision to lift the partial arms embargo imposed on August 8. According to Stockholm International Peace Research Institute (SIPRI), Germany ranked second among arms suppliers to Israel between 2020-2024, while Europe’s share in Israeli defense exports rose to 54%.
Significant Economic Potential
Politico reports that Germany’s 2026 defense budget is set at €377 billion. Additional Israeli defense acquisitions could generate substantial revenue for Israel’s defense industry, highlighting the strategic and economic importance of the ongoing talks.
