Germany plans to buy Israel’s Arrow-3 missile defense system for nearly 4 billion euros in total and will ask lawmakers to release advance payments of up to 560 million euros next week, Bloomberg news agency reports.

The news comes in the context of a meeting between Israeli Prime Minister Yair Lapid and German Chancellor Olaf Scholz in Berlin this afternoon. According to the report, the German government has decided in favor of the Israeli system and against the American THAAD system produced by Lockheed Martin.

The Arrow-3 is designed to intercept ballistic missiles outside of Earth’s atmosphere.

It is the top layer of Israel’s missile defense matrix, stretching from Iron Dome that intercepts short-range rockets to Arrow-3’s long-range missiles that destroy any unconventional warheads at a safe altitude.

Berlin aims to reach a government-to-government agreement with Israel on the purchase of the Arrow-3 system by the end of the year, according to finance ministry procurement documents that have been prepared for parliament.

Germany will lose some or all of its advance payments if the deal fails, according to the documents, as the money would be used to compensate Israel for costs incurred by then.

The German air force is supposed to take delivery of the Arrow-3, which will cost about a billion euros more than originally planned, by the fourth quarter of 2025.

Russia’s war in Ukraine has exposed a shortage of ground-based air defense systems, such as Raytheon’s Patriot units or the more recently developed IRIS-T in many Western nations.

While Patriot and IRIS-T cover the middle air defense layer, Arrow-3, produced by Israel Aerospace Industries (IAI), offers protection for the top layer.

The Jerusalem Post