Germany To Build Interceptors For Arrow 3 Missile Defense Shield

Defence affairs ~ By Dan Williams and Michael Nienaber

Berlin’s agreement with Israel to purchase the Arrow 3 air defense system includes joint production of interceptor missiles in Germany, according to officials familiar with the matter.

Among the companies likely to be awarded the local production is German company MBDA Deutschland, one of the officials said, speaking on condition of anonymity because of the sensitivity of the matter.

An industry official said such an arrangement was consistent with other major Israeli export deals. When Israel Aerospace Industries sold drones and Barak missiles to India, for example, it agreed to joint production with Indian companies, the official said.

Spokespeople for IAI and MBDA declined to comment, as did the defense ministries of Germany and Israel.

MBDA is building new production facilities for interceptor missiles for the US Patriot air defense system in Germany. The main contractor for the system is RTX Corp. subsidiary Raytheon.

Israel last week handed over the first Arrow 3 to Germany during a ceremony at Holzdorf Air Base, about 120 kilometers (75 miles) south of Berlin. It marked the first time another country had gained independent access to the high-end military asset.

The Arrow 3 contract was signed just over two years ago under former Chancellor Olaf Scholz. With an overall value of nearly €4 billion, it constitutes Israel’s largest-ever defense export deal. The agreement includes launch systems, munitions and radars.

The system, dubbed the Arrow Weapon System for Germany (AWS-G), will for the first time allow the German Air Force to detect and intercept ballistic missiles outside the Earth’s atmosphere, closing an important gap in Europe’s defenses.

Arrow 3 is one of the few Western systems with that capability, at a cost of about $3 million per interceptor, according to the Missile Defense Advocacy Alliance. The US-made SM-3 Block IIA missile, used in its Aegis and Aegis Ashore systems, is deployed in Romania and Poland. Each SM-3 costs about $25 million.

Israel’s Arrow 3s played a crucial role in defending against ballistic missile attacks from Iran in 2024 and 2025.

State-owned IAI is the prime contractor for the Arrow 3, with Rafael Advanced Defense Systems Ltd. and Tomer – also owned by the Israeli government — playing smaller roles. US manufacturer Boeing Co. provides key subsystems and additional technology.