Isranomics

Israel Aerospace Industries’ ballistic missile shield deal with EU to rise to €3B

by | Nov 5, 2022 | Economy | 0 comments

The U.S. Department of Defence is considering requests from the Israeli and German defence ministries to authorise the sale of Arrow-3 ballistic missile interceptors developed by Israel Aerospace Industries (IAI). Given that the United States paid for a sizable portion of the cost associated with developing and manufacturing Arrow missiles, its consent to any agreement is necessary.

In October, fourteen NATO members and Finland signed a Letter of Intent to begin developing a combined defence system called the European Sky Shield Initiative. The original contract, done with Germany, was estimated at roughly €2 billion, but it is now likely to increase to a record €3 billion. In addition, some of the interceptor’s components will be made by the US company Boeing, just like the missiles the company produces for the Israeli Air Force.

Arrow 3 ballistic missile interceptors were designed to fly outside the earth’s atmosphere, where their warheads would detach to form “kamikaze” satellites that track and crash into targets. Such high-altitude intercepts are designed to safely eliminate approaching chemical, biological or even nuclear missiles.

Despite IAI’s repeated efforts in the past, the United States has been reluctant to allow the export of the Arrow system to countries like South Korea. However, with a potential threat of war between Russia and Ukraine spilling into Europe, there is cautious optimism in both Germany and Israel that the United States would ratify the arrangement between the two strategic partners this time around.

“Israel will play a part in building Germany’s new defence force, mainly in the field of air defence,” said Israel’s PM Yair Lapid during his visit to Germany in September. “It has to do with our total commitment to the safety of Germany, to the safety of Europe, to the ability of liberal democracies to defend themselves”, he continued.

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