Israel's largest defense deal is now underway after US approval

Why Germany is seeking Arrow 3?

Germany's interest in an interceptor missile system is part of the European Sky Shield Initiative (ESSI), a pan-Europe air and missile defense system. The program has assumed significance in the wake of the ongoing Russian aggression in Ukraine.

Russia not only has a wide spectrum of land-based missile systems but also an extensive inventory that it can deploy if a conflict in Europe flares up. In such a scenario, an effective missile defense system is Europe's best bet in securing its strategic assets. Germany is interested in Arrow 3 system as it looks to overhaul its armed forces, an initiative that began in September last year.

Germany has been in talks with Israel ever since and previous reports suggested that a $2 billion deal would be signed to this effect. With the US also a potential supplier of air defense systems with its Terminal High Altitude Area Defense (THAAD) missiles, there was a possibility that it could block an Israel-Germany deal.

The US approval has now paved the way for the largest deal ever to be signed by Israel, with the Arrow 3 contract estimated to be worth around $3.5 billion. The exact details of the deal still need to be worked out and inclusions of ancillary systems or surveillance targeting radar remain unknown.

In the short term, the two nations are expected to sign a $600 million letter of commitment to take the decision forward, CNN reported. Once parliaments of both countries approve the deal, the full contract will be signed.

Not only is this a major development for Israel, as Germany wants to procure its advanced technology, but it could also set the ground for further acquisitions from other European nations as they look to build up the ESSI.