Germany plans to buy Israel's Arrow-3 missile defense system for almost 4 billion euros ($4.30 billion) in total and will ask lawmakers to release advance payments of up to 560 million euros next week, according to documents seen by Reuters on Friday.
The Arrow-3 is designed to intercept ballistic missiles outside of the Earth's atmosphere.
It is the top layer of Israel's missile defense array, which extends from Iron Dome that intercepts short-range rockets to Arrow-3's long-range missiles that destroy any non-conventional warheads at a safe altitude.
Berlin aims to strike a government-to-government deal with Israel on the purchase of the Arrow-3 system at the end of the year, said the finance ministry's procurement documents that were prepared for parliament.
Germany will lose part or all of its advance payments should the deal fail, according to the papers, as the money would be used to compensate Israel for costs incurred by then.
The German air force is supposed to take delivery of Arrow-3, that will cost about one billion euros more than originally planned, by the fourth quarter of 2025.
Shortage of ground-based air defense systems
Russia's war in Ukraine has laid bare a shortage of ground-based air defense systems such as Raytheon's RTX.N Patriot units or the more recently developed IRIS-T in many Western nations.
While Patriot and IRIS-T cover the medium layer of air defense, Arrow-3 - produced by Israel Aerospace Industries (IAI) - offers protection for the higher layer.