Israeli military circles have, for the first time since the ceasefire, disclosed a growing shortage of interceptor missiles, particularly the Arrow 3 missile system used against ballistic threats. The disclosure comes amid continued silence from the Ministry of Finance regarding military demands to expand production, under the pretext of controlling an already strained defence budget.
According to a report by Yuval Azulai in the Israeli outlet Calcalist, a significant delay preceded the approval of a new production plan. Only at the beginning of this week did the ministerial procurement committee, chaired by Israel Katz, approve a large scale acceleration plan for Arrow 3 missile production through Israel Aerospace Industries.
The plan enables expanded procurement contracts and includes infrastructure upgrades to support increased manufacturing capacity.
Rising Costs and Strategic Dependence
Details of the deal, including the number of interceptor missiles involved, remain classified. However, previous agreements between the Ministry of Defence and Israel Aerospace Industries over the past two years are estimated to be worth billions of dollars. The cost of a single Arrow 3 missile exceeds two million US dollars.
Since the war that began on 7 October, this system has served as the primary defence against ballistic missiles launched from Iran and Yemen.
Internal Disputes Delay Critical Decisions
Senior military officials had reportedly stressed the urgency of expanding production prior to the committee’s decision. Among them were Defence Ministry leadership, including Director General Amir Baram, alongside the CEO of Israel Aerospace Industries, Boaz Levy, and senior military figure Danny Gold.
They argued that accelerating production and expanding missile availability is essential to maintaining military superiority and strengthening both civilian and military defensive capabilities.
Despite these assertions, the report highlights longstanding financial disputes between the Ministries of Defence and Finance, which delayed the approval of the plan for months. The core disagreement centres on funding sources, with the Finance Ministry resisting additional spending and framing the issue as an opportunity to contain what it views as an uncontrolled expansion of the defence budget.
Evolving Interception Strategy and Battlefield Adaptation
The Finance Ministry had expected the Defence Ministry to absorb the cost within its existing multi billion dollar budget. In contrast, military officials warned that the initial phase of conflict with Iran was only a precursor to a more complex second stage.
Unlike previous confrontations, the recent war saw the air defence system deploy both Arrow 3 and David’s Sling interceptor missiles. Originally designed as a mid range defence system, David’s Sling has been adapted to intercept ballistic threats at lower altitudes.
Two weeks before the war, the military announced an expansion of Arrow 3’s operational role. The system intercepts threats outside the atmosphere, while David’s Sling operates below that threshold. In scenarios involving cluster warheads, lower altitude interception does not prevent the dispersion of multiple submunitions across wide areas, resulting in widespread destruction.
By contrast, interception outside the atmosphere, as conducted by Arrow 3, allows most debris and submunitions to burn upon re entry, reducing ground level impact.
The military has justified recent changes in interception policy as a necessary measure to manage limited missile stockpiles, maintain readiness, and prepare for evolving conflict scenarios in the coming weeks.
Severe Depletion of Missile Stockpiles
A report by the Royal United Services Institute indicates a significant depletion of interceptor missile reserves for both Israel and the United States. Arrow missile stockpiles have reportedly declined by 80 percent, while David’s Sling inventory has dropped by 55 percent. Meanwhile, stocks of THAAD system allocated for Israel have been reduced by half since the outbreak of war.
This decline has occurred despite continuous production of Arrow missiles since October 2023, with a notable increase following the first large scale Iranian missile barrage in April 2024.
Production Expansion Driven by External Demand
Since 2025, production rates of Arrow 3 missiles at Israel Aerospace Industries have tripled. This increase has been partly driven by large scale orders from Germany, with two deals valued at a combined 6.5 billion US dollars.
Military officials confirmed that advance payments from these contracts enabled sustained and expanded production, even under tighter financial oversight. With the latest approval granted this week, production capacity is expected to rise further in the coming months.
