Rafael Secures €2 Billion Deal to Supply Spike Missiles to German Army Despite Diplomatic Tensions

In one of the largest European defense deals signed by an Israeli company in recent years, Rafael Advanced Defense Systems will supply the German army with Spike anti-tank missiles in a transaction valued at approximately €2 billion.

The deal, approved in Berlin this week, comes against the backdrop of a temporary arms embargo imposed on Israel last summer by German Chancellor Friedrich Merz, following Israel’s controversial decision to occupy Gaza. Despite the diplomatic strain, the new agreement underscores the enduring defense partnership between Israel and Germany.

Deal Executed Through Eurospike Joint Venture

The contract will be executed through Eurospike GmbH, a European joint venture owned by Rafael (20%), Rheinmetall (40%), and Diehl Defense (40%). The company serves as the exclusive European distributor of Spike missiles, with production taking place at Eurospike’s facilities in Germany.

According to defense industry sources, the fact that Eurospike is predominantly German-owned helped overcome political resistance to the deal. “This structure allows the transaction to move forward under a European framework, even amid growing criticism of Israel’s military policies,” said one senior official familiar with the negotiations.

Spike: A Global Bestseller

Rafael’s Spike missile family is one of the most successful precision-guided weapon systems in the world, known for its ease of operation, modular design, and adaptability across multiple platforms — from ground launchers to helicopters and naval systems.

To date, more than 40 countries have purchased Spike systems, about half of them NATO members. The German deal marks the most extensive Spike procurement by the Bundeswehr to date.

Diplomatic Headwinds and European Market Challenges

The agreement contrasts sharply with recent developments elsewhere in Europe. In the wake of the Gaza war, Spain canceled a planned €250 million deal with Rafael for 1,700 Spike missiles and 170 launchers, citing political sensitivities and pressure from within the European Union.

Analysts note that while Germany remains Israel’s second-largest defense partner after the United States, broader European sentiment toward Israeli arms deals has cooled since the conflict. “Many procurement officials are wary of optics,” said a defense industry source. “Germany is an exception, balancing politics with strategic necessity.”

Expanding Defense Cooperation with Israel

Germany’s defense ties with Israel have deepened in recent years. Prior to the October 7 War, the two countries signed the landmark Arrow 3 missile defense deal — worth roughly ₪14 billion (€3.5 billion) — the largest defense export agreement in Israel’s history. Israel Aerospace Industries (IAI) is expected to deliver the first Arrow 3 systems to Germany by the end of this year, with discussions already underway for the future Arrow 4 system, designed to counter advanced ballistic threats.

While Rafael declined to comment on the new Spike contract, the deal is widely seen as a major diplomatic and industrial achievement, signaling continued strategic cooperation between Jerusalem and Berlin despite shifting European attitudes toward Israel’s defense sector.