Israel to Pay Double for German Submarines in Light of Sudden Price Hike

Bypassing the Knesset and the public, Israel's Defense Ministry is going ahead with the purchase of three submarines to revamp its navy's arsenal, despite ThyssenKrupp raising the price

Avi Bar-Eli
Avi Bar-Eli
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A new submarine built for the Israeli Navy at the dite of ThyssenKrupp Marine Systems in Kiel, northern Germany, in 2013.
A new submarine built for the Israeli Navy at the dite of ThyssenKrupp Marine Systems in Kiel, northern Germany, in 2013. Credit: AFP
Avi Bar-Eli
Avi Bar-Eli

Israel will have to fork out double the original sum for three submarines after the German corporation ThyssenKrupp raised the price of the vessels, while the German government declined to raise the subsidies it provides to Israel in line with the price increase. The ministerial defense procurement committee authorized the higher payment Sunday without the public or the Knesset being notified.

In 2017, the government signed a memorandum of understanding according to which the Defense Ministry would purchase three submarines at a total cost of 1.8 billion euros ($2.05 billion), based on a 2016 price estimate. The German government agreed to cover a third of the cost of the deal, some 600 million euros.

The submarines, which are due to be supplied to the Israeli Navy toward the end of the decade, will replace the force’s older submarines. The new submarines will join three new submarines purchased for a total of 1.5 billion euros, two of which have already been supplied to the navy. The previous submarine deal stands at the center of Case 3000, involving allegations of bribes paid by ThyssenKrupp to Israeli officials involved in the deal.

A few months ago, after progress was made in negotiations for the purchase of additional submarines from ThyssenKrupp, Defense Ministry officials told closed hearings involving Prime Minister Naftali Bennett, Foreign Minister Yair Lapid, Defense Minister Benny Gantz and Finance Minister Avigdor Lieberman that the Germans had raised the price of the vessels to 3 billion euros, and that the German government had not increased its subsidy. Israel, which originally was to pay 1.2 billion euros, was now required to pay 2.4 billion euros.

The defense establishment insisted on completing the deal despite the price hike. Despite objections raised by Lapid, the deal was approved.

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