Israel Signs Deal With Germany to Buy Three Submarines

Israel's Defense Ministry revamps its arsenal with the purchase of the three submarines, despite ThyssenKrupp raising the price and corruption charges shrouding the previous transaction

Jonathan Lis
Jonathan Lis
The signing at the Ministry of Defense in Tel Aviv.
The signing at the Ministry of Defense in Tel Aviv.Credit: Israel's Defense Ministry
Jonathan Lis
Jonathan Lis

Israel and Germany have successfully negotiated a multi-billion dollar deal to purchase three submarines, the defense ministry announced Wednesday. The new deal was signed after years on the backburner over allegations of corruption surrounding the sale levied against close associates of former Prime Minister Benjamin Netanyahu.

The deal was already struck in 2017 in a memorandum of understanding (MOU) between Germany and Israel, but the manufacturer of the submarines, ThyssenKrupp, recently doubled the price of the submarines, while the German government declined to raise the subsidies it provides to Israel in line with the price increase, according to a report in TheMarker on Tuesday.

Israel, which originally was to pay 1.2 billion euros, instead paid 2.4 billion euros, with the ministerial defense procurement committee approving the inflated fee on Sunday, without the public or the Knesset being notified.

The MOU from 2017 stipulated that the Defense Ministry would purchase three new Dakar class 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.

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. Despite objections raised by Lapid, the deal was approved by the defense establishment.

The submarines, the first of which is due to be delivered to Israel within the next nine years, 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.

At first, the German government had reservations about the deal, and included a memorandum that would allow it to withdraw if fundamental corruption were revealed. Concern over cancelation of the deal was one of the reasons that led Bennett to oppose discussing the establishment of a committee to investigate Case 3000.

Nevertheless, according to Israeli sources familiar with the details of the deal, Germany has recently made clear that despite its previous declarations it will not act to cancel the deal even if the findings of a probe by Israel reveal corrupt conduct. Former German Chancellor Angela Merkel worked at the end of her term to ensure that the deal would go through even after she left office.

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