German Defense Minister Boris Pistorius (right) and Israeli Defense Minister Yoav Gallant shake hands after signing an agreement on Arrow-3 hypersonic missile defense project at the Defense Ministry in Berlin on Sept 28, 2023. (PHOTO / AFP)

JERUSALEM - Israel announced Thursday that it had signed a record-breaking $3.5 billion agreement with Germany to sell its Arrow-3 hypersonic missile defense system to the European country.

The Israeli Defense Ministry said in a statement that Israeli Defense Minister Yoav Gallant and German Defense Minister Boris Pistorius signed the agreement in Berlin on Thursday. The two ministers also signed a joint statement, pledging to enhance bilateral security ties.

As part of the deal, Germany has agreed to make an immediate payment of $600 million, which will be used by Israel to start the production of Arrow-3 batteries for Germany, the joint statement said

ALSO READ: Germany, Israel agree to cooperate on moon landing mission

As part of the deal, Germany has agreed to make an immediate payment of $600 million, which will be used by Israel to start the production of Arrow-3 batteries for Germany, the statement said.

The Arrow-3 is Israel's most advanced missile defense system and a key component of the country's multi-layered defense doctrine, which also includes the Iron Dome to intercept short-range rockets and David's Sling to block medium-range missiles.

READ MORE: Ukraine, Germany discuss supplies of Taurus cruise missiles

In 2022, Israeli arms export deals reached a new record of $12.5 billion, with over 25 percent of its sales going to Europe, according to Defense Ministry figures.