By August 2008 the United States and Israeli governments have initiated development of an upper-tier component to the Israeli Air Defense Network, known as Arrow 3, "with a kill ratio of around 99 percent". The development is based on an architecture definition study conducted in 2006-2007, determining the need for the upper-tier component to be integrated into Israel's ballistic missile defense system. According to Arieh Herzog, the main element of this upper tier will be an exoatmospheric interceptor, to be jointly developed by IAI and Boeing. Lieutenant General Patrick J. O’Reilly, Director of the Missile Defense Agency, said:
| “ | The design of Arrow 3 promises to be an extremely capable system, more advanced than what we have ever attempted in the U.S. with our programs. This has to do with the seekers that have greater flexibility and other aspects, such as propulsion systems – it will be an extremely capable system. | ” |
The new component will also require the integration of longer range detection, tracking and discrimination capability, beyond what the "Green Pine" and "Super Green Pine" radars employed with the Arrow 2 are providing. Among the advanced sensors considered for Israel's future multi-tier system, are airborne electro-optical sensors deployed on high flying unmanned aerial vehicles and future enhanced "Green Pine" radars, as well as the AN/TPY-2 radar already deployed in Israel, and operated by U.S. forces.
Israel Aerospace Industries announced in June 2009, that the Arrow 3 patented exoatmospheric interception method includes a two-stage interceptor, like the Arrow 2, but purely based on hit-to-kill technology. Unlike most kill vehicles, which use liquid or gas propulsion, the new Israeli kill vehicle will be propelled by an ordinary rocket motor equipped with a thrust-vectoring nozzle. It will also be fitted with a gimbaled seeker for hemispheric coverage. By measuring the seeker’s line-of-sight propagation relative to the vehicle’s motion, the kill vehicle will use proportional navigation to divert its course and line up exactly with the target’s flight path. Joseph Hasson, chief missile designer at IAI, who patented the new kill vehicle with his colleague Galya Goldner, says that the concept is relatively simple, reliable and inexpensive, and is based on mature technologies. Furthermore, the kill vehicle’s divert capability and agility reduce the need for detection and tracking systems, which usually accompany remote sensor-assisted exoatmospheric kills. IAI displayed a full-sized model of the Arrow 3 missile and its kill vehicle at the June 2009 Paris Air Show.
Arrow 3 should be able to intercept ballistic missiles, including intermediate-range ballistic missiles, at altitudes of over 100 km (62 mi), and in greater ranges. It could also be ship-based. Arrow 3 is slightly smaller than the Arrow 2, faster, weighing nearly half, and may have a reduced 30-year life-cycle cost. Reportedly it will cost $2–$3 million per unit, while program cost is estimated at some $700–$800 million over three years. It is expected to be tested at the beginning of 2011 and possibly deployed by 2014 or 2015. Reportedly, the U.S. will provide the full funding for the development and production of the Arrow 3.
According to numerous Israeli experts, namely Prof. Yitzhak Ben Yisrael, former director of the Israeli Administration for the Development of Weapons and Technological Infrastructure and currently the chairman of the Israeli Space Agency, it is also possible that the Arrow 3 could serve as an anti-satellite weapon.
