JERUSALEM, Aug 31, 2026 (BSS/AFP) - Israel's defence ministry announced Monday it had signed a deal with Athens worth approximately three billion euros (almost $3.5 billion) to set up the "Achilles Shield" aerial defence system for Greece.

"Under the deal, Israel will build Greece a comprehensive, multi-layered air defence array, drawing entirely on Israeli-made systems and on the extensive operational experience Israel's defence establishment has gained during the war," the ministry said in a statement.

"This is the largest defence export deal in the history of Israel-Greece relations, and one of the largest in the history of the State of Israel," it added.

The deal was signed by the Israeli defence ministry's director general, Major General (Res.) Amir Baram, and his Greek counterpart, Ioannis Bouras, in Tel Aviv.

A Greek defence ministry source had told AFP in late July about an upcoming purchase of Israeli-made anti-missile, anti-aircraft and anti-drone systems, part of a broader defence investment for the Achilles Shield of 4.2 billion euro ($4.8 billion).

In a statement, the Greek Defence Ministry said the multi-billion euro purchase was part of "the greatest reform of its armed forces in its history".

Greek Defence Minister Nikos Dendias was quoted in the statement as saying that recent technological developments "have long rendered existing defence doctrines completely obsolete".

"Greece is the first country in the European Union to adopt" a multi-layered air defence system such as the Israeli one, he added.

According to the Israeli Defence Ministry, the export deal includes the David's Sling, Barak MX and SPYDER interception systems, air surveillance radars, and "a new national command and control system".

All the equipment is manufactured by Israeli defence contractors Rafael and Israel Aerospace Industries and its subsidiary ELTA Systems.

A supplementary 26 million euro deal was also signed to provide Greece with Rafael's defence systems against drones, the ministry said.

"Israel and Greece share common strategic interests and face shared regional challenges," said Defence Minister Israel Katz, quoted in the statement.

"At a time when actors with hegemonic ambitions are seeking to expand their influence and undermine stability in the region, Israel and Greece will continue to deepen their defence and strategic cooperation," he said, in a likely reference to Turkey.

Greece is now one of only four European NATO members to spend at least three percent of GDP on its military, amid decades of tensions with neighbouring Turkey.

Israel has also increasingly locked horns with Turkey, having struck a disused military base in northwest Syria, claiming it wanted to avert Turkish troops deploying to the facility.

In 2023, Israel signed a deal with Germany to provide the Arrow 3 anti-ballistic missile defence system, which was expanded in December for a total value of $6.5 billion, the country's largest-ever military export contract.