A senior official confirmed Wednesday that Germany only agreed to supply Israel with its sixth Dolphin-class submarine if Jerusalem unfroze $100 million in tax revenue it was withholding from the Palestinian Authority, Army Radio reported.

"The [submarine] was the icing on the cake Israel received for agreeing to the European request [to transfer the funds]," the official said.


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On Sunday, German newspaper Welt am Sonntag reported that German Chancellor Angela Merkel threatened Prime Minister Binyamin Netanyahu with the halting of a German plan to deliver a submarine to Israel if the latter refused to resume the transfer of tax revenues to the Palestinian Authority.

According to the report, Israel yielded to pressure from Berlin and unfroze the funds. Immediately after, a German government official announced her country would build and pay up to one-third of the cost of a sixth Dolphin-class submarine to be delivered to the Israeli navy.

The agreement in principle to provide the Dolphin-class submarine, which foreign reports say enhances Israel’s second-strike capability since it can carry nuclear warheads, comes a month after reports that Germany was reconsidering the deal because of anger at the announcement of plans to build some 1,100 housing units in Jerusalem’s Gilo neighborhood, over the Green Line.

The German official said she did not know whether those reports were accurate.

She said Germany will pay up to 135 million euros toward the submarine, which will cost between 372m. and 520m. euros.

Talks on the deal for the sub stalled last year after the Germans declined to underwrite it, as they had done with previous submarine purchases.

Welt am Sonntag reported that German deputies were confidentially informed by the Merkel administration that delivery of the sixth Dolphin was put on hold because of Netanyahu’s settlement policies.

According to the German paper, the Merkel administration “informed the heads of parties (Bundestag) and leading foreign politicians that Israel made concessions.”

The paper cited unnamed deputies from the governing coalition who said that there was never a serious attempt to use the Dolphin as leverage over Israel.

Welt am Sonntag wrote that a second theory is also “plausible” in terms of the delivery of the Dolphin to Israel.

The paper cited Iran’s “new aggression” last week, which culminated in the storming of Britain’s Embassy on Tuesday by the Basij militia controlled by Iran’s Revolutionary Guards.

Herb Keinon contributed to the story.

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