Israel has decided to pay Germany the mark-up on a $1billion Dolphin-class submarine, officials announced Thursday.

Prime Minister Binyamin Netanyahu had lobbied German Chancellor Angela Merkel earlier this year to underwrite a significant portion of the purchase, but Berlin balked at discounting Israel's sixth Dolphin as it tightens its belt amidst global economic downturn. 

Germany has, in the past, sold submarines to Israel at steep discounts as a show of solidarity with the Jewish state, which was founded in the wake of the Holocaust.

A special ministerial committee decided to accept the recommendation of Defense Minister Ehud Barak, who lobbied for the purchase, despite the price-tag. Israel currently operates three Dolphins, and purchased two more from Germany in 2006.

Those submarines are expected to be delivered later this year.

 he purchase of Israel's sixth Dolphin was approved over the objection of senior IDF officers. Former IDF Chief of Staff Gabi Ashkenazi and his successor Benny Ganz both opposed acquiring a sixth submarine on budgetary grounds.

In 2006 Former IDF Chief of Staff Dan Halutz insisted one submarine - rather than the two ultimately purchased - was enough to carry out the missions allotted to Israel's submarine force.

Foreign reports Thursday said the two vessels expected to arrive this year have the ability to carry nuclear warheads and provide Israel with the ability to launch a counter-strike on Iran should the Islamic Republic strike a serious blow to Israel's population centers.