In Rome, a teaming up between KNDS and Leonardo last December to build tanks and fighting vehicles was seen as a significant move for European defense industry integration amidst border conflicts and global competition. The collapse of the deal this week served as a stark reminder that business interests ultimately determine outcomes in such partnerships. The initial agreement between KNDS and Leonardo, buoyed by a government-to-government accord, had envisioned potential collaboration on a new Italian five billion euro program for building fighting vehicles. This deal also included the possibility of Italy joining a KNDS plan for a new European tank, with Leonardo acquiring a stake in KNDS.
However, disagreements arose as Leonardo sought to customize the tanks with additional features, leading KNDS to pull out of talks. Despite political goodwill and strategic vision for European synergies, financial considerations remained paramount. The collapse of negotiations reflected the challenges in achieving solid agreements even with compelling reasons and high chances of success. While Leonardo’s stake in KNDS appears less likely now, Italy’s participation in the KNDS-led Main Ground Combat System tank program may still proceed. The development of the MGCS program is uncertain, but Italy’s decision to purchase the Leopard or Rheinmetall’s prototype Panther could determine its involvement. Cost considerations will likely influence Italy’s choice between the two options.
