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Abstract

The Russian invasion of Ukraine has inflicted a significant blow to the EU’s defence strategy, jeopardising its ability to contribute adequately to the transatlantic security architecture and slowing the development of a continental strategic autonomy. In view of this, Germany and Italy should strengthen bilateral defence cooperation, particularly regarding industrial and procurement policies. As Berlin and Rome are two pillars of Europe’s industrial defence basis, closer bilateral cooperation would facilitate EU defence consolidation and enhance Europe’s military credibility. The future Italian-German Action Plan, the specifics of which are still unknown, is an excellent opportunity to establish a joint defence strategy centred on sectors of mutual interest. 

1. European defence after 24 February 2022 

 

As we are writing, a full-scale war is unfolding in Europe, with a nuclear power as the aggressor. War crimes against civilians are being committed on a massive scale and – as of June 2023 – more than eight million refugees have crossed the borders to seek shelter in the EU. As put by the European Court of Human Rights, Russia’s unprovoked invasion of Ukraine arguably represents the greatest challenge to human rights since World War II (WWII). The war has deteriorated the global security and macroeconomic environment, while inflation, food emergency and the worsening climate crisis are negatively reinforcing each other.

The war deeply affected the European security architecture. In the years prior to the war, the Ursula von der Leyen-led European Commission had already been advocating for the Union to take significant steps to strengthen the EU’s position as a geopolitical player worldwide, establishing a series of tools – such as the European Peace Facility (EPF) and the Strategic Compass – to boost EU defence capabilities. The Russian invasion of Ukraine compelled the EU revise its plans, as it was clear that the bloc was far from prepared to face a crisis of such geopolitical magnitude right across its borders.

Policies and tools designed well in advance to cope with hard security challenges would have certainly improved the efficacy of the European response. The absence of such supranational structures of political-military coordination opened the doors to centrifugal tendencies, only partially contained by the urgency to address the calamitous emergency of the conflict. Ostensibly, the inadequacy of the EU as a security provider is one of the key factors pushing some member states – and especially those on the Eastern borders – to rely even more on NATO as a guardian of stability. 

The request to join NATO by the Finnish and Swedish governments in the face of the Ukrainian war might be interpreted as a negative signal for the credibility of the EU as a defensive alliance, weakening any perspective of Europe to develop an autonomous defence policy. And while the news may be welcomed by those who see NATO as the primary security provider for the continent, it is less enticing for the EU member states who are not part of the Atlantic Alliance. Contrary to the purpose of the two organisations to “play complementary, coherent and mutually reinforcing roles” on security issues, this cannot occur if European countries are unable to stand on their own two feet militarily and independently contribute to transatlantic security and burden-sharing. 

Current EU defence arrangements are currently insufficient to strengthen a European pillar in NATO, let alone leaving the door open for true strategic autonomy. The practical objectives set out by the Strategic Compass (i.e., the creation of a rapid deployable force of 5,000 units) are obviously unfit to face major conventional military challenges stemming from Russia, but also from a potential conflict over Taiwan or in the Middle East and North Africa region (the latter of which features far less prominently in the latest NATO Strategic Concept). Against this backdrop, it is unlikely that in the near future the Compass will play a significant role in reshaping the organisation of CSDP missions of crisis management and capacity-building. 

The war may also undermine the EU efforts to strengthen the European defence market, whose integration has long been welcomed also by the US. In this regard, the priority is arguably the development of the European Defence Fund. At the outset, this instrument had a dual purpose: promote the research and development of modern military systems required by the member states and nurture the intraEuropean supply chains. In other words, the EDF was devised to increase the competitiveness of EU defence companies while strengthening the European Technological and Industrial Base (EDTIB). The initial success of the EDF calls, which resulted in the funding of dozens of multinational initiatives, indicates at least some desire on the part of European companies and governments to invest in the project and embrace this political priority.

However, already today the EDF budget of just eight billion euro over seven years is a far cry from the investment needed to reduce the fragmentation of a sector wherein the major EU players represent only a portion of the overall internal market. For decades, the EU defence industry has faced stiff competition from the United States, the United Kingdom, and even South Korea, to the point where many non-EDTIB companies now have profound roots in the procurement traditions of member states. As a consequence, the EU industry lags behind international competitors in key sectors such as disruptive technology, as the European Defence Agency (EDA) acknowledged last year. Aware of this situation, the EU Commission in 2022 launched the European Defence Industry Reinforcement through Common Procurement Act (EDIRPA), an instrument that should convey common procurement projects by providing the member states willing to cooperate with both financial incentives and a common procurement platform. However, this platform could even involve associated countries and thus bring into the EDTIB complementary contractors from the UK, Norway, Switzerland, or the US.

The effect of this newly established strategy on the EDTIB has yet to be determined and will depend heavily on its implementation; the impact of both the EDF and EDIRPA will be limited if allocations go toward further fragmentation of military stockpiles and will spur additional duplication of capabilities across domains. The creation of a new European main battle tank (also called as the Main Ground Combat System – MGCS) is an example of the limited role that EU procurement might play in the near future. The MGCS has a history dating back to 2015, when it was evident that the EU tank fleet needed an upgrade to keep up with global competition and the EDA was tasked with the responsibility to coordinate the Member States’ investments in R&D. The effort to expedite the delivery of a new model was further accelerated in response to the Ukraine conflict. Yet, in 2022, the only tank project nearing maturity was the new “Panther”, which was the result of a unilateral German initiative led by Rheinmetall and Krauss-Maffei Wegmann. Considering that Italy and France chose to upgrade their legacy tanks and that the only quasi-European programme, the Franco-German MGCS, is hobbling back, the most likely outcome will be the widespread acquisition of nationally developed systems (including the Korean K2) instead of a common European design.

Indeed, the never-ending debate over the development of the MGCS is only the tip of the iceberg when it comes to concerns about the EDTIB’s future. Inevitably, the shipment of defence systems to Kyiv will deplete the EU member states’ strategic readiness. To fill the void, the EU nations will most likely initiate a new phase of national procurement to replenish existing stocks. If the procurement of these systems (primarily tanks, artillery, armoured vehicles, missile defence systems, man portable equipment and various kinds of ammunition) prioritises off-theshelf solutions, even if this is in accordance with EDIRPA guidelines, the European Defence Agency’s effort to achieve European interoperability that can embrace NATO standards will be jeopardised.

2. The Italian-German contribution to European defence cooperation 

Italy and Germany seem to be on the verge of signing off on an “Italian-German Action Plan” for expanding bilateral cooperation, which is anticipated to encompass a variety of topics ranging from industrial issues to foreign policy. Among the sectors of envisaged cooperation, defence is one of the most prominent. Indeed, the two nations are pillars of the European Defence Industrial and Technological Base and home to renowned prime contractors such as Leonardo, Rheinmetall, ThyssenKrupp AG, and Fincantieri. The investments of these two nations in acquisition, research, and development represent a significant portion of total European military expenditures. This privileged position in the EU landscape makes even more significant the commitment of Rome and Berlin to increase their military spending as a reaction to the Russian aggression.

Meeting in Versailles in March 2022, all the EU member states vowed to establish new capabilities and prepare strategic enablers to operate jointly whenever necessary. Nevertheless, the scale and time of this commitment differs between the two countries. Italy should in theory reach the NATO target of spending 2 per cent of its GDP in defence by 2028. The pace of such an increase is very much uncertain, and Italy’s defence budget remains deeply unbalanced, with substantial expenditures focused on personnel costs and few resources directed to exercise and maintenance. Instead, Chancellor Olaf Scholz’s Germany has responded to the Zeitenwende (“historical turning point”) of Russia’s invasion of Ukraine by setting up a one-off fund of 100 billion euro, the Sondervermögen (“special fund”), and a commitment to bring the Bundeswehr’s regular budget in line with the 2 per cent threshold for years. Yet, doubts exist on whether the fund will suffice given inflationary pressures and Berlin’s yawning gap in defence capabilities. It is estimated that Germany will likely need to spend some 300 billion euro worth to put the Bundeswehr in a position to once again be a credible military tool.

Differences also exist in the strategic priorities of the two countries. Growing Italian defence investments over the last decade have focused mainly on improving the armed forces’ ability to project power into the “wider Mediterranean”, establishing for instance the carrier strike group Cavour and an amphibious landing group. Germany, on the other hand, is emphasising a return to territorial defence: it recently (re-) instated structures such as a territorial headquarter (Territorialen Führungskommando) for domestic operations and logistical support to allied operations in Europe, putting the Eastern flank front and centre in its strategic outlook. 

The disparities in the two countries’ budgetary provisions are thus both qualitative and quantitative, as Italy’s stagnating defence expenditures are allocated differently than Germany’s growing defence budget. This must be balanced against differences in public opinion. Despite Russia’s aggression and the country’s international obligations, the majority of Italians oppose any increase in military spending. In contrast, the German electorate is experiencing change of heart, as it has abandoned long-standing scepticism defence matters and is now massively supporting the government’s stance on strengthening the national military capacity. 

The was in Ukraine is offering the opportunity to the two nations to improve their complementarities in several sectors, starting with major investments to plug the holes in basic defence capabilities caused by underspending in ground-based air defence, an improved focus on dual-use technologies, and a promotion of a more integrated procurement process that prioritises ammunition and the development of strategic enablers such as cyber and space capabilities. 

A comprehensive political-industrial-military approach would provide Berlin and Rome with a common ground for enhancing their strategic response to the unfolding crisis in Ukraine. Italy and Germany should focus on filling voids in the respective armed forces; more investments in dual technologies such as space capabilities and cyberwarfare, as well as other traditional domains, would also be essential. 

The two countries should also commit to joint procurement as the only way to preserve and boost Europe’s Defence Industrial and Technological Base (EDTIB) in the aftermath of an unprecedented spike in demand for defence goods. The stir provoked in France and Italy by the German-led European Sky Shield Initiative, which appears to favour US- and Israeli-made ground-based missile defence systems at the expense of their European counterparts, is revealing: when there is an emergency, there are a few possible trading partners today that could be associated in procurement without compromising medium- to long-term development plans.

Therefore, strengthened cooperation in the field of procurement would allow for more transparent communications with international partners, promoting the excellence of the two national industries without fuelling protectionist impulses which would waste resources (or efficiency) on short-sighted projects. 

A holistic spending approach, seeking complementarity and rewarding the excellence of small and medium-sized businesses, would be advantageous to the majority of industrial sectors, given the number of prospective investment domains. Italy and Germany are home to a large number of small and mediumsized enterprises (SMEs) in the defence industry, and these firms frequently hold the keys to the two nations’ competitive advantage in sectors such as sensor technology and electronic and cyber warfare. Both nations have a vested interest in influencing European programs, such as the EDF, to more effectively stimulate innovation within their respective defence ecosystems. 

Similarly, the two countries should create synergies within initiatives funded through the EDF. Italy and Germany are already working together in the European medium-altitude, long endurance, remotely piloted aircraft system (MALE RPAS) programme, which is a PESCO project co-financed through EDF and managed by OCCAR that has the objective to empower Europe with a modern and competitive intelligence, surveillance and reconnaissance (ISR) system. Interestingly, both countries share similar sensitivities when it comes to the employment of armed drones, despite the fact that Italy decided to arm its drones without the decadeslong parliamentary and public debate that marked Germany’s decision to equip its own Heron TP drones with weapons. Moreover, both Rome and Berlin are extremely cautious when it comes to automation, and military interlocutors in both countries stress the importance of keeping a human in the loop. 

Space is another area of potential cooperation. The protection of Italian assets (defence from kinetic attacks as well as cyber threats) feature prominently in Rome’s 2019 National Space Security Strategy. Cooperation with Berlin could boost complementarities in sectors with a strong electronics component. The two nations are jointly working on strategic enablers trough the Defence of Space Assets (DoSA), a PESCO initiative whose goal is providing training for space military operations, space resilience and access to space and in-space operation. Both of these projects – obviously started before the breakout of the Ukrainian war – are evidently connected with the upcoming defence challenges that Europe, and thus the two countries, will be facing in a next future.

Cooperation is also feasible in the field of electronics, which entails crossdomain capabilities with dual-use benefits for the civilian sector. In this regard, Leonardo’s acquisition of Germany’s Hensoldt is encouraging, as it could facilitate the establishment of economies of scale in the field and pave the way for new collaborations in other industries. Notably, reciprocal support could be conceivable in the areas of avionics, manned-unmanned teaming and combat cloud technologies. Given Germany’s decision to purchase F-35 multirole jets to replace its aging Tornado fleet, Berlin could greatly benefit from Rome’s special relationship with the US and British aerospace industries, as well as its experience in the F-35 programme via the Cameri production facility.

A further area in which cooperation should be reinforced is underwater technologies. In this field, Italian and German companies are already collaborating, and the realisation of the U212 NFS submarine is a good instance of the brilliant results that can be achieved together. Cooperation between Fincantieri and ThyssenKrupp could be furthered also considering the expanding interest in the underwater environment and research in underwater unmanned vehicles (UUVs). Italy’s long-standing necessity to protect its critical seabed infrastructure in the Mediterranean basin makes it an appealing partner to Germany, which is especially alarmed over potential repeats of the Nord Stream sabotage. The establishment of the German-led NATO Critical Undersea Infrastructure Protection Cell may offer some further chances of bilateral and multilateral cooperation in this regard. 

Germany and Italy should also do more together on land systems, notably tanks and mechanised vehicles. Germany has a strong European lead in this realm, while Italy has some positive experiences with the Centauro and a non-negligible niche of turret making. The challenge will be to facilitate Italian participation in the Main Ground Combat System (MGCS) project, managed by the FrancoGerman consortium KNDS. From a German perspective, MGCS is supposed to eventually foster a Europe-wide consolidation of land systems technologies and production. An Italian contribution, joining the consortium and transforming it in a true European initiative, would be especially timely given the urgent need for Italy to modernise its armoured fleet, but also to raise Europe’s overall production capacities and match the mounting continental demand for tanks. Furthermore, Italy is currently examining options to create a new hub for land systems, in order to rationalise the current industrial supply chain and procure a successor to the Dardo infantry fighting vehicle (IFV). The offer by Rheinmetall to produce its new Lynx IFV in partnership with Italian companies within the national borders should be carefully considered in order to foster much-needed economies of scale in this domain.

Another enticing area of bilateral cooperation for Berlin could be a partnership designed to support its decision to make the Bundeswehr greener. Germany has already demonstrated a developing awareness of the environmental impact of its military activities. This correlation is recognised by both NATO and the EU, and it is believed to be particularly significant in three fields (listed in decreasing importance): static pollution produced by military barracks and other defence buildings; pollution generated by the systems themselves and military mobility; and the dispersion of ammunitions or other wastes, particularly to sea. Italy, for its part, has already devised a strategy to address the dilemma between defence and the ecological transition. The lion’s share of this strategy consists of a plan to control the energy supply of all military installations on Italian territory, renovate vital defence-related infrastructures, and increase the military’s mobility’s sustainability. Research into alternative energy sources for the military, such as solar panels, may reduce the reliance of forward operational bases on petroleum runs, which are particularly susceptible to guerrilla attacks when deployed in contested territories.

Conclusions and outlook

The so-called Zeitenwende is proving to be all but easy to live up to for Germany, while Italy still has to prove it perceives any urgency when it comes to a change of pace in defence spending. In this situation, cooperation between the two states can help to alleviate the burden imposed by the radical changes both countries will need to implement in their defence policies. Both countries’ defence budgets are currently being increased, but while this was necessary after a long period of underfunding of the respective armed forces, it also comes with some risks. The primary danger is that both Berlin and Rome will use the concept of European strategic autonomy to appease national industrial champions rather than actually implementing plans to strengthen EU defence initiatives. Despite some positive signals, it is uncertain how much of Germany’s 100 billion euro special fund will be invested in multinational strategic armament projects. Similar risks are present in Italy, which badly needs to replenish its stocks after the latest shipments to Ukraine. 

The authentic European commitment of the two nations should inevitably result in joint efforts, beginning with technological and industrial advancement. Italy and Germany have declared their willingness to increase their defence expenditures to 2 per cent of GDP, as agreed upon at the 2014 NATO summit in Wales. This old threshold, which after 24 February 2022 has become a starting point rather than a ceiling for many within the Alliance, will not necessarily enhance the EU’s defence profile. In contrast, national increases in the defence expenditures that are not coordinated may paradoxically be detrimental to the strategic autonomy of the EU. As a result of Russia’s invasion of Ukraine, the imperative need of many EU countries to purchase or upgrade weapons has a negative impact on the European industrial base. In the future, countries with a proclivity to cooperate, such as Germany and Italy, should maximise the potential of strategic, industrial and cultural synergies in the defence sector. This cooperation should begin as a bilateral effort within the framework of the forthcoming Italian-German Action Plan and, whenever feasible, translate into bilateral initiatives in the defence industry. Initiating pragmatic projects and generating industrial and political realities is the most effective method to advance European integration. This is something that can be accomplished more easily by beginning with a bilateral perspective while remaining open to the eventual participation of other EU nations.