Russia’s full-scale invasion of Ukraine served as a wake-up call about the necessity of reevaluating the existing European approach to collective security and highlighting vulnerabilities in its defense mechanisms. As European leaders grapple with rising global tensions and increasing demands from Washington to shoulder more of their defense responsibilities, German-Italian cooperation stands out as a critical step toward building a unified European defense industrial base. This collaboration is not just an important industrial effort; it is a strategic necessity for the European Union (EU) to consolidate and bolster European military capabilities for a strong defense posture and to assert its credibility in the evolving transatlantic relationship, reinforcing NATO’s overall effectiveness.

The recent creation of Leonardo Rheinmetall Military Vehicles, a 50-50 joint venture between Italy’s Leonardo and Germany’s Rheinmetall, is a landmark move in this direction by highlighting the need for stronger European cooperation on defense manufacturing and procurement policies. By pooling expertise to develop next-generation main battle tanks (including upgrading up to 125 Ariete tanks to new standards) and infantry fighting vehicles, Germany and Italy are addressing the operational needs exposed by the war in Ukraine and the persistent fragmentation of Europe’s defense capabilities. Germany’s established leadership in armored vehicle exports and Italy’s innovative approach underline the potential for a stronger, standardized European defense ecosystem. This partnership is expected to bolster Italy’s defense capabilities and help Rheinmetall secure €20 billion in contracts by 2027. This is a groundbreaking development, especially after Leonardo’s previous unsuccessful negotiations with the Franco-German consortium KNDS.

Another important area of German-Italian collaboration extends into the maritime domain. ThyssenKrupp Marine Systems, Germany’s prominent player in the conventional submarine market, and Fincantieri, Italy’s leading shipbuilder, are laying the groundwork for a European champion in underwater defense. This partnership could consolidate capabilities in a market projected to exceed €400 billion, reinforcing Europe’s position in a sector vital for modern warfare, even in the undersea domain where we face increasing threats.

These developments come as the EU navigates a complex transatlantic dynamic, also shaped by the return of Donald Trump to the White House. During his first term, President Trump’s blunt demands for greater European defense spending exposed deep divisions within the alliance—despite that he was not the first American president to raise this issue. In reality, European NATO members have increased their defense spending by 19 percent (or an additional $78 billion). In 2023, Italy spent almost $32 billion while Germany spent $68 billion—a combined 27 percent of the NATO European budget (a total of $375 billion in 2023)—while the United States spent $860 billion. Both countries have pledged to increase their defense spending to meet the NATO 2 percent GDP guideline, which is expected to be just the floor, not the ceiling. Trump’s return underscores the urgency for Europe to demonstrate its commitment to defense—an issue that goes beyond budgets to include industrial capacity and strategic coherence.

The German-Italian partnership is emblematic of Europe’s response to these pressures. Both nations are pursuing projects that not only enhance their own defense capabilities but also contribute to the broader EU goal of reducing fragmentation and inefficiency, facilitating deeper cooperation with other NATO allies, in particular those in Eastern Europe, and enhancing NATO’s readiness and effectiveness. This aligns with calls for greater financial integration, including the use of Eurobonds to fund shared defense initiatives in the absence of a common financing mechanism for EU debt. Italy supports this measure but still faces resistance from Germany’s fiscally conservative leadership.

The European Defense Fund received around 300 submissions from companies and research entities this year, a 25 percent increase compared to 2023. The new European Defense Industrial Strategy sets out a vision for deepening intra-EU cooperation by aiming to represent 35 percent of the EU’s defense markets (currently, only 18 percent of total EU spending is on collaborative programs) and at least 50 percent of defense procurement though the European defense technological and industrial base by 2030.

As Europe moves forward, its defense strategy cannot be decoupled from the transatlantic relationship. Both Germany and Italy are solid partners of the F-35 program and are also present in the United States with long-standing investments (Leonardo) or upcoming investments (Rheinmetall). Italian and German defense firms, such as Fincantieri and Rheinmetall, are strengthening ties with the United States, ensuring their integration into NATO supply chains.

France’s latest decision to drop its “buy EU” demand for the European Defence Fund represents a crucial shift and opens up new opportunities for U.S. defense companies to participate in projects of the proposed European Defense Investment Plan. There is currently €1.5 billion earmarked for 2027, but it is expected to grow in the future. Such investments recognize the importance of transatlantic defense complementarity.

The consolidation of a unified European defense industrial base driven by Rome and Berlin will help reduce Europe’s distance from the U.S. defense industrial base. The ultimate goal is to invest more, and more strategically, in new technologies while avoiding duplicates and exploiting a major standardization of (interconnected) weapon systems. These efforts reflect a pragmatic approach: reinforcing Europe’s industrial base while maintaining the vital link with Washington.

Paolo Messa is a nonresident senior fellow at the Atlantic Council’s Europe Center. Follow him on X: @PaoloMessa.

Dr. Valbona Zeneli is a nonresident senior fellow at the Atlantic Council’s Europe Center and the Scowcroft Center for Strategy and Security. Follow her on X: @ValbonaZeneliTo.

Corrections: An earlier version of this article stated that the total European NATO member defense spending for 2023 amounted to $370 billion when the correct sum is $375 billion. Additionally, Rheinmetall hopes to gain €20 billion in contracts by 2027 from multiple sources, not just the Italian military, as misstated in an earlier version of this article.

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