KNDS-Leonardo rupture could nix Italian Leopard 2 tank buy – MASHAHER

ROME — A major Italian acquisition of Leopard tanks is on the brink of collapsing after a cooperation deal between tank manufacturer KNDS and Italy’s Leonardo was scrapped on Tuesday due to a row over technology transfer.

Announced in December 2023, the partnership between Leonardo and the German-French alliance was due to lead to an industrial role for the Italian defense giant in a large planned Italian purchase of Leopard tanks, including 130 combat versions.

Leonardo aimed to add its own components and electronics to the tank, which was to be assembled at its facility in La Spezia, Italy, but the surprise announcement by KNDS on Tuesday indicated Leonardo wanted more input that KNDS was prepared to offer.

“With 18 European user countries, Leopard 2 is the battle tank standard of our continent and of NATO. It is more important than ever to safeguard this standard, which makes a significant contribution to the interoperability and joint combat power of the European and NATO armies. The parties did not manage to agree on configuration,” Frank Haun, KNDS CEO, said in the statement.

KNDS, the statement added, “is no longer in talks with Leonardo regarding a potential partnership with the Italian company.”

Hours after KNDS issued its statement, Leonardo put out its own press release. “Leonardo announces, despite the efforts undertaken, the interruption of the negotiations with KNDS to define a common configuration for the Main Battle Tank program of the Italian Army and to develop a broader cooperation,” it stated.

”Leonardo confirms its commitment to provide the Italian Army with a performant, interoperable and up-to-date solution, satisfying the present requirements and remaining well positioned for future developments toward Main Ground Combat System, also through cooperation with other qualified international partners,” it added.

The breakdown in talks could yet have further fallout for Italian plans for a new tracked fighting vehicle and a possible entry by Leonardo into KNDS as a stake holder – a move which would have boosted the much vaunted and long delayed consolidation of the European land defense industry.

“Talks about Leonardo’s strategic participation in KNDS have also fallen short,” said Haun.

KNDS is a consortium of Germany’s Krauss-Maffei Wegmann and France’s Nexter.

Instead, the divorce shows that national interests in the industry are still paramount, despite the pressure from politicians to create synergies and bulk up in the face of Russian aggression and global competition.

While KNDS was keen to suggest in its statement that Leonardo was at fault for wanting to disrupt the uniformity of the Leopard model, one industry insider also pointed the finger at KNDS. “During talks, Italy was offered zero technology transfer, but you can’t offer an off-the-shelf tank when Leonardo has its own systems it can integrate,” said the source, who spoke on condition of not being identified.

A Leonardo official told Defense News earlier this year that the Italian firm was mulling supplying an electro-optical sensor, software defined radio, the command and control system and possibly the gun barrel to the tank.

A second industry source said Italy would now almost certainly cancel its purchase of Leopard tanks even though the process will be complicated by the fact the Italian parliament has voted for it.

“Italy may now consider buying the Rheinmetall Panther KF51 tank, even though it is just a prototype, unless the Italian army steps in and says it still wants the Leopard,” said the source, who also spoke on condition of anonymity because he was not permitted to speak on the record.

Last year’s Leonardo-KNDS cooperation deal also mentioned possible teaming on a separate Italian €5 billion ($5.4 billion) program to build 1,050 tracked fighting vehicles.

Leonardo and Italy’s Iveco Defence Vehicles are currently in the process of selecting a European partner to work with on the so-called A2CS program, with candidates including KNDS, which would propose its tracked Boxer vehicle as a baseline, while Rheinmetall has offered its Lynx.

“After this announcement today it is more difficult to imagine Italy working with KNDS on the A2CS program,” said the second source.

The rupture between KNDS and Leonardo could also have ramifications for Italy’s hoped-for entry into the European battle tank program known as the Main Ground Combat System (MGCS), which KNDS is running.