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Canada selects Germany’s TKMS for landmark 12-submarine order valued at 20 billion euros

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German naval manufacturer Thyssenkrupp Marine Systems (TKMS) has secured the largest contract in its corporate history, a landmark agreement to deliver 12 submarines to the Royal Canadian Navy for approximately €20 billion ($21.7 billion).

Canadian Prime Minister Mark Carney announced the decision on Monday, confirming that Ottawa has selected the TKMS Type 212 CD (Common Design) submarine over the rival KSS-III model offered by South Korea’s Hanwha Ocean, which had also been under close consideration.

As a result of the selection, the navies of Germany, Norway, and Canada will operate the identical class of vessel. The three nations will be able to field an unprecedented combined fleet of 24 Type 212 CD submarines to counter the Russian Navy in the North Atlantic and Arctic oceans.

Beyond the naval contract, TKMS is reportedly laying the groundwork for an additional sweeping bilateral package valued in the tens of billions of euros. This broader economic initiative includes German purchases of Canadian liquefied natural gas (LNG) and the construction of launch facilities in eastern Canada for German space launch vehicles.

These aerospace facilities are intended to grant Ottawa operational independence from US launch infrastructure.

TKMS is experiencing a period of significant growth, further bolstered by fresh orders from the German Navy. Among these domestic programs, the company is developing the F127 frigate, which represents the most expensive defense procurement project in the history of the German armed forces.

Ottawa selects German industrial giant over South Korean rival

Canada has decided to award its long-planned contract for the construction of up to 12 new submarines to the Kiel-based naval specialist TKMS, passing over South Korean competition.

Prime Minister Carney announced the decision on the eve of his departure for the NATO summit in Ankara. Under the terms of the agreement, Ottawa will procure the Type 212 CD submarines, which TKMS produces in joint cooperation with Norway’s Kongsberg Defence & Aerospace (KDA).

Compared to the predecessor Type 212 A class, the Type 212 CD features advanced sensor suites and has been optimized for operations in the harsh environments of the North Atlantic and the Arctic, including under-ice deployments.

In winning the tender, TKMS defeated Hanwha Ocean. The South Korean shipbuilder’s KSS-III model, which carried a significantly lower price tag, was ultimately bypassed.

The total financial volume of the Canadian acquisition is estimated at approximately €20 billion.

The first Type 212 CD submarines are scheduled for delivery in 2033. It remains undisclosed whether the Royal Canadian Navy will take immediate delivery of these initial hulls or face a longer induction timeline.

While final contractual details are still being negotiated, TKMS confirmed that the submarines will be constructed entirely at the German group’s shipyards in Kiel and Wismar. Canada’s industrial contribution to the primary construction will be limited to the supply of specialized non-magnetic steel.

Germany, Canada, and Norway form North Atlantic alliance against Russia

Canada’s selection of the TKMS platform is closely aligned with the primary operational requirements of its maritime forces.

On one front, Ottawa is increasingly focusing on potential northern deployments given its vast Arctic coastline and the ongoing reduction of polar ice cover.

On another, Canadian naval strategy is heavily oriented toward patrols in the North Atlantic. These missions aim to prevent Russian surface combatants and submarines from transiting the Arctic Ocean past Iceland to project power into the wider Atlantic.

With the primary objective of securing the strategically vital Greenland-Iceland-United Kingdom (GIUK) Gap, Germany, Norway, and Canada established a joint “North Atlantic Security Partnership” at the NATO summit in Washington in July 2024. Denmark formally joined the defense coalition in 2025.

The scope of this trilateral operational cooperation is broad. In addition to underwater assets, Germany, Norway, and Canada are acquiring Boeing P-8A Poseidon maritime patrol aircraft to conduct coordinated aerial surveillance over the North Atlantic.

Germany and Norway have already jointly ordered 12 Type 212 CD submarines.

If Canada fulfills its planned acquisition of 12 additional vessels, the three partner nations will eventually operate a highly standardized fleet of 24 identical submarines, streamlining joint operations and maintenance.

Targeting strategic independence from the US

The acquisition of the TKMS Type 212 CD is further supported by extensive industrial offset agreements negotiated between Berlin and Ottawa.

These offset packages are designed to deepen German-Canadian economic integration and industrial cooperation.

Through these initiatives, both nations aim to reduce their respective economic reliance on the United States.

As part of the offset programs, TKMS plans to establish a joint center of excellence for submarine simulation, crew training, and maintenance in partnership with Canadian technology firm CAE.

On Tuesday, German aerospace startup Isar Aerospace signed an agreement with Maritime Launch Services, a Canadian company developing a commercial spaceport near Canso, Nova Scotia.

Beginning in 2028, Isar Aerospace intends to launch its Spectrum launch vehicle from the Nova Scotia facility to deploy small and medium-sized satellites. Historically, Canada has relied entirely on US launch infrastructure for its space access.

Under parallel reciprocal investment frameworks, the German state-backed gas importer Sefe is scheduled to import 1 million metric tons of Canadian LNG annually.

This supply agreement is intended to partially reduce Germany’s reliance on US shale gas imports.

Discussions have also taken place regarding German investments in Canada’s raw materials sector, specifically focusing on securing supply chains for rare earth elements.

TKMS order book swells amid defense procurement boom

The Canadian submarine contract provides significant commercial momentum to TKMS.

As of March 31, the company reported a record-high order backlog of €20.6 billion.

In the first half of the 2025/26 fiscal year, TKMS reported a 10% increase in revenue to €1.17 billion. While this remains substantially below the volumes recorded by German defense prime Rheinmetall—which grew its revenue by approximately 8% to €1.94 billion in the first quarter of 2026 alone—it highlights the broader defense boom lifting the naval specialist.

TKMS recently rose to 61st place in the Stockholm International Peace Research Institute (SIPRI) global ranking of the world’s largest defense contractors.

The company is anticipating further export orders. In late June, TKMS celebrated the christening of the third Tamandaré-class frigate being built for the Brazilian Navy in Itajaí, Brazil.

One vessel in the class has already been delivered, a second is scheduled to begin sea trials this year, and a fourth is currently under construction.

The Brazilian government is reportedly planning to place an follow-on order for an additional four TKMS frigates.

To manage this sharp increase in naval production, TKMS has been in ongoing negotiations to acquire the adjacent German Naval Yards facility in Kiel.

However, Rheinmetall has also expressed strong interest in acquiring the same shipyard to support its newly established maritime division.

US technology remains central to defense systems

TKMS is positioned to benefit heavily from domestic procurement programs initiated by the German Navy.

Following the cancellation of the F126 frigate project, TKMS secured contracts to build new MEKO A-200 class frigates as a rapid alternative.

The initial phase of the program involves the construction of four hulls at a cost of €6.63 billion, with a follow-on option for an additional four vessels valued at €5.3 billion.

These domestic surface combatant contracts, alongside the Canadian submarine program, are not yet reflected in the record €20.6 billion backlog reported on March 31.

Concurrently, development continues on the F127 next-generation frigate program, which TKMS is executing in partnership with the Naval Vessels Lürssen shipyard (acquired from Rheinmetall).

The German Navy currently plans to procure eight F127 frigates to serve as its primary air defense combatants over the coming decades.

Total program costs are estimated to exceed €26 billion, which naval analysts note makes the F127 the most expensive procurement project in German naval history.

However, the program has faced criticism regarding its planned air defense suite, which relies on Standard Missile interceptors and the SPY-6 radar system.

Both systems are manufactured by the US defense contractor RTX (formerly Raytheon), maintaining a significant degree of technological dependence on Washington.

Defense analysts point out that there are currently no equivalent European alternatives to these US systems, and note that Germany will remain reliant on US satellite and GPS networks for the next decade.

While a transition to European systems, such as the Iris-T interceptor family manufactured by Germany’s Diehl, could eventually offer strategic independence from the US, experts estimate that this technology will not be sufficiently mature for high-end naval air defense applications until the mid-2030s.

Diplomacy

EU pursues closer ties with Israel on space and air defence

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The EU is turning to Israel to bolster its new initiatives in high-tech air defence and space capabilities.

Shimrit Maman, head of the Israel Space Agency, travelled to Brussels this week and met on Tuesday with European Commissioner for Startups, Research and Innovation Ekaterina Zaharieva to discuss key sectors, including artificial intelligence and robotics.

The visit took place ahead of European Commission President Ursula von der Leyen’s first major speech on space, scheduled for Thursday at a summit in Paris.

In the speech, Von der Leyen is expected to warn against mounting hostilities and emphasise the necessity of strengthening Europe’s presence in space.

“It’s very hard to do everything by yourself,” Maman told Politico, adding that the militarization of space is “already happening, it’s just we are not aware of the extent,” and noting that allies are showing growing interest in “dual-use” technologies intended for both civilian and defence purposes:

“One thing we’re working on is early-warning systems. For example, during the last wave [of missile attacks] with Iran, we saw this very clearly. How we were getting the alerts to all the civilians in Israel, and that made the casualties so low. This is part of the system. We’re working on a very holistic view, where you can alert in advance, the system alerts the citizens.”

Following several years of effective disengagement caused by political tensions surrounding the invasion of Gaza, the EU has recently begun forging closer military and technological ties with Israel through a series of agreements.

Competition from Washington and strategic rivalry with Moscow and Beijing have nevertheless underlined the requirement for allies possessing sophisticated industrial capacity.

In 2024, European Commission President Ursula von der Leyen backed calls by Polish Prime Minister Donald Tusk and Greek Prime Minister Kyriakos Mitsotakis to create an EU-funded air defence shield.

Three senior officials involved in the discussions said, however, that the plans stalled after officials in the Commission and several national capitals concluded that the project would require reliance on Israeli air defence technology, which was considered too sensitive one year into the Gaza conflict.

Yet Israel’s Rafael, which is expanding its European operations significantly, has now confirmed that it will open a factory to manufacture the Iron Dome air defence system at a former Volkswagen plant in Germany.

One week ago, Greece signed a 3 billion euro agreement with the Israel Ministry of Defense.

The deal provides for the establishment of a new multi-layered air defence network designed to shoot down drones, hostile jets, and rockets.

“We see everything integrating into this multi-layer defence approach,” Maman said, highlighting satellite imagery and artificial intelligence modelling as primary focal points for joint development efforts:

“I’m not only seeing defence as ballistic missiles from Iran… think about a fire, a flash flood or even a long drought… we have a proven track record, and we’re getting really good results.”

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UK reassures US that new Israeli settlement sanctions are symbolic

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The UK has reportedly engaged in behind-the-scenes talks to avoid a backlash from the US over anti-Israel sanctions scheduled for announcement today.

According to a report by Bloomberg, Andy Burnham’s government is expected to ban trade with Israeli settlements in the West Bank today.

Burnham is seeking to pursue a firmer stance on an issue of high importance to the governing Labour Party, though one that risks angering US President Donald Trump.

Foreign Secretary Ed Miliband will unveil a new sanctions regime targeting Israel but limited to Jewish settlements in the West Bank, according to sources familiar with the matter.

Burnham and Trump spoke by telephone on Monday, the Prime Minister’s Office said. A statement noted that the two leaders discussed a two-state solution for Israel and the Palestinian territories.

The discussion suggests that Burnham used the call to notify Trump that sanctions against Israel were imminent.

The proposals under review included a new sanctions regime with measures to block the exchange of goods and services with Israeli settlements.

Miliband also evaluated expanding existing human rights sanctions to encompass the blocking of aid, which has drawn criticism for exacerbating the humanitarian crisis in Gaza.

The Foreign Secretary further considered explicitly endorsing the International Court of Justice’s non-binding 2024 opinion that declared Israel’s occupation of territory currently recognised by the UK as the State of Palestine to be unlawful.

Even so, UK officials fear the announcement could cause an early setback in Burnham’s relationship with Trump.

To defuse a backlash from the Trump administration, British diplomats privately informed the US that the sanctions are largely symbolic and will have no tangible impact on the UK’s broader trade or security ties with Israel, according to sources familiar with the discussions.

The proposals were drawn up after Israel decided to issue tenders for the construction of 1,200 settlement housing units in an area of the West Bank.

Disputes between Israeli settlers and Palestinians have intensified in recent months as Israeli Prime Minister Benjamin Netanyahu faces a difficult battle to retain his seat in a general election scheduled for 27 October.

Burnham joined the leaders of Canada and five European governments, including France, Germany, and Italy, in signing a statement that condemned the housing plan as “unacceptable” and urged Netanyahu to withdraw the tender.

In a separate statement, German Chancellor Friedrich Merz condemned a call by Israeli National Security Minister Itamar Ben Gvir for “nightly assassinations” in Gaza.

Burnham is eager to demonstrate early to the Labour Party that he is adopting a more critical approach toward Israel than his predecessor, Keir Starmer.

Although Starmer hardened his stance against Israel during his two years in office, including by formally recognising the State of Palestine, his initial refusal to demand that Netanyahu halt military operations in Gaza divided the party.

This division led to a decline in Labour’s poll ratings and boosted electoral gains for the Green Party across the country.

Burnham’s return to Parliament last month led to Starmer’s resignation. Burnham apologised for Labour’s handling of Israel’s military operation in Gaza under his predecessor, stating that the party “did not adopt the right stance”.

Last month, Burnham’s new Defence Secretary, Wes Streeting, who faced intense competition from a Muslim independent candidate in his northeast London constituency at the last general election, stated that Israel had fallen “short” of international standards.

US Ambassador to Israel Mike Huckabee told the BBC’s “Newsday” programme that there would “undoubtedly” be a US response.

Accusing the Labour Party of “discriminating against the Israeli government”, Huckabee said: “It is like throwing a rock and not knowing where it lands. The UK is a sovereign country and can do as it pleases, but so is the US.”

Republican Florida Congressman Randy Fine also warned that British firms would be barred from doing business with local governments in the state if sanctions were imposed.

In a post on X, Fine said: “Florida has made its stance clear. Any company—or country—that boycotts Israel will be boycotted by Florida.”

Labour MPs and Jewish groups have warned the government that any sanctions against the settlements could amount to a “de facto boycott” of Israeli goods and compromise the safety of British Jews.

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US drafts post-war Middle East strategy focused on Iran

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The US administration is working on a post-war strategy focused on containing Iran and expanding the normalisation of relations between Israel and its neighbours.

According to Axios, although the plan remains in the draft stage, it is intended to guide the US approach to the Middle East once the war with Iran concludes and across the final two years of President Donald Trump’s term in office.

Two major events cast a shadow over the planning process: the Israeli elections scheduled for 27 October and the US midterm elections in November.

US officials state that initial work on the strategy is being conducted both at senior political levels within the Trump administration and at an interagency working level.

According to sources, Trump has held two meetings with senior advisers in recent weeks where the plan was discussed and concepts were floated.

In private conversations, Trump reportedly said he is working on “something much bigger” in the Middle East following the war with Iran.

According to sources, three primary elements have been put forward as prospective components of the strategy:

Establishing a regional alliance among US allies, guaranteed by the US, in order to contain Iran.

Pursuing a joint effort to bring the regional fallout of the 7 October 2023 Al-Aqsa Flood operation toward a conclusion by securing the next phase of Trump’s Gaza plan, signing a security agreement between Israel and Syria, and implementing the Israel-Lebanon agreement.

Expanding the Abraham Accords and reaching a normalisation agreement between Saudi Arabia and Israel.

The Trump administration hopes that the new Israeli government formed after the 27 October elections will be willing and able to cooperate on the post-war strategy.

However, some US officials emphasise that Trump will push for the implementation of this strategy regardless of the Israeli election results, even if the vote leads to political deadlock.

A source familiar with the process stated that drafting the strategy would take several more weeks. “They are working on it, but it is not finished yet,” the source said, adding:

“The aim here is to connect many moving parts in the region; how to build a regional alliance after the war. It is not yet clear whether all US allies in the region will participate in this process.”

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