Europe
Rheinmetall charts a course to become the world’s second-largest defense company
The German arms conglomerate Rheinmetall is systematically expanding into numerous new areas of the defense industry and plans to become one of the top three defense companies in the world.
The company, which traditionally produces tanks, artillery, and ammunition, is now entering the drone and satellite production markets.
According to an analysis in German Foreign Policy, Rheinmetall is thus transforming into a company that not only produces weapons and ammunition for future battlefields but also manufactures the unmanned aerial vehicles flying above them and the satellites that survey the conflict and its surroundings.
While Rheinmetall’s arms sales were only €3.7 billion in 2020, total sales are expected to reach €50 billion by 2030 following the divestment of its civilian automotive division.
Based on current figures, this would place the company second among global defense corporations, behind the US giant Lockheed Martin, which recorded defense sales of €55.5 billion in 2024. In Europe, Rheinmetall will be the largest ammunition manufacturer.
Europe’s largest ammunition manufacturer
Rheinmetall expects ammunition production to constitute the largest share of its sales, reaching €14 to €16 billion by 2030.
The Düsseldorf-based arms manufacturer is already Europe’s largest ammunition producer, thanks in part to the acquisition of its Spanish competitor Expal, which was completed in the summer of 2023.
While Rheinmetall produced approximately 60,000 units of 120mm tank ammunition in 2022, it plans to produce 240,000 units by 2027. For 155mm caliber artillery ammunition, the group aims to increase production from 70,000 rounds in 2022 to 1.1 million rounds in 2027, and 1.5 million rounds by 2030.
The production of medium-caliber ammunition for air defense will be quadrupled by 2030 compared to 2022, reaching 4 million rounds. To achieve this, Rheinmetall is expanding its plant in Unterlüß to become the largest ammunition factory in Europe, and possibly the world, according to a statement by CEO Armin Papperger at the new factory’s opening in late August.
A key customer for the company is the German Armed Forces, which increased its framework agreement for the supply of tank ammunition alone to approximately €4 billion in 2023. Rheinmetall is also building a series of new ammunition and gunpowder factories in countries such as Lithuania, Latvia, Bulgaria, and Romania.
Diversification in tank production
Rheinmetall aims to achieve its second-highest partial sales figure in the combat vehicle business, with a target of €13 to €15 billion in 2030.
The group is involved in the construction of numerous long-standing tanks, including the Leopard main battle tank, for which Rheinmetall primarily produces the smoothbore cannon, and the GTK Boxer wheeled armored vehicle.
In the future, Rheinmetall is focusing particularly on the Lynx infantry fighting vehicle and the Panther main battle tank. The KF41 Lynx was introduced in 2018; Hungary and Italy have placed firm orders for the vehicle so far. CEO Papperger hopes to sell more than 6,000 Lynx infantry fighting vehicles, at least if it emerges victorious in the ongoing selection process by the US armed forces.
Rheinmetall is also focusing on the KF51 Panther main battle tank, which is being touted as a potential successor to the Leopard. This tank is a competitor to the German-French MGCS (Main Ground Combat System) battle tank project, which has made no progress.
Rheinmetall has already received firm purchase commitments for the KF51 Panther: one from Hungary and another from Italy. Here, Rheinmetall is partnering with Leonardo.
In Italy, Rheinmetall operates as a supplier in a joint venture with the Italian defense group Leonardo.
SPOCK satellites: The digitalization offensive
Rheinmetall expects additional sales of €8 to €10 billion in its digitalization business segment, which includes the satellite business. The Düsseldorf-based tank manufacturer is entering this market from scratch.
The background for this is the digital networking of weapon systems traditionally produced by Rheinmetall on the battlefield. This includes network connectivity with reconnaissance satellites.
To produce these, Rheinmetall has established a joint venture with the Finnish startup Iceye, which is considered an international leader in the production of satellites with SAR (Synthetic Aperture Radar) technology.
When using SAR satellites, microwaves are emitted, and their echoes are measured to create high-resolution images of events on the ground, even at night or in poor weather conditions.
Rheinmetall holds a 60% stake in the joint venture, which will operate its production at the Neuss facility, while Iceye holds a 40% stake. The initial plan is to produce satellites for the German Armed Forces’ “Panzer Brigade 45” unit in Lithuania for approximately €1.76 billion.
The reconnaissance system will be named SPOCK (Space-based System for Persistent Operational C2 and Kill-chain). Competing firms were displeased that the contract was awarded without a tender process, which was a clear advantage for Rheinmetall.
Kamikaze drones
Rheinmetall aims for additional sales of €3 to €4 billion in the air defense segment by 2030. This is also a relatively new area for the company.
In July, Rheinmetall, in collaboration with the US defense giant Lockheed Martin, opened a factory in Weeze, North Rhine-Westphalia, that produces fuselage parts for the US F-35 fighter jet. This was the first step into the aviation industry.
The group is also working with various external companies to gain expertise in drone production. For example, it collaborates with the Israeli company UVision, founded in 2011 and specializing in drone manufacturing, with which it primarily produces Hero kamikaze drones.
Recently, this joint venture received an order to supply millions of euros worth of Hero drones to a NATO country.
The Düsseldorf-based group signed a collaboration agreement for drone defense with the US startup Anduril in 2024 and expanded it this year to include drone production. Anduril is considered the world’s largest military startup.
Rheinmetall also works with Auterion, a drone specialist founded in Switzerland and now based in the US. According to reports, Rheinmetall is currently planning to build a drone factory in the Baltic states.
New goals in the maritime sector
The new maritime division is also expected to generate a turnover of approximately €5 billion by 2030.
This division will be created through the acquisition of Naval Vessels Lürssen (NVL), the naval division of the Lürssen shipyard in Bremen, with the acquisition expected to be completed by early 2026.
Rheinmetall hopes this will create certain synergies with its tank-building operations but, above all, allow it to enter the extremely costly warship construction market. “In the future, we will be a significant player on land, at sea, in the air, and in space. Rheinmetall is thus transforming into a cross-domain systems house,” said CEO Papperger.
NVL has primarily built corvettes; the company currently owns four shipyards in Hamburg (Blohm + Voss, Norderwerft), Wolgast (Peene-Werft), and Wilhelmshaven (Neue Jadewerft).
According to reports, the corvettes, which will soon be produced by Rheinmetall’s maritime division rather than NVL, could be equipped with new weapons that Rheinmetall is currently developing in collaboration with the US company Lockheed Martin.
“The current conflict situation shows that military application capabilities are becoming increasingly important in the maritime sector as well,” says Rheinmetall.
Transatlantic orientation is critical for Rheinmetall
Rheinmetall is one of the companies in the German defense industry with a clear transatlantic orientation. Its shareholders include well-known financial firms from the US, though none of them approach the 10% ownership threshold.
According to Rheinmetall’s current information, the largest single investor is BlackRock, with a 7.0% stake. It is followed by Bank of America (4.64%), Morgan Stanley (4.37%), Goldman Sachs (4.06%), and the Swiss UBS Group (3.83%).
More importantly, Rheinmetall is actively seeking orders from the US armed forces, the world’s largest arms buyer, and is collaborating very closely with US companies, including Lockheed Martin.
On the other hand, Rheinmetall also produces weapon systems labeled as “ITAR-free.” These are systems manufactured without US components and are therefore not subject to the US International Traffic in Arms Regulations.
The SAR satellites produced by Iceye—and in the future, in collaboration with Rheinmetall—are “ITAR-free” and thus independent of US influence.
Europe
Fico accuses Merz of blackmail over threat to veto EU budget
Slovak Prime Minister Robert Fico has hit back after German Chancellor Friedrich Merz threatened to veto the EU budget unless funding for Ukraine is secured.
Merz said he would block the EU’s seven-year budget if no agreement is reached on financial assistance for Ukraine.
The chancellor’s intervention has angered Central European leaders who are net beneficiaries of EU funds but do not want to take part in the next round of funding to support Ukraine’s war effort.
“What the chancellor is doing is typical blackmail, and I will not bow to it,” Fico told reporters in Bratislava.
Fico spoke alongside his Czech counterpart, Andrej Babiš, whose government has refused to participate in a future loan to Ukraine.
“I do not know why he said this,” Babiš said, referring to Merz’s stance.
Merz wants EU leaders to discuss Ukraine’s financing needs at a summit in Dublin on Friday.
In a letter to European Council President António Costa, who will chair the meeting, obtained by The Guardian, Merz wrote:
“We must maintain our support for Ukraine in its struggle to defend itself. This is our shared vital interest. Yet bilateral aid provided to Ukraine is distributed unevenly, with the burden shouldered mostly by only a few member states.”
The EU agreed last year to provide a €90 billion loan to Ukraine, intended to cover two-thirds of its military and civilian spending for 2026 and 2027.
Since then, however, Russia’s relentless bombardment has placed a heavier financial burden on Kyiv, prompting President Volodymyr Zelenskyy to ask for €70 billion to plug the budget deficit.
The EU has endorsed Zelenskyy’s figures and pledged to find €45 billion. Ukraine’s other allies, such as Britain and Canada, are expected to cover the rest.
Last year, Merz launched an initiative to tap €210 billion in frozen Russian state assets held in the EU, but the plan fell through due to opposition led by Belgium, which holds most of the funds in Brussels.
The €90 billion loan was the backup plan. Having opted out of that loan, Hungary, Slovakia, and Czechia indicated that they would not take part in the next round either.
Bulgaria joined these three member states following the election of Prime Minister Rumen Radev last April.
The question of funding for Ukraine is now spilling over into the fraught negotiations on the 2028-34 EU budget.
Germany, the largest net contributor, wants substantial cuts to the proposed budget and opposes the EU providing generous funding to member states that refuse to contribute to Ukraine’s financial needs.
Merz states in his letter that a “collective commitment without exceptions” is a “fundamental prerequisite” for closing Ukraine’s financing gap and for “discussing other matters, particularly those with financial implications.”
He also notes that, in the context of the EU’s next seven-year budget, known as the Multiannual Financial Framework, all member states must contribute to a “robust” financial perspective for Ukraine from 2028 onwards.
A German government official said:
“For the Multiannual Financial Framework (MFF) to be successfully concluded, it is vital that all EU member states provide financial support to Ukraine.”
Berlin is also aiming to shift decision-making on funding for Ukraine from unanimity to qualified majority voting, in an effort to prevent a single government from blocking EU decisions.
The letter reflects mounting frustration among the EU’s northern member states, Ukraine’s most generous backers, over lower contributions from other EU countries in Central and Southern Europe.
The task of brokering an agreement on the budget falls to Costa, the former Portuguese prime minister.
Costa wants a deal by the end of the year, ahead of elections in France, Poland, and Italy in 2027 that could complicate the process.
A spokesperson for Costa confirmed receipt of the letter without elaborating on details. “President Costa will dedicate time to the Ukraine issue at the informal European Council meeting in Dublin this week,” the spokesperson said, adding that funding for Ukraine would be addressed at a dedicated summit on the EU budget scheduled for 26-27 November.
Europe
EU expects next Israeli government to adopt less aggressive posture
The EU expects the next Israeli government to mend its “difficult relationship” with Brussels and adopt a more constructive approach toward Gaza and illegal settlements.
Israeli President Isaac Herzog tasked Gadi Eisenkot, the leader of the anti-Netanyahu bloc, on Sunday with forming a government.
Eisenkot stated that the country faces a “catastrophic diplomatic crisis” as traditional allies begin to reassess their relations with Israel.
Speaking to Rapporteur, several European diplomats stationed in Tel Aviv said they expect ties to get back on track.
“Whatever government comes in, we can try to revitalize relations because Israel is clearly a very important partner,” one European diplomat said, adding that Brussels expects the next administration to be “less aggressive”.
The diplomat noted that relations with Europe are currently “not very good”.
Israel cut off communication with Kaja Kallas, the EU high representative for foreign affairs and security policy, after Rapporteur revealed in June that she had compared Israel to apartheid-era South Africa during a visit to Mexico.
The diplomat stated that this decision, taken ahead of elections, was political in nature. A second European diplomat based in Brussels explained that the announcement came only a few days before an official visit by Dubravka Šuica, the European commissioner for the Mediterranean.
“This could have been interpreted as a tactic to divide Europe, but Israel had asked Kallas to deny the report; she did not do so,” the second diplomat said.
Brussels has repeatedly voiced its frustration with Israel over the humanitarian crisis in Gaza and the expansion of West Bank settlements.
However, EU governments blocked almost all sanctions proposed by the European Commission.
A third diplomat said opposition parties would “almost certainly take the issue more seriously” when it comes to tackling violence by West Bank settlers:
“We see Palestinians being expelled from their homes and new illegal settlements being built in the West Bank. There is a reluctance on the part of the current government to address this issue, which causes problems in our relations.”
The new government is expected to ease pressure on Palestinians and halt construction of the E1 settlement project, a controversial plan to build settler housing in the West Bank east of Jerusalem.
“They will probably try to deal with the problem of extremist settlers in the West Bank,” the diplomat added.
On Gaza, the diplomat described the situation as “a complete nightmare”, with two million Palestinians crowded into an area that accounts for roughly 35% of the territory.
“There are not enough tents for the winter, and not enough vaccines are reaching the area despite an increase in diseases,” the diplomat said.
The European official argued that Donald Trump’s peace plan met all the conditions for Europe. Although the EU had much to offer, neither the US nor Israel appeared interested in EU involvement in the process.
“We are currently training Palestinian police in the West Bank, and if permitted, we could do the same in Gaza,” the diplomat said.
The diplomat disclosed that Israel had agreed with Šuica that Europe would finance two projects aimed at improving sewage and water infrastructure in Gaza, continuing:
“However, none of these projects has started yet because there is a serious problem with dual-use goods. Getting materials into Gaza is very difficult because the Israelis say they could be misused if they fall into the wrong hands of Hamas.”
Israel insists that Hamas must be disarmed before subsequent phases of Trump’s plan can proceed.
With disarmament unlikely to happen in the near term, the EU argues that certain measures can be carried out in parallel.
“We can begin rebuilding sanitation systems in Gaza. We can start building desalination plants. We can begin providing energy and water to Gaza,” one diplomat said.
While Brussels hopes for progress on Gaza and the West Bank, it maintains that expectations regarding the establishment of a Palestinian state need to be “managed”.
The EU continues to advocate a two-state solution, yet most leading Jewish parties oppose the creation of a Palestinian state.
The diplomat noted that the next Israeli government will likely have “a very slim majority and not much room for manoeuvre”.
There is also a “major misunderstanding” between the EU and Israel that must be addressed. According to the diplomat, Europeans fail to recognize the “psychological impact” of 7 October on Israelis.
“This event changed the country and made the two-state solution even more distant than before,” the diplomat said.
In return, some Israeli politicians believe Europe has betrayed Israel despite what they view as a fight against “Islamist terrorism”.
“Their argument is that European politicians are somewhat afraid of the Muslim population in Europe,” the European diplomat said.
Europe strongly opposes Iran and the possibility of Tehran acquiring nuclear weapons, imposing sanctions in response.
However, the diplomat argued that the EU would not participate in a war because it lacks a common army:
“We are a diplomatic and economic power, which is why we resort to sanctions and diplomacy. The expectation that we would take part in a military operation is unrealistic.”
Europe
Germany threatens EU budget veto over long-term Ukraine aid
Germany has threatened to veto the European Union’s joint budget for the 2028-2034 period, which is currently under negotiation, unless every member state commits to providing financial support to Ukraine in 2027 and subsequent years, German Chancellor Friedrich Merz warned.
According to a report by the Financial Times (FT), Chancellor Merz set out Berlin’s condition for the budget talks in a letter addressed to European Council President António Costa.
In his letter, Merz wrote: “A collective commitment that every single one of us, without exception, will make a fair contribution to closing Ukraine’s budget deficit is an indispensable prerequisite for resolving this budget issue and, in particular, for addressing subsequent matters that carry financial implications.”
The German Chancellor stressed that a formula backed by all member states must be established to provide Ukraine with a reliable, multi-year financial perspective starting from 2028.
Merz also insisted that any agreed solution must cover the interest payments on debts incurred to finance the assistance provided to Kyiv.
Conversely, several countries within the bloc have cut financial aid to Ukraine, and the number of capitals adopting this stance is projected to rise next year.
In December 2025, Hungary, Slovakia, and the Czech Republic approved the EU’s 90 billion euro loan package for Kyiv only on the condition that they would not contribute to its costs themselves.
Alongside these three countries, Bulgaria has also stated that it does not plan to participate in subsequent financial assistance packages for Ukraine.
In France, far-right leader Marine Le Pen, who could potentially win the presidential election scheduled for spring 2027, recently told the FT that Paris has run out of funds.
Le Pen assessed: “The honest approach is to tell Mr Zelensky clearly, and even warn him: ‘Look, we cannot do more. We have already allocated the 90 billion euro EU loan, in which France’s share amounts to 18 billion euros. 18 billion euros is genuinely a huge amount of money.'”
The EU’s 90 billion euro loan, covering the 2026-2027 period, aims to meet two-thirds of Ukraine’s financing requirements.
Brussels expects the remaining 45 billion euros to be covered by other partners, including Canada, the UK, Norway, Japan, South Korea, and Australia.
Germany remains the largest net contributor to the EU budget.
In contrast, the four Eastern European countries seeking to avoid financing Ukraine rank among the largest net beneficiaries of the bloc’s budget.
Leveraging this balance, Chancellor Merz aims to use his influence in the EU budget negotiations to secure uninterrupted support for Kyiv in 2027 and the years beyond.
According to the FT, Berlin is also demanding that future aid packages be decided by qualified majority voting rather than unanimity, which is required under the current system.
A German government spokesperson told the newspaper:
“The issue of Ukraine’s financial needs must be resolved within the framework of the next EU budget. Financial support for Ukraine from all EU members is decisive for the successful conclusion of the budget talks.”
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