On one hand, NATO’s target for military spending “of 5% is realistic,” while on the other, Italy’s postponement of Safe loans “does not affect” the group’s profits, “neither this year nor in the forecast.”
This is the conviction of Lorenzo Mariani, CEO of Leonardo, speaking yesterday on the sidelines of the Defense Industry Forum held alongside the ongoing NATO summit in Ankara.
The head of the Italian aerospace and defense giant addressed the topics of increased defense spending for the old continent, Italy’s postponement of joining the European Safe instrument, and the Gcap program.
At the same time, Leonardo announced two important initiatives with the Atlantic Alliance: the agreement worth about 200 million euros for the Protected Business Network program for NATO’s digital transformation together with Accenture, and the selection, in consortium with Thales, to develop a new communication system intended for the Allied Special Forces Command.
All the details.
ABOUT THE INCREASE IN DEFENSE SPENDING…
Speaking at the Defense Industry Forum organized alongside the NATO summit in Ankara, Mariani commented on the Alliance’s goal to increase defense investments up to 5% of GDP, calling it achievable provided it is accompanied by a sustainable timeline.
“The 5% target is realistic but the important thing is the timing modulation, because not all countries, for various reasons ranging from budgetary to social reasons, are able to follow this path within the time initially imagined by America,” explained Leonardo’s CEO, as reported by Repubblica.
…AND THE AMERICAN DISENGAGEMENT
At the same time, according to Mariani, the issue of European defense must be seen “from the other side,” starting from the observation that “there is a need for the alliance not to be propped up solely by the American contribution but that a European contribution is necessary, hence the opening of a verticality in terms of technological products and European sovereignty through collaboration agreements.”
We are not at year zero in Europe: “Collaboration agreements exist between European countries and this is the real point: so far Europeans have spent on too fragmented things and in some sectors they do not have suitable systems to fill the gaps defined by NATO and investments must be made in these areas, bearing in mind that chasing the top of the range is not always the way.” Some examples: regarding missile defense coverage, the American Patriot is often mentioned, but in Europe there is the Samp/T developed by Eurosam (a consortium formed by Mbda Italy, Mbda France, and Thales), a medium-range surface-to-air missile system. “It works very well,” notes Mariani, reported by Radiocor. The same applies to the F35 in relation to the Rafale fighter and the Eurofighter.
ROME’S APPROACH
Furthermore, the CEO of the former Finmeccanica group explained that the industrial sector has welcomed the approach chosen by the Italian government. “Within the commitment to grow, we as industry have particularly appreciated the gradual growth, because a stepwise growth would have put us in difficulty. There are no steps in industrial production.”
Referring to Italy, Mariani observed that the country “is capable,” but needs “its own timing and above all gradual growth, accompanied by communication that clearly explains that security is truly the foundation of civil life and the well-being of a country.” He then added that “a gradual growth that today leads to a moderate increase of half a point, 0.7 I heard, and that especially involves security aspects and not only pure defense, allowing us also to convey a socially more acceptable message, this in my opinion is positive.”
THE POSTPONEMENT OF SAFE: THE IMPACT ON LEONARDO’S ACCOUNTS
Another topic addressed by Leonardo’s top executive concerned the Italian government’s decision to postpone the use of loans from the European Safe program. In recent months, our country had requested to be admitted to loans totaling 14.9 billion euros from the EU under the Security Action for Europe (Safe) program to finance defense and security expenses. The mechanism provides that the EU raises funds on capital markets and makes them available to member states in the form of long-term loans, based on their investment plans for the European defense industry. But at the moment, the Rome government has preferred not to join.
According to Mariani, the choice will not affect the group’s economic results. “The Group does not lose out because the programs in which we are currently engaged and on which we have based our growth over the strategic plan period are programs that relied and rely on the ordinary Defense budget.”
The CEO reiterated that the postponement “does not affect” the group’s profits, “neither this year nor in the forecast,” adding that “what I observe is that the programs are funded and we are continuing to work on all of them.”
THE FINAL DECISION BELONGS TO THE GOVERNMENT
Mariani also linked the Italian executive’s choice to the framework of the European infringement procedure: “I believe that the Safe issue has been addressed, beyond the controversies, in a rational way. We are a country under infringement procedure: exiting the infringement procedure is the logical approach. Then, once out, applying the national safeguard clause is a somewhat technical and somewhat political decision. We, as industry, accept it.”
Regarding the methods of financing defense spending, Mariani emphasized that “the industry has the flexibility to adapt to different financing methods,” specifying that the use of Safe loans or the issuance of government bonds is a decision that exclusively belongs to the government.
REGARDING A POSSIBLE ENTRY OF ANKARA INTO THE SAFE PROGRAM
Asked whether he viewed positively the extension of Safe participation to Turkey, Leonardo’s CEO said that “the inclusion of all alliance countries can be considered, that is not the issue. The issue is that Safe was created to further federate Europe with collaboration programs so it probably makes sense to first federate the ‘core’ Europe and then extend it to countries that are part of the alliance, they are still important allies of European countries but are not part of it. So nothing against Turkey absolutely, but I believe priority should first be given to consolidating the programs that give a boost to the European industry,” reports again Radiocor.
THE SECOND INTERNATIONAL CONTRACT OF GCAP
During his speech in Ankara, Mariani also focused on the Global Combat Air Programme (Gcap), a program for a sixth-generation air combat system to be operational by 2035 developed by London, Rome, and Tokyo, recalling the recent signing of the second joint international contract with Edgewing, the trinational industrial joint venture established to lead the design and development of the program among the lead companies (Leonardo for Italy, Bae Systems for the United Kingdom, and Mitsubishi Heavy Industries for Japan).
“Just the day before yesterday the first major international Gcap (Global Combat Air Programme) contract was signed which truly represents, as we see it, a point of no return, because at that point the principle is established that there is a large contract that then flows down to the three lead system integrators, including Leonardo.”
THE AGREEMENT WITH LEONARDO AND ACCENTURE FOR NATO’S DIGITAL TRANSFORMATION
Also yesterday, on the occasion of the NATO Summit Defense Industry Forum, Accenture signed an agreement worth about 200 million euros with the NATO Communications and Information Agency (NCIA) within the Protected Business Network (PBN) program, in which Leonardo will participate as an industrial partner over the next seven years.
Within the project, the Piazza Monte Grappa group will implement a Zero Trust architecture protected by its own Global Cybersec Platform, a multi-agent platform based on artificial intelligence for cyber defense, aiming to guarantee the highest levels of resilience of NATO’s digital infrastructure. The agreement launches the first implementation phase of one of the Alliance’s main digital transformation programs, approved by the North Atlantic Council. “In the current geopolitical scenario, this project represents a fundamental milestone to strengthen NATO’s operational readiness, interoperability, and mission continuity,” said Leonardo’s CEO and Managing Director Mariani, underlining that the program “consolidates the group’s leadership” in cybersecurity for mission-critical organizations.
THE CONTRACT WITH THALES FOR NATO SPECIAL FORCES
Finally, earlier this week the NATO Communications and Information Agency (NCIA) selected the consortium formed by Thales and Leonardo as the trusted supplier to develop a next-generation secure deployable communication and information system dedicated to the Allied Special Forces Command (SOFCOM).
The contract represents the first project of a broad NATO program aimed at providing cutting-edge communication and information systems to SOFCOM, in order to strengthen the Alliance’s resilience in modern warfare. As system suppliers, Thales and Leonardo are delivering next-generation deployable CIS to NATO – which can be managed and updated throughout their lifecycle, while training and support will ensure full adoption by users under NCIA’s responsibility. In addition to the Franco-Italian partnership, the Consortium will deliver these systems to NATO also leveraging industrial assets present within the Alliance, with key technologies coming from the United Kingdom and Germany.
