GPI Global Policy Institute

Italy’s defense industries in the new era of European rearmament

By Massimiliano Cintura

February 17,2026

WASHINGTON – “It is time for European nations to wake up. Russia’s invasion of Ukraine demonstrated that Europe continues to face grave security threats and must re-militarize to ensure its security.” (US Department of State, Agency Strategic Plan for Fiscal Year 2026-2030).
On March 2, 2025, Ursula von der Leyen, President of the European Commission, suggested that the European Union might need to ease its fiscal rules regarding allowable national debt levels to facilitate increased defense spending by member states. On March 4, 2025, Von der Leyen announced the EU’s €800 billion defense investment plan called “ReArm Europe”.
During the European Council meeting held on March 20 and 21, 2025, Ursula von der Leyen reported on Spain and Italy’s requests to change the name of the European rearmament program, as it was considered too militaristic. Because of this, the plan was renamed “Readiness 2030”.
The name of the program comes from the title of the Defense White Paper presented by the Commission and the High Representative. The White Paper was created in order to present ways of closing capability gaps in order to build a strong Europe-wide defense industrial base. It proposes ways for Member States to massively invest in defense and procure new defense systems while ramping up the capabilities of the European defense industry as the critical foundation for enhanced European security. The Defense White paper prioritizes anti-aircraft defense, ammunition stockpiles, missiles, drones, and military mobility.

Where does the Italian defense industry stand?

According to the Stockholm International Peace Research Institute (SIPRI), Italy is the world’s sixth-largest arms exporter, accounting for 4.8% of global arms exports, surpassing UK. During the 2020–2024 period, Italian arms exports rose by 138% compared to 2015–2019, the largest increase recorded worldwide, reflecting strong international demand for Italy’s defense products. Approximately 71% of these exports were destined for the Middle East. Indeed, Italy is Qatar’s second-largest defense goods supplier (28% of total acquisitions), after the United States. In 2024 alone, Fincantieri delivered eight warships to the country. In Kuwait and in Egypt, Italy provided about 18% for each country.
Italian arms exports also extend beyond the Middle East, though on a smaller scale. Italian defense goods exports rank third in Poland with a 3.5% share, fifteenth in Israel with around 1%. Italy supplies 2.4% of Norway’s imported weapons—a figure that has grown in response to increased demand linked to the Russo-Ukrainian war and Norway’s proximity to Russia. Italy accounts for 24% of Turkey’s arms imports, a share that may increase following the Leonardo–Baykar agreement. Taiwan imports approximately 1.2% of its arms from Italy, a relatively small share that nonetheless places Italy second after the United States, which supplies 98%.

Italy’s Growing defense budgets

According to the latest “Documento Programmatico Pluriennale” (Multiannual Planning Document), the Italian government would have reached in 2025 the NATO target of allocating 2% of GDP to defense, amounting to approximately €45 billion.
As the significant foreign sales outlined above indicate, Italian military industries are internationally recognized for their high quality and technological sophistication. However, the sector is not fully self-sufficient, as it relies on technological inputs from foreign companies. Although these foreign suppliers are located in allied countries, this state of affairs reveals a potentially dangerous dependence in critical military supply chains.
All that notwithstanding, Italy’s military industries boast several high performing enterprises. Foremost among them is Leonardo S.p.A.(formerly Finmeccanica). This defense company offers an impressive range of highly competitive, top of the line defense products and services: 1) helicopters, such as the NH90 and AW101 models; 2) defense and security electronics, providing technologies for airspace and maritime control; 3) cyber and security solutions, with more than 50 countries worldwide using its communication services; 4) aircraft, with around 1,200 deployed across more than 50 bases globally; 5) space, a sector in which the company operates both independently and through joint ventures.

Many international partnerships

Furthermore, Leonardo holds one third of the shares of Thales Alenia Space, together with the French company Thales Group, which is also active in the defense industry. In the space sector, Leonardo produces and provides sensors, propulsion systems, launch management, space modules, and satellites. Indeed, more than 50% of the habitable infrastructure of the International Space Station was developed by Thales Alenia Space. Leonardo is 30% owned by the Italian Ministry of Economy and Finance. Likewise, Fincantieri, over 70% state-owned and specialized in shipbuilding, contributes to defense through its production of frigates and aircraft carriers. The Italian state is effectively involved in the country’s defense industries. These investments have proven to be profitable, with worldwide exports worldwide, while supplying Italy’s armed forces.
In early 2025, Leonardo and Germany’s Rheinmetall formalized a joint venture, called Leonardo Rheinmetall Military Vehicles (LRMV). This joint effort is aimed at developing, manufacturing, and marketing the replacement for the Italian Army’s Ariete main battle tank. The joint venture will also be responsible for producing a new infantry combat vehicle (AICS-Armored Infantry Combat System.)
On March 6, 2025, Leonardo also signed an agreement with Baykar, a Turkish drone manufacturer best known for the Bayraktar TB2 drone, which was first deployed by Ukrainian forces in 2021. The two companies agreed to establish a joint venture focused on the production of UAS (unmanned aerial systems). Earlier, in late December 2024, Baykar acquired Piaggio Aerospace, a transaction approved by the Ministry of Enterprises and Made in Italy, with the goal of revitalizing the company.

Supplying Italian armed forces

The Italian armed forces rely extensively on domestic suppliers. Alongside Leonardo, Italy is home to other major defense manufacturers such as Fabbrica d’Armi Pietro Beretta-founded in 1526 and widely regarded as the world’s oldest firearms manufacturer, and Iveco Defence Vehicles, which produces military platforms including the Ariete main battle tank. Although neither Beretta nor Iveco is state-owned, both play an important role in equipping the armed forces.
Notwithstanding a strong defense industrial base and productive foreign ventures, Italy cannot meet all of its defense procurement needs through domestic production alone. SIPRI estimates that in 2022 Italy spent around € 1.2 billion on arms imports, primarily from the United States. The U.S. is the world’s leading arms exporter, responsible for 43% of global exports (107 countries).
Over the 2020–2024 period, Italy ranked twenty-fourth worldwide for arms imports, accounting for roughly 1% of the global total. Italy’s main suppliers are the United States, Germany, and the United Kingdom. That said, U.S. dominance as an exporter of military goods to Italy is evident, as approximately 94% of Italian arms imports originate from the USA. This reliance is particularly evident in areas such as missile systems and surveillance technologies, where Italian firms struggle to compete with major U.S. defense companies like Lockheed Martin and Raytheon.
A 2023 report by the Istituto Affari Internazionali highlights Italy’s continued dependence on U.S. and Israeli technologies for armed drones, satellite communications, and cyber defense. This reliance could be mitigated by the Leonardo–Baykar memorandum of understanding on drone design and production, which anticipates growth in a European drone market expected to reach €100 billion in the coming years, offering significant opportunities for industrial development. In addition, although Italy possesses around 150 Ariete battle tanks, only a portion of them is currently operational. In the air domain, two squadrons continue to operate Tornado aircrafts, which are now outdated, while some helicopter fleets are also expected to be replaced by UH-60 Black Hawk models manufactured by Lockheed Martin.

High tech innovation

On November 27, 2025, Leonardo announced their new project: the Michelangelo Dome. An “architecture of systems” integrating next-generation land, naval, airborne and space sensors, cyber-defense platforms, command-and-control systems, artificial intelligence and coordinated effectors. The platform creates a dynamic security dome capable of detecting, tracking and neutralizing threats in the event of large-scale attacks, across all operational domains: aerial and missile threats – including hypersonic missiles and drone swarms – surface and subsurface attacks at sea, and hostile ground forces.
In the field of artificial intelligence, Leonardo is concentrating on creating innovative applied AI solutions across a wide range of technological domains. These efforts span from enhancing system autonomy through Swarm Intelligence methodologies and developing algorithms for uncrewed platforms, to advancing command and control architectures, cognitive sensing technologies, and resilience frameworks. The scope also includes cybersecurity applications, radar signal analysis, war-gaming, and simulation environments, as well as industrial process optimization and predictive maintenance strategies.
At the same time, the Italian Ministry of Defense is allocating substantial resources to build the nation’s most sophisticated artificial intelligence platform. This initiative serves a dual purpose: reinforcing Italy’s technological sovereignty and promoting the dual-use potential of innovation. For instance, technologies originally developed for military command and control could be repurposed for civilian emergency response, thereby supporting civil protection operations and strengthening broader national security functions.

Challenges and vulnerabilities.

Italy has a strong and competitive defense industry. Yet its technological autonomy remains limited by reliance on foreign suppliers. Heavy dependence on the United States for critical components may constrain political autonomy and, despite the alliance between the two countries, it constitutes a potential strategic vulnerability. To enhance Italy’s global standing, coherent and consistent policies on arms supplies and exports are essential. Without them, Italy risks failing to fully exploit its technological capabilities and advanced industrial base.

The limits of European rearmament

It should be noted that Italy, along with other European countries, operates within a highly fragmented European defense procurement environment. Indeed, European NATO members collectively use 17 different models of main battle tanks and 27 different artillery systems. This fragmentation raises costs and diminishes operational effectiveness across European armed forces, including Italy’s, which are among the largest in Europe.
To be truly successful, European rearmament should become a collective, Europe-wide effort. Right now, each nation still acts mostly on its own. The result is fragmentation and duplication. And this greatly limits the effectiveness of money spent. In the absence of a common European strategic doctrine and coordinated defense industries action plans to be achieved via mergers and effective joint ventures, necessary synergies will not materialize. Indeed, higher defense spending alone is not enough. Europe needs to create the strong defense industrial base that will provide the European armed forces the defense goods they need for the credible, and operationally nimble deterrent that Europe must have.

Legal Disclaimer

The Global Policy Institute (GPI) publishes this content on an “as-is” basis, without any express or implied warranties of any kind. GPI explicitly disclaims any responsibility or liability for the accuracy, completeness, legality, or reliability of the information, images, videos, or sources referenced in this article. The views expressed are those of the author and do not necessarily reflect the opinions or positions of GPI. Any concerns, copyright issues, or complaints regarding this content should be directed to the author.

Massimiliano Cintura is a Global Policy Institute fellow. He received his MA in International Studies in 2025, from the University of Turin, Italy, with a dissertation on Frontex (the European Border and Coast Guard Agency). Prior to that he earned a BA in International Science, Development and Cooperation in 2023, with a dissertation on Eurojust (the European Union Agency for Criminal Justice Cooperation), also from the University of Turin. His areas of expertise and research focus include: International Relations, Global Affairs, Migration, Defense and Security issues.

---