Italian defence and engineering groups enjoy Gulf deal boost
Italy has proved it is a ‘reliable partner at the darkest of times’, say analysts
Italian defence and engineering companies have emerged among the winners from strengthening ties between the Gulf countries and Giorgia Meloni’s government, signing deals for weapons systems and munitions amid heightening geopolitical uncertainty.
State-controlled Leonardo received a €320mn naval combat systems order from Kuwait and has also announced it will provide four of its C-27J maritime patrol aircraft to Saudi Arabia for €200mn. Riyadh will also purchase lightweight torpedoes from Italian shipbuilder Fincantieri in a €200mn deal announced earlier this year.
Meanwhile, Abu Dhabi’s defence contractor Edge is buying a controlling stake in Italy’s family-owned engineering company CMD, whose high-performance engines for luxury cars can be used to build low-cost surveillance and interceptor drones.
Italy had “proved it’s a reliable partner at the darkest of times” said Mohammed Baharoon, head of the Dubai Public Policy Research Centre, referring to the Italian prime minister’s visit to the region after the US and Israel launched their war against Iran.
Before the war, Meloni had already been promoting ties with Gulf countries. In December, she attended the annual Gulf Cooperation Council summit as the guest of honour, a rare invitation extended to only a handful of foreign leaders.
Iran retaliated to the US-Israel attacks by launching barrages of missiles and drones at the US Gulf allies, and her trip to the region in April, days before the ceasefire between the US and Iran, also impressed her counterparts and generated goodwill.
The recent defence deals come as Gulf governments turn to Europe and Asia looking to bolster air defences and develop their own defence industries. The governments have also signed deals with South Korea and Ukraine. Analysts said Gulf nations had also questioned the political reliability of the US under President Donald Trump.
They expect further deals on the horizon. The UAE last year said it would invest €40bn in Italy in a range of sectors, while Gulf countries are in talks over possible equipment purchases from Italy. Qatar and Fincantieri are discussing the development of new mobile counter-drone systems and an underwater system. Saudi Arabia has been in discussions with a clutch of small high-tech Italian firms over space co-operation.
“Gulf authorities were left feeling highly exposed after the US faced problems in providing countries with enough missiles and ammunition” for air defence systems, said Alessandro Marrone, the head of defence and security programme at Rome’s Institute of International Affairs.
“There was no plan B for a prolonged campaign. The Gulf countries took note of that . . . They learned if they diversify their partners, they will be better prepared in case of another conflict,” he said.
The UAE has borne the brunt of Iran’s retaliation against the US and Iran, with nearly 3,000 missiles and drones launched against it since the start of the war, forcing authorities to utilise expensive US and Israeli-made air-defence systems to protect against swarms of cheap Iranian drones.
Rodrigo Torres, chief financial officer of Edge, said his company’s talks with Italy’s CMD began in March as Gulf authorities rushed to find partners to help them rapidly expand production of low-cost surveillance and interceptor drones.
“With Europe, and especially Italy, we have a very tight relationship,” he said, noting that the UAE needed “quantity” and “sophistication”.
Edge’s deal for CMD involves the transfer of crucial technology to the Gulf, at a time when governments had been trying to diversify away from energy to boost their “knowledge-based economies”, said Baharoon.
Established in 2019 through the merger of two dozen legacy companies, Edge has signed agreements with other European groups. Days before the US attack on Iran, it signed a deal with Spain’s EM&E group to explore setting up a UAE-based joint venture to develop $1.5bn worth of remote weapons stations. It also agreed to create a shipbuilding joint venture with France’s CMN Naval to produce nearly €7bn worth of small and medium-sized naval vessels.