Germany Halts Large Shipbuilding Project, Dealing a Blow to Military Expansion Plans

Reference News Network, June 27 report According to AFP on June 24, Germany halted the largest naval procurement order in decades on Wednesday. This large-scale warship project was forced to terminate due to long delays, dealing a significant blow to Germany's grand plan to reorganize its military.

German Defense Minister Boris Pistorius stated that the project, which was set to cost billions of euros and aimed to build six new-generation specialized anti-submarine frigates, will be completely terminated, and the government will instead procure eight smaller vessels.

Pistorius said, “Continuing with this project would result in a massive waste of time, costs would be exorbitant, and it would carry enormous risks.”

He admitted that Germany had already invested 2.3 billion euros in the problematic F126 frigate project.

The project was awarded to the Dutch shipyard Damen in 2020.

“It is better to decisively terminate than to leave it unresolved for a long time. We cannot afford it in terms of either funding or time,” Pistorius added.

Although the project had long been mired in difficulties, the official announcement still surprised many.

Previously, the market widely expected that German defense giant Rheinmetall would take over as the general contractor to complete the construction of these frigates.

Following the news, Rheinmetall's stock price plummeted by about 20% on the Frankfurt Stock Exchange.

Reports indicate that Germany, as the most populous country in the EU, is accelerating the expansion of its long-neglected military to strengthen its position in NATO and deter Russia, and the shelving of this project is undoubtedly a major setback.

In 2020, Germany ordered four F126 anti-submarine frigates from the Dutch Damen shipyard, with a total contract price of 10 billion euros, and later added two more, further expanding the order.

According to the German Ministry of Defense, the first ship was originally scheduled for delivery in 2028, with all six vessels to be in service by 2033. However, the project has faced continuous delays, with the delivery of the first ship now pushed back to 2032.

Pistorius stated, “The navy will not be able to fulfill its promised operational capabilities to NATO on time.”

According to the Financial Times, this complex project has many issues, such as cultural conflicts between the Dutch shipyard and German military procurement officials. The report cited industry insiders in April, stating that Damen shipyard struggled to meet two rigid requirements from German officials: all materials must be provided in paper form, and all technical documents must be prepared in German.

Against the backdrop of European countries significantly expanding their militaries, Rheinmetall's performance has surged.

The company's CEO, Armin Papperger, revealed to the media in May that Rheinmetall was in talks with the German government to take over the F126 project, and at that time, the market expected both parties to reach an agreement soon.

However, the German Ministry of Defense stated that the government ultimately determined that transferring the project to the shipyard NVL, acquired by Rheinmetall in March, would be too costly.

The German Ministry of Defense stated that if the project were to continue, the total cost would exceed 18 billion euros, which includes already invested funds and the 15.2 billion euros required for NVL to take over.

Pistorius mentioned that the government would attempt to recover some of the funds already invested in this doomed project, but admitted that “the hope of recovering the funds is very slim.”

The German government will no longer procure F126 frigates and will instead purchase eight mature small vessels from the domestic company ThyssenKrupp Marine Systems.

According to the new procurement plan, the German government will spend 6.3 billion euros to purchase four MEKO A-2000 frigates, while retaining the option to order four more, with the additional order costing about 5.3 billion euros.

Boosted by this positive news, ThyssenKrupp Marine Systems' stock price rose by 16%.

This series of events has also highlighted the many challenges facing Germany's large-scale military expansion, particularly the cumbersome and protracted arms procurement process. (Translation/ Xu Yanhong)