Frigate bid buoyed by EU offer of ‘new era’ military pact

Germany’s bid to sell $10bn worth of new warships to Australia has been buoyed by the EU’s surprise offer of a new military pact with Canberra.

Anthony Albanese meets with EU Commission president Ursula von der Leyen in Rome to rekindle free trade talks and discuss a potential defence partnership. Picture: Instagram

Germany’s bid to sell $10bn worth of new warships to Australia has been buoyed by the EU’s surprise offer of a new military pact with Canberra.

EU Commission president Ursula von der Leyen floated the potential defence and strategic partnership with Anthony Albanese on the sidelines of Leo XIV’s inaugural mass in Rome, as both leaders sought to kickstart previously shelved Australia-EU trade negotiations.

Hailing a “new era” for Australia and Europe, Ms von der Leyen said recent EU defence agreements with Japan and South Korea could serve as potential templates, along with the bloc’s upcoming strategic pact with Britain.

“We would be very pleased if we could develop such a security and defence partnership too, just to broaden the strategic partnership in many topics that we have in common,” she said.

Ms von der Leyen said Australia and Europe were reliable, predictable partners who could “offer to each other stability” amid rising global tensions.

Egypt's ENS Al-Jabbar, a Meko-A200 frigate built by Germany's ThyssenKrupp Marine Systems. Picture: TKMS

Germany’s ThyssenKrupp Marine Systems has been locked in a high-stakes contest with Japanese rival Mitsubishi Heavy Industries to sell 11 general purpose frigates to the Royal Australian Navy. The Japanese bid is seen as the frontrunner for the frigates’ contract due to be awarded by the end of the year.

A source close to TKMS said, however, that the prospect of an Australia-EU defence pact expanding joint exercises and defence industry co-operation showed the race was not “a fait accompli”.

“It’s a very good statement of a traditional defence partner wanting to work more closely with Australia,” the source said.

“This potential agreement essentially says ‘Here’s a path that’s equally important to us’.” The confidence boost comes amid potential opportunities for Australian defence exporters to sell weapons to Germany, after the country’s new Chancellor, Friedrich Merz, vowed to build the strongest conventional army in Europe.

The head of Germany’s military procurement arm, Vice-­Admiral Carsten Stawitzki, is due to visit Australia next week for talks with Defence officials on bilateral industrial co-operation, building on the success of last year’s agreement for Australia to export Boxer combat vehicles to the German army.

The Mitsubishi Heavy Industries-built Mogami is considered the frontrunner in the race with Germany’s Thyssenkrupp for the frigates contract.

The EU’s defence agreements with Japan and South Korea, sealed in November last year, have opened the way for more joint exercises between European militaries and their Asian partners, closer maritime and cyber co-operation, and new defence industry deals.

The Prime Minister signalled Australia was open to “further engagement” with Europe, but appeared cautious on the proposed deal, saying the nation already had a “range of defence relationships” with European countries, as well as Japan, South Korea and New Zealand. “This was just a suggestion that Ursula von der Leyen raised,” Mr Albanese said.

“There was no detail … It was really an assertion of Europe’s values being consistent with Australia’s values, and in what ways could be explored in further defence co-operation.”

He and Ms von der Leyen used their bilateral meeting to revive talks on an Australia-EU free-trade agreement that stalled in 2023, but Mr Albanese was unable to say whether an agreement would be struck during his second term of government.

“Our objective is to support an expansion of free and fair trade … and we will wait and see,” he said.

“We have indicated in the past, though, that we won’t sign up to agreements that aren’t in Aus­tralia’s national interest.”

Trade Minister Don Farrell is due to discuss past sticking points with EU trade commissioner Maros Sefcovic on Tuesday, including Australia’s push for bigger quotas for Australian beef and lamb exports to the bloc than were previously on offer.

Defence has been assessing the risks, capabilities and costs of both frigate bids and is yet to provide advice to the government on its findings, but Japan is mounting a whole-of-government campaign to win the contract, leveraging its “quasi alliance” with Australia and the need for closer defence co-operation in the Indo-Pacific to counter China’s growing military might.

Getting the frigates’ program under way is Australia’s highest defence priority after the AUKUS nuclear-powered submarine pact, with the first three vessels to be built offshore and the remainder to be constructed in Perth.

Japan’s upgraded Mogami frigate is a newer design than Germany’s Meko-200, and is seen as potentially more capable.

Yet Japan’s bid is considered by many to be more risky as it has never exported a warship to a foreign buyer or built one in another country.

Australia and the EU have both expressed a desire to seal a free-trade agreement as soon as possible amid the global economic upheaval caused by US President Donald Trump’s tariffs.

“I think both Australia and ­Europe now realise that there’s a priority and an imperative to get a free-trade agreement,” Senator Farrell said.

“If other countries don’t want to trade with you, well, that’s fine. That’s their decision.

“But if there are countries such as Europe who do want to do trade with you, well then you’ve got to go that extra mile to get an agreement over the line.”

Australia has indicated it was prepared to axe the $5.2bn luxury car tax to bolster the European car industry as part of its bid to get a deal across the line.

Senator Farrell said he was confident an agreement could be reached after the EU indicated it could be willing to shift on past demands for Australian pro­ducers to cease using European food names such as prosecco and feta.

“We are after a realistic commercial offer in respect of access to beef and lamb into the Euro­pean market, and that’s what I’ll be seeking,’ he said. “And I’m hopeful that if there’s some goodwill on both sides, we can get this agreement across the board.”