Italy Clears the 50-50 Leonardo–Baykar LBA Systems Drone JV With NATO-Only Sales Conditions
Rome, 16 June 2026
Key points
- Italy's Council of Ministers cleared the 50-50 Leonardo–Baykar drone joint venture, LBA Systems, under the country's 'golden power' statute on 16 June, attaching national-security conditions before a regulatory deadline
- The conditions limit the venture's sales and any overseas expansion to states politically aligned with NATO and the European Union, classify the drone technology, and impose confidential-information safeguards
- LBA Systems is Italy-headquartered; Baykar leads the airframes (Bayraktar TB3, Akıncı), Leonardo supplies electronics, payloads, certification and manned-unmanned teaming; the two project a USD 100 billion European market over ten years
- Europe closes an acknowledged drone-capability gap by adopting a Turkish design house, then fences the arrangement with sovereignty conditions rather than building the design capacity itself
Italy's cabinet on 16 June approved the 50-50 Leonardo–Baykar drone joint venture, LBA Systems, exercising its 'golden power' to limit the venture's sales and overseas expansion to NATO- and EU-aligned states and to classify the underlying technology.
The Council of Ministers cleared the deal at a meeting attended by Defence Minister Guido Crosetto and Foreign Minister Antonio Tajani, acting ahead of a statutory review deadline. 'Golden power' lets Rome impose conditions on, or block, transactions in strategic sectors. Leonardo and Baykar signed a memorandum of understanding in March 2025 and formally launched LBA Systems at the Paris Air Show in June 2025; the cabinet's conditional approval now lets the venture proceed.
The conditions are the substance. International sales and any future expansion of LBA Systems are restricted to countries Italy considers aligned with NATO and EU policy; the drone technology is classified; and confidential-information safeguards apply, with continuity of supply named as a strategic interest. The venture is headquartered in Italy and keeps a light structure. Baykar leads the airframes, including the Bayraktar TB3 and the Akıncı, while Leonardo provides electronic systems, payloads, certification and manned-unmanned teaming. Reuters first reported the decision; Leonardo and the Italian government are the primary sources.
Leonardo and Baykar project a USD 100 billion European market over the next decade across unmanned fighters, armed surveillance drones and long-range strike platforms — the segment where European primes have lagged most visibly behind Turkish, Israeli and US suppliers.
The proprietary read. The structure is the admission. Europe's largest sovereign-leaning prime addresses its weakest segment not by designing a competitive combat drone but by buying into a Turkish one, then bolting on political fences — NATO-only sales, classified technology — to keep the capability inside the alliance. It is the same supplier-seat pattern seen elsewhere this week: Europe takes the integration, the certification and the export controls, while the design authority sits abroad. Whether the golden-power conditions amount to genuine control or merely to a veto over Baykar's customer list is the question the contract, not the cabinet decree, will answer. First framed in Signal No. 84.
Sources: Leonardo · Italian Council of Ministers · Baykar · Reuters.
First reported in Signal No. 84, 17 June 2026.