German lawmakers approved two orders for attack drones, each worth about €270 million, from domestic start-ups Helsing and Stark Defence as Berlin seeks to strengthen Nato’s eastern flank.

The budget committee in the Bundestag lower house of parliament voted to pass framework agreements with the companies to buy so-called medium-range loitering munition systems, according to a defence ministry statement on Wednesday.

German start-ups Helsing and Stark will get the deals, said people familiar with the deal, who asked not to be identified because the deliberations weren’t public.

“Today’s decision represents a new era in German defence policy and demonstrates trust in innovative companies,” a spokesperson for Stark said by email. Helsing didn’t respond to a request for comment.

Military expansion

Germany has eased borrowing rules to fund a massive expansion of its military as it seeks to transform the Bundeswehr into Europe’s strongest conventional army. The drone orders are part of a bid to remake the armed forces that began shortly after Russia’s full-scale invasion of Ukraine four years ago. US President Donald Trump’s wavering commitment to Nato has fuelled the sense of urgency in Europe, which has underfunded its militaries for decades.

Both firms are expected to provide the first shipments to a German battle tank brigade deployed in Lithuania by October, the people said. Other European allies have also committed to help fortify Nato’s eastern flank.

Germany’s armored brigade in Lithuania will be equipped with a combat network that includes strike drones in 2027, according to the Defense Ministry. The exact number of units to be ordered hasn’t been disclosed due to national security reasons.

Loitering munitions are missiles that can launch without a specific target and hover above a battle zone or other designated area. They can then strike after a target is selected either by an operator or on-board artificial intelligence, depending on the drone’s degree of autonomy.

Competition to produce a new generation of autonomous weapons is intense as drones have become an essential part of the arsenals of both Russia and Ukraine in their war. German defense giant Rheinmetall is expected to get a similar contract later this spring, according to the people.

A spokesperson for Rheinmetall declined to comment.

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Before the vote in parliament, the defence ministry sought to ease concerns among lawmakers that controversial US investor Peter Thiel owns a stake in Berlin-based Stark.

The defence ministry told lawmakers in a confidential briefing last week that Thiel, a German-born US tech billionaire, is a minority shareholder who doesn’t have any special rights or influence over Stark.

The defence ministry initially proposed to award Munich-based Helsing a contract for as much as €1.5 billion and Stark a deal worth up to €2.9 billion. The lawmakers approved a maximum order ceiling of €1 billion per company, the people said.

Since kamikaze drones are a relatively new type of weapon that is undergoing rapid innovation circles, the contracts were designed to allow for flexibility to update products or cancel the deals if certain development milestones are not met, the defence ministry said. The ministry will have to submit a progress report on the companies’ production and pricing every six months, according to the people.