Hungary's government and Rheinmetall to produce armored fighting vehicles in Hungary

FILE PHOTO: The logo of Germany's Rheinmetall AG is seen after the Company's 2019 annual report in Duesseldorf, Germany, March 18, 2020 REUTERS/Thilo Schmuelgen/File Photo

(Reuters) - The Hungarian government and German defence company Rheinmetall AG have agreed to set up a joint venture to produce Lynx armored fighting vehicles in Hungary, the government said in a statement published by the state news agency MTI on Monday.

Hungary is modernizing its military hardware to fulfil its NATO obligations. The deal is worth more than 2 billion euros, which is the biggest in Hungary’s defence modernization programme, the government said.

“This partnership means more than modernizing the military,” the government said, adding that the cooperation with a leading European company would help restore Hungary’s military industry.

Hungary has long vowed to increase its military spending, which as in many NATO countries remains far short of the alliance’s goal of 2 percent of economic output. Much of its military infrastructure dates back to communist times.

Hungary last week signed a declaration of intent to buy air defence missiles from U.S. arms manufacturer Raytheon Technologies. The deal is worth about $1 billion.

Reporting by Anita Komuves; Editing by Nick Zieminski