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CUTTING RED TAPE ⟩ Lithuania Makes Unusual Concessions to Expedite Rheinmetall Ammo Factory Launch

Photo: Hannibal Hanschke
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The Lithuanian government is ramping up its defense efforts through the issuance of defense bonds, the establishment of a €180 million ammunition factory, and the creation of military training areas in the Šilalė and Tauragė regions.

The Lithuanian government has granted emergency project status to a €180 million artillery ammunition factory to be established by the German defense contractor Rheinmetall in the Radviliškis district. This designation allows the project, named the Lithuanian Center of Excellence for Ammunition, to commence construction without prior permits, which will be obtained before the project's completion.

Economy and Innovation Minister Aušrinė Armonaitė emphasized that this status triggers expedited procedures, enabling swift development and accelerated issuance of building permits. The Ministry of National Defense highlighted the critical need for this facility to ensure a reliable supply of 155 mm ammunition for the Lithuanian Armed Forces and foreign units stationed in Lithuania.

Rheinmetall hopes to start building the 155mm ammo factory already this October. The factory is planned to be built in the Radviliškis district in the middle of Lithuania.
Rheinmetall hopes to start building the 155mm ammo factory already this October. The factory is planned to be built in the Radviliškis district in the middle of Lithuania. Photo: Rheinmetall

Approved amendments by the Seimas in April have streamlined processes for major Western arms and ammunition manufacturers, including Rheinmetall, to quickly establish production facilities in Lithuania. This new factory is expected to create at least 150 jobs. Lithuanians will be the first Baltic nation to host an international defense industry project of this magnitude.

Defense Bonds Out Soon

The Lithuanian Seimas (Parliament) has recently legislated the issuance of defense bonds as part of a comprehensive defense budget package. These bonds, set to be issued after October 1 with the enactment of the National Defense Fund law, are designed to replace the current government savings bonds. Finance Minister Gintarė Skaistė announced that the defense bonds will offer lower interest rates compared to the existing savings bonds.

Lithuania's Finance Minister Gintare Skaiste explained that the new defense bonds will be extended to legal entities in addition to individual investors.
Lithuania's Finance Minister Gintare Skaiste explained that the new defense bonds will be extended to legal entities in addition to individual investors. Photo: Olivier Hoslet

The exact date and conditions for the first issuance are still under discussion. Minister Skaistė explained that while the current savings bonds are intended for individual investors, the new defense bonds will be extended to legal entities as well, requiring certain technical adjustments. The specifics will be presented to the public before the National Defense Fund is operational.

The law supporting the defense fund was passed by the Seimas in late June, alongside related amendments to corporate tax, excise duties, national debt regulations, and the plan for issuing defense bonds. The defense fund aims to raise substantial amounts for military purposes: €209 million by 2025, €325 million by 2026, and €343 million by 2027. This funding is earmarked for enhancing divisional capabilities, preparing to host the German brigade in Lithuania, and addressing military mobility and other defense needs.

New Military Training Areas

Complementing these financial and industrial measures, the Lithuanian Ministry of Defense announced on July 10 that it has endorsed a proposal to create military training areas in the Šilalė and Tauragė regions. This initiative, still awaiting parliamentary approval, seeks to enhance military training capabilities without impacting protected areas or cultural heritage sites.

The Tauragė training area will cover 4,304 hectares, and the Šilalė area will span 2,677 hectares. These areas will primarily be used for maneuver training with military vehicles, avoiding heavy combat activities.

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