The French and German defense ministers have inked a deal for a multi-billion euro Franco-German armaments project. This agreement entails the development of a new battle tank intended to replace both Germany's Leopard 2 and France's Leclerc.

German Defense Minister Boris Pistorius and French Defense Minister Sebastien Lecornu jointly announced that their respective countries are prepared to advance with the development of a new tank, which will serve as the cornerstone of their ground defense capabilities.

Pistorius formalized this commitment by signing a memorandum of understanding regarding the development of the Main Ground Combat System (MGCS) during his visit to France on Friday.

The MGCS is intended to succeed Germany's Leopard 2 battle tank and France's Leclerc in their military fleets.

Pistorius described the agreement in principle as "historic." He stated, "We have agreed on the distribution of all tasks for this major project," while stopping short of publicly releasing more details.

The German defense minister emphasized that there was still a long way to go until tank production would actually begin, though he acknowledged that the agreement marked an "important milestone."

Pistorius mentioned that contracts with industry were expected to be finalized by the end of the year. He expressed confidence that German lawmakers would approve the scheme.

Lecornu, on the other hand, named KNDS, Rheinmetall, and Thales as companies likely to contribute to the future tank.

The ministers also reached an agreement on the contested distribution of tasks and contracts for the project. Two of the eight pillars of the project would be led by Berlin, another two by Paris, while the remaining four would be jointly led.

Shortly after French President Emmanuel Macron was elected in 2017, he and then German Chancellor Angela Merkel agreed on a list of joint armament projects costing more than €100 billion ($106 billion).

The MGCS is the second major arms industry project between the two European countries and comes on the heels of plans to build a next-generation fighter jet, FCAS, as well as drone systems.

The MGCS project does not only include the development of the battle tank, but also a series of systems and vehicles built off that platform.

Germany is meant to play a leading role in developing the MGCS, while France is taking the lead on developing the FCAS.

However, industrial rivalries and differing political interests weigh heavily on the prestigious Franco-German MGCS project.