France and Germany agreed on Friday to move to the next phase of a project to jointly develop a battle tank by 2040, their defence ministers said, as they seek fresh impetus despite reservations and differences on each side.

Berlin and Paris in 2017 agreed to work on a joint fighter jet under French lead, estimated to cost some 100 billion euros in total, and also a Franco-German tank to succeed the German Leopard 2 and the French Leclerc.

Both projects have been plagued by disagreements and delays, further straining Franco-German ties burdened by differences over energy topics and over how far Europe should become independent from the U.S. in its security policy.

Why Is It Important?

The political decision to move to the next phase is important because French and German companies have their own interests, while Paris and Berlin do not see eye to eye on the concept.

The support of French Defence Minister Sebastien Lecornu and his German counterpart Boris Pistorius to drive things forward maintains some momentum.

Development of a next-generation tank is also seen as vital in highlighting how Europe can create its own defence autonomy, compete with new players like India and China, but also take the lead over Russia and the United States, who have yet to unveil plans for tanks to replace their existing models.

What Has Been Agreed?

The two sides have agreed on a way ahead for the distribution of work between manufacturers and hope to sign their first contracts by the end of year.

Which Companies Are Involved?

Funded equally and carried out under German management, it is led by KNDS, a holding company created between France's Nexter and Germany's Krauss-Maffei-Wegmann (KMW), maker of the Leopard tank. Rheinmetall and Thales are also involved.

"There has been very important work which ... enables us to say that in the 2040s, it will be time for two friendly neighbouring countries, members of the European Union and members of NATO, to have a completely functional and operational armoured cavalry," Lecornu said.

"There is still a long way to go before our Franco-German land combat system of the future, MGCS, is realised. And yet today's signing of the MOU is another important milestone," Pistorius said.

(With Inputs From International Agencies)