The leaders of Germany and France have agreed to scrap a landmark project to develop and build a new-generation fighter jet, officials said on Monday, bowing to industrial rivalries over Europe’s most ambitious defense program.

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Berlin pulled out of the Future Combat Air System, a project with Spain and France that had been seen as central to European efforts to face down Russia and reduce reliance on the United States.

Elbit said that the deal will include local manufacturing and assembly of the system with Diehl, to support “the development of sovereign capabilities and strengthening the German defense industry.”

Germany was required to incorporate the EU Pay Transparency Directive into its national law, but it has missed the deadline.