On June 30, 2026, Albania signed a cooperation memorandum in Vlora with Italy’s Fincantieri, one of Europe’s leading shipbuilders, in a move aimed at reviving naval production at the Pashaliman base and strengthening the country’s defence industrial capacity.
The memorandum, signed between the Albanian state company KAYO, Fincantieri and the “Pavarësia” Industrial School, provides for the production of military vessels at Pashaliman. The first vessels are expected to serve the needs of Albania’s Armed Forces, while officials have also presented the project as having future export potential.
Fincantieri CEO Pierroberto Folgiero said the aim is to start production in 2027 and build around 10 vessels by 2030, with lengths of up to 80 metres. Students from the “Pavarësia” Industrial School are expected to be trained in Italy as part of the project, linking defence production with vocational education, technology transfer and local employment.
Prime Minister Edi Rama said the project would generate around 500 well paid jobs in Vlora and would involve personnel who, because of the defence related nature of the work, would be subject to background checks and confidentiality requirements. He also said the government would review the state budget to increase defence spending in line with NATO related targets, bringing defence expenditure to 2.6 percent of the state budget.
The agreement follows earlier cooperation between KAYO and Fincantieri, including an April 2026 joint venture agreement in which Fincantieri would hold 51 percent and KAYO 49 percent. That arrangement was described as focused on the construction and maintenance of naval vessels in Albania, primarily for the Albanian Navy and potentially for other markets.
The Pashaliman project also comes at a moment when Italy is seeking to redefine its economic presence in Albania. In an interview with Tirana Observatory, the academic journal of the Albanian Institute for International Studies, Italy’s Ambassador to Albania, H.E. Marco Alberti, said the main challenge is “transforming friendship into a strategic partnership.” He said Italy’s new approach in Albania aims to move beyond the traditional presence of small companies toward “heavy industry, energy transition, digital technology, and high-value-added services.”
That shift is directly reflected in the Fincantieri-KAYO partnership. Ambassador Alberti described the recently signed joint venture as a project that “will help modernize a shipyard and the maritime defence capacity of Albania, in the NATO framework.” He also said it would create hundreds of new jobs, help retain talent in Albania and provide Fincantieri with additional shipbuilding capacity for international orders. According to Alberti, this reflects a new strategy based not only on “Italy in Albania,” but on “Italy with Albania.”
Analysts say the agreement is important because Fincantieri is not a conventional investor. Albert Rakipi, chairman of the Albanian Institute for International Studies and former deputy minister of foreign affairs, has argued that Fincantieri is “no ordinary investor” and that, in strategic weight, it is comparable to major Italian industrial champions such as Leonardo in defence or ENI in energy. According to Rakipi, its presence in Albania “carries a significance that far exceeds a single business deal” because it inserts Albania into a new industrial and security geography.
In that sense, Pashaliman could become more than a shipyard. Rakipi has described the project as a possible symbol of a new Italian approach to Albania, moving “from crisis management to industrial partnership; from border control to maritime production; from migration anxiety to defence cooperation.” This assessment reflects a wider debate over whether Italy is prepared to see Albania not merely as a neighbouring country to be stabilized, but as a platform for industrial, maritime and security cooperation in the Adriatic and the wider Mediterranean.
For Albania, the initiative could mark a shift from reliance on imported defence capabilities toward limited domestic production and maintenance capacity. It could also give new relevance to Pashaliman, a historically important naval site, by turning it into a platform for industrial cooperation with Italy, Albania’s closest major EU neighbour and NATO ally.
The project also fits into the broader evolution of Albanian Italian relations. Italy has long been one of Albania’s closest partners in trade, migration, culture and security. However, its investment presence has often remained concentrated in lower and medium value sectors. Rakipi has noted that a strategic relationship requires investment in strategic sectors such as defence industry, energy, ports, infrastructure, maritime economy, logistics, advanced manufacturing, technology, education and professional training.
Seen from that perspective, the Fincantieri project could represent a move toward a more strategic economic relationship, involving defence, maritime production, technical education and industrial capacity. It also offers Italy an opportunity to strengthen its role in the Adriatic and Western Balkans at a time when regional infrastructure, ports, energy and supply chains are increasingly part of geopolitical competition.
The agreement comes at a politically sensitive moment in Albania. Rama used the signing ceremony to defend foreign investment, saying that the idea that foreign investment is contrary to national interests is “mad.” His remarks appeared to address criticism surrounding other strategic investment projects, particularly the contested resort development in Zvernec, which has triggered daily protests in Tirana and among the diaspora.
However, the Fincantieri project differs from controversial real estate and tourism projects in important ways. It is presented as a defence industrial partnership with a NATO ally, connected to military modernization, employment, skills development and Albania’s role in NATO’s southeastern flank. That distinction may help the government frame the agreement as a national security and industrial project rather than as another case of disputed strategic investment.
Still, implementation will be decisive. Rakipi has warned that the project can become a real strategic platform only if Albania builds the necessary ecosystem around it, including technical schools, engineering capacity, maritime training, defence procurement planning, port modernization, transparent regulation and protection from clientelist or short term political interference.
The memorandum therefore opens both an opportunity and a test. If successful, Pashaliman could become an important maritime and defence industrial hub in the Adriatic and a concrete example of a deeper Albania Italy strategic partnership. If delayed, poorly managed or politicized, it could add to public skepticism over major government backed investment projects.
For now, the agreement signals Albania’s ambition to play a more active role in NATO’s southeastern flank and to use cooperation with Italy as a pathway toward industrial and security upgrading. Whether the project becomes a lasting strategic asset will depend on what follows after the signing ceremony.
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