Budget Curtails French Spending, Retains Programs

By Amy Svitak
Source: Aviation Week & Space Technology

The updated strategy paper comes as France and other major defense powers in Europe face declining defense spending in light of fiscal constraints. Like France, the U.K. is reassessing its military force structure to more closely align with budget realities. As Europe's two biggest defense spenders, both nations are struggling to remain relevant as the U.S. turns its strategic focus to the Asia-Pacific, and countries such as Brazil, Russia, India and China boost defense equipment purchases.

Overall, the defense chief says, budget reductions in France and in the rest of Europe will have a major impact on the nation's industry, much of which is concentrated in several regions. Overcapacity in Europe—coupled with contraction of the national and European market for military hardware—is occurring at a time when international competition is exacerbated by the U.S., where budget pressures are leading industry to redouble efforts in exports. Russia and certain emerging countries vying for a presence on the world market contribute to the diminution of outlets.

As expected, the 2013 road map is shot through with calls for more European harmonization, incorporating for the first time input from consultations with the European Union, Britain and Germany. Weakened defense spending among European governments, including some whose defense outlays have dropped below 1% GDP, makes more urgent the need to pool resources to save money, though it is unclear whether France will be able to enlist other nations in these efforts.

In space-based Earth observation, for example, despite years of negotiations, European governments have been unable to come together on a ground network that could pull information from various nations' radar and optical satellites.

As was the case in the previous white paper, Hollande's strategy calls for renewed attention on space-based electronics intelligence. However, a program called Ceres, first proposed in 2008, has gone nowhere, mainly because France has been unable to win the support of any other European government for the project.

In addition to space-based intelligence, the document calls for a “mutualization” of efforts to deploy and exploit surveillance drones with European partners. Le Drian says theater and tactical drones will be purchased off the shelf at first, but eventually be replaced by a European development effort.

While unmanned aerial vehicle (UAV) developments have been long-delayed in France, Le Drian vows they will be given a new push, though the extent remains to be seen. In his remarks he touted Franco-British defense cooperation initiatives outlined under the 2010 Lancaster House agreement, which so far has included Anglo-French military exercises and joint development of new hardware, and has enabled the allies to work closely in Libya and Mali. Although the agreement includes provisions for bilateral drone development, since taking office a year ago Le Drian has signaled an interest in expanding the cooperation to include other European governments.

In the meantime, as Paris grapples with its spending crisis, Le Drian foresees applying several billion euros in proceeds from the sale of state-owned assets—mainly property—to the nation's defense coffers. However, this one-time cash infusion will not be repeated, painting a slightly less rosy picture for defense spending beyond 2014.

In addition, the white paper says defense planners will now be required to consider the total cost of ownership of capital investments—a response to an unexpected €3 billion shortfall between 2009-12 due partly to equipment purchases which did not account for total life-cycle costs.

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