Article updated to correct error in attribution and country reference.

PARIS — France plans to sign an agreement with Germany and Italy to launch studies for a European medium-altitude, long-endurance (MALE) UAV at the Paris Air Show in mid-June, said French Defense Minister Jean-Yves Le Drian.

The signing is seen as a critical first step in retaining industrial skills in aeronautics and intelligence gathering.

Defense minister Jean-Yves Le Drian said France plans to sign with Germany and Italy at the Paris Air Show an agreement for studies for a European MALE UAV, seen as a first step in retaining industrial skills in aeronautics and intelligence gathering.

"Our effort in surveillance and ISR drones should be boosted, notably with the launch this year of studies for a future European UAV that France expects by 2025 with Germany and Italy," Le Drian told journalists March 11 as he set out his agenda for the year.

A European sovereignty underpins the project, as the UAV would be equipped to avoid the US International Traffic in Arms Regulations, a source close to the project said.

Italy."The Paris Air Show in June will be a major rendezvous for our defense industries," Le Drian said. "It will be a significant step on the road to producing a European drone, as we will sign then an agreement in principle on the launch of studies".

A third US-built Reaper UAV will be delivered next month, and the second order for a three-strong batch will be made in the summer, he said.

The study is seen as a last chance saloon for Europe in a critical sector led by US and Israeli manufacturers.

A recent The French order of the US-built General Atomics Reaper "slightly traumatized us" as industry had been working on UAVs for some time, Dassault Aviation chairman Eric Trappier said March 11. That French acquisition of the Reaper is a temporary measure and it is time for the Europeans to prepare for the future, he said.

A third US-built Reaper UAV will be delivered next month, and the second order for a three-strong batch will be made in the summer, Le Drianhe said.

The Reapers cannot fly in Europe as they are not certified for the European airspace, Trappier said.

"We're asking the authorities for the last time to say there is an operational need," he said. This is a "strategic" capability and the studies will be a first step toward development and production of the drones.

An order for the studies would be worth in the 10tens of millions of euros, he said. The companies have agreed to share the work and it is up to the administrations to make the political, budgetary and operational choices.

Last year, saw the start of discussions with the French, German and Italian defense ministries began discussions on the definition phase of the project based on the industrial proposal, Dassault said in its 2014 financial results. The company hopes this year will bring the green light for the definition phase.

Trappier was speaking on presentation of the 2014 results. Dassault partnered in 2013 with Airbus Defence and Space, and Alenia Aermacchi to pitch the next generation MALE 2020 project to France, Germany and Italy.

One of the issues for Germany is the capability for arming the planned UAV, which poses little problem for France and ItalyGermany, said Christian Mölling, defense analyst at the German Institute for International and Security Affairs in Berlin.

There is a pPublic opinion is against that arming and the government will have to deal with rather than avoid the issue, not avoid it, he said.

There are also qQuestions also remain on the whether there is a business case for a European drone. "Where is the demand?" he said.

Airbus Defence and Space declined comment.

The industry source said there are unofficial estimates for a world market of 300-400 units. France and Germany could each buy 20-30 units and Italy 5 five to 20, other European Union countries 20 to 50, and the Middle East, Latin America and Asia 200-300.

An analyst said industry has estimatesd production of at least 400 units is needed to be "economically feasible."

There is also uncertainty over what the functions would be on a next-generation UAV as the military is are still exploring the different scenarios for the present first generation or 1.5 generation Reapers, Mölling said. The conflict in Ukraine is seen by some as the limit as there are fears the UAV would be shot down by air defense systemsor manpads, he said.

The definition report is expected to run for 24 months, and development would take place be over five to six years, the industry source said.

Mölling pointed to the high development cost of the US Navy X-47 as an indicator of what the budget might be for the three European nations.

Airbus DS would be lead on the study, reflecting almost a decade of research and development on the Talarion MALE UAV. Airbus spent a reported €250 million of its own funds on the Talarion, with some estimates going higher, before the company closed the project due to the lack of a government order.

Industry sees the wWork on Talarion and Dassault's work on the Neuron combat UAV technology demonstrator will deliver 80 percent of the research and development. The three European companies have agreed to an equal split of workshare.

The planned UAV would be powered by a twin-jet system that which would generate electricity for the onboard sensors and communications and deliver the reliability vital for flying in the skies over Europe.

Industry plans to have the UAV certified for flying in the "non-segregated" civil and military airspace. Drones are restricted to flying in military air lanes, but there is work on gaining a certification to fly in civil airspace.

France has flown the Harfang MALE UAV on civil missions including last year's the public events of the 70th anniversary last year of D-Day on the Normandy beaches.

Industry sees the UAV project as key to maintain engineering skills and employment. But even if the UAV were to enter production, it is not clear there would significant employment is not guaranteed, Mölling said.

The defunct Talarion stemmed from a study launched and funded by France, Germany and Spain, and announced at a previous Paris Air Show.

Among the features of the MALE 2020 are mission modules for intelligence gathering, wide coverage over long distance, and high-speed maneuvers, with surveillance and reconnaissance over wide area and operational theater.