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Providing Budgetary Cover

Industry, Military To Display Prowess as Funding Threat Hangs Over Show

Jun. 15, 2014 - 03:45AM   |  
By PIERRE TRAN   |   Comments
A Puma helicopter lands near legionnaires of the French Army's 2nd Foreign Parachute Regiment in the mountains in northern Mali, where French forces have battled jihadi fighters. (Kenzo Tribouillard / AFP)
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PARIS — As France prepares to open the Eurosatory land defense and security trade show, company heads and military chiefs of staff are fighting hard to ward off budget cuts, which they view as a threat to industry and operational capability.

The exhibition runs June 16-20 and is supported by the Defense Ministry, which has invited 160 foreign official delegations from 108 countries.

Defense Minister Jean-Yves Le Drian is due to open the show on June 16, saying he supports a promised ringfencing of the defense budget as set out in the six-year military program adopted in November, analysts said.

The Finance Ministry has drawn a bead on the military and arms programs as the government looks for ways to cut €50 billion (US $68.1 billion) from the national budget.

President François Hollande, after a June 2 meeting of the defense and national security council, sought to calm the waters.

“The president of the republic underlined the essential nature of our defense effort in strengthening our international influence, protecting our national interests and ensuring France’s security,” the president’s office said in a statement.

“In this respect, he confirmed the financial commitments in the military budget law. The multiyear path for defense spending should be matched by improved management of our equipment and projects.

“He asked the finance and defense ministries to submit proposals by the end of June,” the statement said.

Opposition members of Parliament, however, said the president may have upheld the defense budget but there is still cause for concern.

Member of Parliament François Cornut-Gentille said the budget law now seems to be tied to management improvements on equipment and projects.

And silence on a planned €6 billion of exceptional receipts, which is the sale of assets to raise money, is a concern, he said in a statement.

The defense council failed to address the issue of exceptional receipts, which remain hypothetical, parliamentarian Philippe Folliot said in a statement.

“The 2014 budget still lacks €1 billion, putting into danger the operational contract for our armed forces,” he said.

Hollande’s statement was a “very positive sign,” said Etienne de Durand, director of security studies at think-tank Institut Français des Relations Internationales.

A cut for 2014 has been pushed off and each year’s spending will need to be protected, he said.

Hélène Masson, senior research fellow at think tank Fondation pour la Récherche Stratégique, said, “the opening of the show comes after the president’s confirmation of a ‘relative ringfence’ for the funds and a confirmation of financial commitments under the multiyear budget law.

“This announcement allows the defense minister to take a more positive position at the show’s opening.”

A major issue for French industry is a 2014 award of a development and production contract for the véhicule blinde multirole (VBMR), a multipurpose troop carrier, in the Army’s Scorpion modernization program, she said.

The Scorpion program should be launched but it is not known when the decision will be made, de Durand said.

“It’s absolutely necessary,” he said.

Masson said the plan to restrict the tender for the VBMR contract to French companies Nexter, Renault Trucks Defense (RTD) and Thales signals an intent to “reconfigure” the domestic industry rather than seek a cross-border European consolidation, which would entail opening the market to competition.

RTD is a unit of the Swedish Volvo group.

On the European front, the land weapons sector has seen little in the way of major deals involving acquisitions or joint launch of programs, apart from the 2012 purchase of light armored vehicle maker Panhard by RTD, and a joint venture for wheeled military vehicles set up by German manufacturers MAN and Rheinmetall, Masson said.

“We are in a transition phase,” she said.

Meanwhile, Britain faces a general election and strategic defense and security review next year, so industry and others expect a mini-scramble at the Defence Ministry between now and early next year to ensure key programs are approved in time.

A bonanza is not expected. Most of the cash for Britain’s £160 billion (US $268 billion), 10-year equipment plan is already committed, leaving only a few ticket big items like the Type 26 frigate and some armored vehicle programs to reach production approval in the near term.

For the French, Eurosatory can be viewed as a valuable showcase for the Army, but the exhibition also works for French defense industry at large.

“It’s very significant for the French Army and industry to show themselves, particularly after the Serval operation in Mali,” de Durand said.

The Mali mission showed that some NATO members are more capable than others, and that they can operate on their own with minimum support, he said.

The trade show is being held against a backdrop of economic and budgetary crisis in Europe.

“It is very important for French industry to deliver a message — defense matters — as NATO says,” de Durand said.

For instance, Dassault Aviation will have a large display even though the fighter builder makes no land armaments, he said.

Beyond equipment, there will be debate and consultancy services at the show.

Think tanks Institut Français des Relations Internationales and Fondation pour la Récherche Stratégique have organized a conference on June 17 at the show, titled, “Is Europe Militarily Dead?”

Strategic consultants will offer advice on markets including Brazil, India, Russia and the US.

The Direction Générale de l’Armament procurement office and the French Army will have a large presence, de Durand said. “The show is a significant investment for them,” he said.

The Defense Ministry stand will set out elements of the Scorpion program, including the véhicule blindé combat d’infanterie, an infantry fighting vehicle, and also the NH90 Caiman tactical transport helicopter and the Mamba ground-based air defense missile based on the Aster 30 block 1 missile, the show organizer said.

The French Army has generally received a small amount for procurement compared to the Air Force and Navy. The Army planners responded by setting out the Scorpion project, binding the elements to each other in a bid to keep the effort intact against budget cuts.

Last month, the three service chiefs and the chief of staff offered to resign if the six-year military budget law were cut, daily Le Figaro reported.

The Coges show organizer, part of the Groupement des Industries Françaises de Défense Terrestre et Aéroterrestre trade body, has identified eight sectors of interest based on the activities of the 1,501 exhibitors:

■Electro-optical systems and components.

■Land robotics.

■Satellite communications.

■Electricity generation and storage.

■Composite armor.

■Low-altitude aviation.

■Crowd control ranging from non-lethal to conventional weapons.

■National and civil security.

Among the equipment to go on display for the first time will be a prototype Tanan vertical take-off and landing UAV powered by a diesel engine, from Airbus Defence and Space.

MBDA will show a new version of its multipurpose combat vehicle, armed with the missile moyenne portée anti-tank weapon, specialist website FOB reported.

Safran’s Sagem will display its Patroller UAV equipped with a new sensor suite. ■

Andrew Chuter in London contributed to this report.

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