By Pierre Tran

Paris.  The European Union could raise a total of €30-€40 billion ($35-$47 billion) to finance work on defense and security projects, drawing on the €7 billion budget due to be pledged to the European Defense Fund, Thierry Breton, European commissioner for internal market, said Nov. 13.

“With 7 billion in equity, we can leverage 30-40 billion,” with backing from participants, he said in a video press conference with the Anglo-American Press Association of Paris.

Breton, speaking from Brussels, said the prospective total funding was more than the €30 billion he had expected to raise.

“What we have now is the tool, for first time in our history,” he said.

“We will not do this overnight.”

The European Defense Fund will finance research and development, inviting member states to invest in industrial projects proposed by small and medium companies, as well as prime contractors.  The European commission, the executive arm of the EU, had pitched the launch of the fund with a €13 billion budget, with negotiations with member states whittling that down to €11 billion before arriving at €7 billion.

The fund would increase a collective approach in joint investment and widen European  investment, particularly among member states such as Poland, Romania and Lithuania, Breton said.

There was much in history and geography which explained why nations in the north and east of Europe had felt “more comfortable” in relying on the U.S., he said.

“We all have our history in defense,” he said.

There were four or five member states with strong arms industries and the aim was to widen the pool of interest in investment.

There were 24 member states backing 16 programs, he said.

“We have room to be inclusive,” he said.

The commission has picked 16 defense industrial projects and three disruptive technology projects for €205 million of support under two pilot programs of the European Defense Fund, namely preparatory action on defense research, and European defense industrial development program, the commission said June 15.

Those projects included work on drones, space technology and unmanned ground vehicles, the commission said. There was also work on a high precision anti-tank missile, warships, airborne electronic attack capability, cybersecurity and active stealth technologies.

A European patrol corvette was one of the projects which has attracted backing from France, Greece, Italy, and Spain, with Italy taking the lead role.

Breton, in the video conference, got up from his desk to find and show a June 2016 report on a European Security and Defense Fund. Breton said he had drafted the report when he was a company chief executive, and had seen the need for higher defense spending in Europe.

The report was written at a time when the then president Barack Obama had called for increased European spending, which president Donald Trump had continued “in his own way,” he said.

Breton showed a picture of his presenting the report to the then French president François Hollande and German chancellor Angela Merkel. He had pitched the idea to the then commission president Jean-Claude Juncker, among other senior officials.

Breton was CEO of Atos, an information technology company, when he drafted the report.

“I played a little role in this,” he said.

Breton, who took up his post as European commissioner last year, was now setting up the fund, which seeks to prime the pump for R& D in military technology.

Breton taught at the Lycée Français school in New York when he was sent abroad under the civil alternative to French military conscription. Breton also taught at Harvard Business School 2007-2008, after serving as economy minister.

On the shelves behind Breton’s desk, there was a model of a Dassault Rafale fighter jet, Galileo navigation satellite — the European alternative to the U.S. GPS system, and a trilobite fossil, which he said was 460 million years old.

Featured Photo: European Commissioner for Internal Market Thierry Breton. [EPA-EFE/FRANCISCO SECO]

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By Pierre Tran

Dateline Paris.

A scathing parliamentary report on the draft 2021 defense budget pointed up  an imbalance of political power, with the executive arm withholding information from the legislature, while enjoying an exclusive right to approve the bill virtually unchanged.

“Not only is the budgetary initiative a monopoly of the executive arm, but the capacity for members of parliament and senators to amend the text is doubly limited…” said the special report, drafted by parliamentarian François Cornut-Gentille, who sits on the finance committee of the lower house National Assembly.

Article 40 of the constitution and the parliamentary majority effectively prevented amendment of the bill, the 370-page report said.

The government showed a lack of willingness to open the debate and communicate to the public through parliament, the report said.

No prime minister has spoken to parliament on the draft budget since 1992.

“Your rapporteur is surprised by the propensity of the armed forces ministry to limit the publicity of answers to written questions, which defies all logic,” the report said.

There was lack of disclosure on the A400M transport plane and Tiger attack helicopter, with the information taking on a significance which was all but incomprehensible.

The wide-ranging report urged a thorough rethink, calling on the government to take a broader view of a strategic industrial and technology base rather than purely defense.

That strategic approach highlighted the sovereignty issue, with the report calling for a French rescue plan for Photonis and Souriau, small companies which have been put up for sale and attracted attention from acquisitive U.S. companies.

Photonis is a specialist in night vision, while Souriau builds plugs for cable network connectivity.

Meanwhile, the ministry has created a post of spokesperson, which has been published in the official journal. That senior press officer will have a basic salary of €90,781-€118,725 ($106,766-€139,639), depending on experience, plus a variable part of pay, Mammoth, a defense blog, reported Nov. 1.

That post sparked media interest as press relations with the office of the the armed forces minister, Florence Parly, have been strained, particularly over the coronavirus crisis.

The favored candidate was  Hervé Grandjean, Parly’s industrial adviser, afternoon daily Le Monde reported.

Budget Crisis

The parliamentary report gave a detailed financial account of major arms programs — noting there were gaps due to lack of information from the defense ministry — while raising a warning flag over the fiscal impact of the pandemic on the 2022 military budget.

A planned sale of 20 Rafale fighter jets to Greece has set off budgetary alarm bells.

France will order 12 Rafales from Dassault Aviation to replace that number of aircraft to be taken from the air force to supply Greece.

The remaining eight will be new aircraft.

The government will need to find more than €1 billion to fund that procurement for the French air force, as that had not been written into the multi-year military budget law.

That would be a good opportunity for the government to revise the budget law, Cornut-Gentille told Nov. 4 the Association des Journalistes de Defense, a press club, Challenges business magazine reported.

The defense budget was due to rise €1.7 billion in respectively 2021 and 2022, with the funding to rise €3 billion in respectively 2023, 2024 and 2025 under the 2019-25 military budget law.

But that planned increase was highly unlikely in the wake of the economic decline sparked by the pandemic.

“Steps of €3 billion per year is unprecedented, from any minister,” Cornut-Gentille said. There will be tough budgetary decisions and it will questionable whether that spending can be maintained.

The report called for a complete rethink of future spending.

The French commitment to spend two percent of gross domestic product on the military is clearly “obsolete,” the report said, quoting Françoise Dumas, chairwoman of the National Assembly defense committee.

A Damocles sword hangs over the services, the report said.

“Everyone should know that the defense spending in 2024 and 2025 is not defined in absolute terms but as a percentage of GDP (two percent),” the report said.

“In the present state of the French economy, that indicates that the services will see their funding fall, undoing the effort of previous years.”

On the lack of preparation for the COVID 19 crisis, the report pointed up the 2008 defense white paper referred to pandemic and epidemic respectively 15 and six times, while the 2013 white paper referred respectively seven times and twice.

The 2017 strategic review for defense and national security failed to refer to pandemic, and referred to epidemics twice.

Those official reports set the background for drafting the defense budget.

The photo of parliamentarian François Cornut-Gentille was taken from the following source:

https://www.latribune.fr/entreprises-finance/industrie/aeronautique-defense/20141105trib1ecf53b05/la-question-de-la-sincerite-du-budget-de-la-defense-se-pose-francois-cornut-gentille-ump.html