Effect Of The Financial Crisis On European Defence: The Case Of France – Analysis

By Adrien Frossard

As Europe remains bogged down in the ongoing economic crisis, it is very likely that the European countries’ armed forces will be affected by this problem. The defence budget is one of the main components of the state budget, which is why governments will certainly be tempted to use defence as an adjustment variable. Several European countries have already gone public about their intention to reduce defence spending because of the crisis. In certain cases they have either delayed or cancelled scheduled investments. No authoritative work has yet been done on the way the financial crisis is affecting Europe’s defence.

Defence and economy are deeply intertwined and the tendency to apply an economically driven approach towards defence can be prejudicial. Defence is not only a question of means, it is also a question of planning, training and organizing— in effect, it is a question of strategy.

France, like other European countries, has been affected by the worldwide economic crisis. It strives to re-balance its budget by implementing austerity measures aimed at reducing its expenses in many sectors including defence. In late July 2012, in the wake of the election of the France’s new President and Parliament, the new delegates were briefed by the French Chief of Staff and Chief of the Army Staff. These two officials used the occasion to highlight the challenges that lie ahead for the French military and expressed serious concerns about France’s defence preparedness. They underlined the fact that the financial crisis may undermine France’s capability to remain a “complete military power”. Similar concerns pervade Europe, as defence spending is being reduced in most countries under the strain of the financial crisis but at the same time it has prompted states to look inward and rely more on themselves.

Let us use France’s case to gather insights about the way the financial crisis is affecting Europe’s defence. The purpose here is to highlight the consequences of the scarcity of funding on defence establishment and the possible response to this issue.
Detrimental Consequences of the Crisis: France’s Case

The first and more likely impact of the crisis is an increasing strain on the defence budget. However, any cut-down in defence spending due to the financial crisis is likely to have the following implications for France. First and foremost, it will affect France’s ability to undertake high intensity military operations, because many equipment programmes are likely to be delayed. Second, it will reduce the readiness of the French forces because of lack of funds for quality preparation of the French forces. Third, the re-thinking of the “operational contract” (contrat opérationnel: a French specific term which stands for the operational requirements that the armed forces must be able to meet) is likely to reduce France’s fighting potential and may lead to the loss of critical fighting capacities. Yet, France’s situation is far from desperate as some features of French defence policy reduces the impact of the crisis.

During his campaign for the presidency, the new French President stated that defence would contribute to debt relief “no more, no less” than the other ministries. With an allocation of 30.2 billion euros for 20131, the French military is likely to get a constant funding year-on-year, abiding by the “zero value” rule.2 But defence planning, especially defence procurement has to be reviewed in the long term. According to Admiral Guillaud, the French Chief of Staff: “[I]f military expenses were to follow the “zero value” rule of evolution during the next three years budgetary program 2013-2015, the additional loss of resources would be around 10 billion euros compared with the initial trajectory set by the White Paper.”3

If one were to look at the current five-year budget planned in 2009, the present figure is already 2.6 billion euros less than what was scheduled. The ministry will then have to reduce its spending and it is likely to delay different procurement programmes to do so. The final list of delayed programmes will be unveiled during next fall, but one can already assess potential programmes under threat. For example, the Scorpion programme which stands for the replacement of the 20 ton class vehicles is likely to be delayed and the delivery schedule of the new multi-role helicopter NH-90 as well as the next multi-mission frigate FREMM is likely to be postponed. As a new five-year budget is awaited in 2015, a new and more realistic defence procurement agenda may be on cards.

Also damaging is the reduction of training periods at various levels. According to the French Chief of the Army Staff, General Bernard Ract-Radoux: “[T]he Army is insufficiently funded to completely undertake an operational preparation of quality”.4 As the mandatory preparation period was previously reduced from 150 to 120 days, the average operational preparation period among the Army was only around 111 days in 2012. This led General Ract-Madoux to say that “the Army is now under a critical threshold which endangers the operational preparation, the success of the mission and then our soldiers’ life.”5 Training is a critical issue as weapon systems are becoming more complex and require more qualified personnel to handle them. It takes a long time to train a soldier for combat and lack of training is likely to harm the effectiveness of French forces on the battlefield.

More broadly, France’s military power status is at stake with the possible reduction of its “operational contract”. The French military is organized to be able to undertake a number of specific tasks. The 2008 White Paper on Defense and National Security states that the Army should be able to project a ground task force of 30,000 men, with an additional 5,000 men for another operation and 10,000 men force to protect the national territory. With difficulty in training its forces, the French military could be tempted to reduce its size; this would in turn affect the list and the size of tasks the military is to handle. Such a move is potentially harmful because it would deprive the French armed forces of two critical capabilities while participating in a coalition operation: the capacity to enter first; and the capacity to command an army corps-sized coalition.6 With such a loss, France would then not be able to lead a multinational force and consequently its status as a military power could come down.

Despite these considerations, we should not exaggerate France’s situation. France has been less affected by the crisis than majority of the European states and the French military has started its reforms long before the crisis arrived. In the wake of France’s presidential election in 2007, a genuine defence policy was undertaken. It took 18 months for the French defense establishment to define the guidelines for this policy. At the same time, to reduce costs, public policies were revised in 2008. These two anticipatory moves prevented any emergency cuts in the French budget under the strain of the crisis, unlike in the case of other European countries. The effects of the crisis notwithstanding, France’s military is still a highly professional and efficient military force. The concern being expressed now is more about the future, and the orientations of the forthcoming White Paper on Defense and the next five-year budget.

Meeting the Challenge: Rationalize and Cooperate

To address the issue of decreasing capabilities and lack of preparation, French officials are striving to find innovative solutions. Basically, two ways have been identified to tackle the detrimental consequences of the crisis: maximize defence spending by improving the administrative system and by promoting jointness within the military; and increase the cooperation with other militaries to create complementary capabilities. Even then, while the issue of defence procurement can be tackled, the loss of readiness and competencies remains an area of concern.

In order to tackle the financial crisis, the French Government has sought to rationalize budget assignments within the military. This process is part of the general re-organization of France’s public administration known as the General Review of Public Policies (RGPP). The Ministry of Defense is currently in the midst of an important reform driven both by the RGPP and the conclusion of the last White Paper on Defense. The main idea of RGPP is to reduce public spending and increase efficiency and quality of public action. For the Ministry of Defense it takes the shape of a vast re-organization and rationalization plan. One main and most visible aspect of this reform is the creation of Joint Defense Bases, aimed at re-grouping different units under a reduced number of administrative entities. For the moment, the implementation of the Joint Defense Bases has not started to bear fruit but it is likely to save money for other purposes in the future.

The second response to mitigate the effects of lack of funding and its negative consequence is cooperation, either within NATO or within the EU. The concept of “pooling and sharing” (P&S) has been promoted within the EU framework. It “refers to initiative and projects to pool and share more military capabilities among EU Member States”.7 The main objective of P&S is to avoid capability duplication and “to facilitate European capability improvement by addressing Europe’s defense capability shortfalls”.8 This demarche has been the starting point for many different projects which are discussed at the level of Ministers of Defense. Among these projects the creation of the European Air Transport Command (EATC) deserves mention. This new multinational command, aiming at effective pooling and sharing of national military assets, is a significant step forward in European defence cooperation. The Netherlands, Belgium, France and Germany have put 150 aircrafts under the operational command of the EATC. This initiative has proved successful with more than 3,000 missions for the benefit of different countries.

Within NATO, the concept of “Smart Defense” also seeks to provide an effective response to the financial crisis. This concept was endorsed by NATO at its Chicago summit in May 2012 as the new outlook for the future of the Alliance. It proceeds with the same logic as P&S, but within the NATO framework, and emphasises more on specialization. While it identifies some critical capability areas, for example ballistic missile defence, ISR capabilities, training and force preparation, Smart Defense urges Alliance members to give priority to these capabilities and to specialise in what they do best.9 In this approach, NATO is identified as a coordinator between nations helping them to build full spectrum capability throughout the Alliance.

Such common approaches, however, remain limited in scope and content. They may not fulfill national aspirations. For example, in the French case, such approaches will not enable its defence establishment to attain its aim of establishing France as a “complete military power”. The idea of developing only specific capability will deprive the country of its autonomy in initiating military operations or to undertake them on its own. The French White Paper on Defense acknowledged the fact that today’s military operations are multinational, and that it is unlikely that a country can ever start a military operations on its own, if one were to rely on the concepts of Smart Defense and P&S. Considering the opposition to such concepts within the Alliance in the past, over Iraq for example, open conflict can occur thus depriving the coalition of critical capabilities. Within the EU framework, the stalemate remains because of the absolute British refusal towards the establishment of a European Headquarter. A second flaw of the common approach is that a possible “free rider” will not play the game fairly. As Admiral Guillaud noted: “[T]hese are interesting tracks, but they will help us achieve our objectives only if they are seen as an opportunity to do more together, not as an excuse to do less individually”.10

An additional limit to the “sharing” logic is the fact that the crisis seems to re-nationalise defence policies. States are no more willing to get involved in distant protracted wars for the sake of others’ interests. The economic cost, coupled with difficult political justifications of military interventions, seem to re-focus European countries on their key interests. The recent operations in Libya could only bring together 10 European countries out of 27, with France and Great Britain as the main contributors.

Conclusion

It is apparent that the response to the financial crisis is mainly driven by economic considerations. In the process, defence requirements are not being given due attention. The European countries are taking the risk of using defence expenditure as an adjustment variable (in their overall spending) to recover from the crisis, thus threatening their rank in the hierarchy of global military power and their ability to intervene across the world. In the case of France, an intelligent and anticipatory planning has mitigated the effects of the crisis but challenges remain, which have to be taken seriously and addressed effectively, if France wants to maintain its strategic autonomy.

1. See http://www.lesechos.fr/entreprises-secteurs/air-defense/actu/02021975341…, accessed on August 13, 2012.
2. This means that the budget will stay the same in absolute value year-on-year, regardless of inflation.
3. See “Si les Sépenses de la Mission, ‘Défense’ Etaient Soumises à la Règle d’Éévolution Dite ‘Zéro Valeur’ Sur la Période de la Prochaine Programmation Budgétaire Triennale 2013-2015, la Perte Supplémentaire de Dessources Par Rapport à la Trajectoire Initiale Déterminée Par le Livre Blanc [… ]serait de l’Ordre de 10 Milliards d’Euros” in Guillaud’s Audition to Parliament, available at http://www.assemblee-nationale.fr/14/cr-cdef/11-12/c1112004.asp, accessed on August 10, 2012.
4. “l’Armée de Terre ne Dispose Plus Totalement des Ressources Nécessaires à Une Préparation Opérationnelle de Qualité”, in Ract-Madoux’s Audition to Parliament, available at http://www.assemblee-nationale.fr/14/cr-cdef/11-12/c1112007.asp#P6_477, accessed on August 9, 2012.
5. “l’Armée de Terre est Passée en Dessous d’un Seuil Plancher Qui Fait Peser un Risque Sur la Préparation Opérationnelle”, Ibid.
6. See http://secretdefense.blogs.liberation.fr/defense/2010/07/contrat-effet-d…, accessed on August 12, August, 2012.
7. See http://www.eda.europa.eu/Libraries/Procurement/factsheet_-_pooling_shari…, accessed on August 11, 2012.
8. Ibid.
9. Refer to http://www.nato.int/cps/en/natolive/topics_84268.htm, accessed on August 10, 2012.
10. “Des Opportunités Intéressantes, Mais Elles ne Rempliront Leur Vocation Que si Elles Sont Vécues Par Tous Comme un Atout Pour Faire Plus Ensemble, et Non Comme Une Excuse Pour Faire Moins Chacun”, in Guillaud’s Audition to Parliament, available at http://www.assemblee-nationale.fr/14/cr-cdef/11-12/c1112004.asp, accessed on August 10, 2012.

Originally published by Institute for Defence Studies and Analyses (www.idsa.in) at http://www.idsa.in/idsacomments/EffectoftheFinancialCrisisonEuropeanDefence_afrossard_240812