Correction: This story has been corrected to show read that French politician Jean-Charles Larsonneur abstained from the vote on Article 14.
PARIS — A new government measure to cap public spending has sparked deep concern over future orders for military programs, at a time when France has vowed to hit the NATO funding target, said a member of Parliament.
Article 14 “could have consequences,” Jean-Charles Larsonneur, a lawmaker who sits on the Defense Committee and specializes in military equipment, told Defense News.
The government adopted in the night of Friday to Saturday Article 14 of the public finance law, which sets an overall limit of €106 billion (U.S. $125 billion) to all civil and military expenditure. Defense spending accounts for half of that overall amount.
Article 14 effectively gives extra power to the Economy and Finance Ministry against the Armed Forces Ministry, with the former effectively winning power to decide which arms programs will be backed as a budgetary authorization needs funds.
There is a threat for “authorization funds” for the Rafale F4 upgrade and a successor to the Mica air-to-air missile, said Larsonneur, adding that those were two projects on which he kept a close eye.
The budget cap “sets a target” but is a bad fit for defense, which requires multiyear spending for large arms programs and funding for foreign combat deployments.
“We will need to be vigilant in each year,” he said.
Article 14 casts doubt over funding for the next multiyear budget, which is being drafted, and also the French pledge to boost defense spending to 2 percent of gross domestic product by 2025, as requested by NATO, he said. That budgetary control also comes as France joins Permanent Structured Cooperation, a move by 25 European Union members to forge a European defense.
Larsonneur, a member of the centrist party Republic on the Move, abstained in the vote for the article. The political party holds a comfortable parliamentary majority.
“This is dramatic,” said a defense executive, who spoke on condition of anonymity. “There are real concerns over the multiyear budget law and program 146.” The latter refers to the procurement part of the annual defense budget.
“This is a real attack from Bercy,” the executive added, referring to the Economy and Finance Ministry. Large programs for a next-generation submarine, a second aircraft carrier, a second step in the Scorpion Army modernization effort, a new tank and artillery, and nuclear weapons could be delayed.
The Armed Forces Ministry offered little resistance, even though programs could be delayed 10-15 years, the executive asserted.
The joint chief of staff and Direction Générale de l’Armement procurement office declined comment, referring inquiries to the Armed Forces Ministry, which was not immediately available for comment.
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Jean-Jacques Bridey, chairman of the Defense Committee of the lower house National Assembly, attacked Article 14.
“The government’s amendment presents a serious risk which calls into question our strategic ambitions set out with consensus in the recent strategic review, and which we will translate in the forthcoming debate on the military budget,” Bridey said in the Friday night parliamentary debate.
Parliamentarian François Cornut-Gentille, tweeted after the government adopted Article 14: “A huge defeat tonight for the Armed Forces Ministry from Bercy through the public finances law: LREM (Republic on the Move) majority removed all budgetary leverage from the future military budget law.”
There are fears new orders will be postponed until existing programs are completed, as the authorization of spending can only be made within the annual budget cap.
An example is the government foregoing a single order to renew the four-strong fleet of nuclear ballistic missile submarines and instead placing individual orders for each boat spread over time, Bridey said. The former would benefit from a lower price for a “bulk order,” while the latter would boost the unit price.
The new budget measure risks making it harder to manage arms programs, which often are late for budgetary, technological and industrial reasons, he said. A launch of a new program might be delayed because a company on another program was late, he added.
The budget cap puts defense spending at the mercy of the efficiency of spending in other government ministries, the lawmaker said. There is the risk of reviving the idea of setting up government-backed leasing deals to get around the spending limits.
Bridey, also a member of Republic on the Move, said he would not vote for the government amendment.
The defense budget relies on two elements, namely an authorization that allows work to be contracted, and the credit payment, which pays contractors and suppliers. The shortfall between the former and the latter leads to the amount to be paid, or a funding gap.
A funding gap of €39.1 billion is expected in 2019 for the defense budget, according to a parliamentary report on equipment and nuclear systems written by Larsonneur.
The public finance law sets targets intended to bring France into line with the European Commission’s target for cutting national debt to 3 percent of GDP. France expects to cut its debt to 2.8 percent next year.
