September 19, 2024
How to finance industrial defense programs in France, outside of the LPM 2024-2030? #FrenchFinance

How to finance industrial defense programs in France, outside of the LPM 2024-2030? #FrenchFinance

CashNews.co

A growing number of voices are being raised today in France to point out the inadequacies concerning industrial defense programs, having been the subject of difficult arbitrations to respect the envelope of €413 billion of the very recent Law of Military Programming 2024-2030, obtained through hard struggles by the Minister of the Armed Forces, Sébastien Lecornu, from the Ministry of Finance.

Thus, if the LPM 2024-2030 is part of a rapidly growing budget, it appears that international tensions, the technological pace, and even the risks of conflict, have increased much more rapidly in recent years, against a backdrop of constraints essential budgetary measures, while the French sovereign debt has exceeded 110% of GDP, and public deficits have failed to fall below 3%.

In fact, the LPM, and its budgetary envelope, appear today to be the upper limit of what the French armies, and the national defense industry, can hope to obtain in the years to come.

But what would happen if there existed an alternative model, complementary to the LPM, capable of supporting the financing of these defense industrial programs which are lacking today, and of supporting the defense industry by enriching its catalog, without eating into the LPM, and without destabilizing the public accounts? Impossible ? Yet this is what the Defense Program Development Capsules, or CDPDs, offer!

Bandeau03 Armed Forces Financing Solutions | Defense Analysis | Armed Forces Budgets and Defense Efforts

The rapid and radical transformation of the global geopolitical and military technological context, which surprised Western armies

If the strategic, geopolitical and technological balances, inherited from the end of the Cold War, have persisted for almost thirty years, they have, in recent years, been profoundly called into question, by the emergence of new major military powers such as China, the arrival of new structuring defense technologies such as drones, and the return to a logic of bloc confrontation, as at the height of the Cold War.

Chinese Navy J-35
Chinese military technology is evolving very quickly, now tangling with, and sometimes surpassing, the most advanced Western technologies.

In doing so, where Russia, China and North Korea have rapidly developed their armies and their defense technologies, the West, long bogged down in the doctrine of the benefits of Peace, and asymmetric peripheral conflicts, in Iraq and in Afghanistan, have allowed their armies and their technological advance to erode, opening the door to challenges to Western hegemony, which could lead to major conflicts.

In fact, most Western armies have been surprised, with the notable exception of South Korea and Israel, in a situation of uninterrupted conflict since the 50s, and have been trying, for several years, to make up for the accumulated delay. , and to rebuild a defense tool sufficient to contain all threats.

Bandeau02 Armed Forces Financing Solutions | Defense Analysis | Armed Forces Budgets and Defense Efforts

For many countries, particularly in Europe, this reconstruction is proving difficult, with budgetary, political and social constraints, as well as the weight of sovereign debts and public deficits accumulated over recent decades, making it impossible to go through it. issuance of debt to finance this necessary transformation, over a particularly short timetable.

An ambitious LPM 2024-2030, but insufficient to respond to changes in threats and defense technologies

In France, this reconstruction began, timidly, from 2017, with a trajectory established by President Macron, intended to give the French armies the necessary means to begin its reconstruction, through the LPM 2019-2025.

Dassault defense industrial programs Rafale merignac
The LPM 2024-2030 respects the format of the armies defined by the 2013 White Paper, in a geopolitical context without comparison with today.

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