France sets budget for revamped defence plansWed Oct 29, 2008
By Elizabeth Pineau
PARIS, Oct 29 (Reuters) - The French cabinet approved on Wednesday a draft defence budget for the next six years, providing the financial underpinnings for President Nicolas Sarkozy's plan to streamline defence.
Sarkozy announced in June an overhaul of France's armed forces aimed at creating a smaller, more mobile army, boosting the country's intelligence resources and maintaining its status as a modern nuclear power over the next 15 years.
The draft Defence Planning Law (LPM), which will be submitted to parliament for a vote early next year, is the financial element of the first stage of that plan.
"France wants to maintain a strong foreign policy. For its voice to be heard, it must be a credible military power," Defence Minister Herve Morin told newspaper Le Figaro.
The bill provides for spending of 185 billion euros ($230 billion) over 2009-2014, with outlays frozen over the first three years and increasing by 1 percent from 2012, Morin added.
"In my view, the LPM is an opportunity in a period of economic crisis. It will enable the injection of money into the economy at a time when our industry needs it," Morin said, adding that 101 billion euros would be spent on defence equipment over the next six years.
"France is one of the three or four biggest countries in terms of arms industries. I have done everything to maintain these flagship companies," he added.
At a news conference, Morin said the financial crisis had not affected plans so far for what he described as a budget based on a "realistic financial trajectory".
AIR FORCE ONE
Much of the savings generated by cutting 54,000 mostly administrative support posts should go towards purchasing new equipment, Morin said, but added that 700 new jobs would also be created in intelligence services to fight terrorism.
Between 50 and 66 of Dassault Aviation's (AVMD.PA: Quote, Profile, Research, Stock Buzz) Rafale fighters will be delivered over the next six years, officials said, adding that the number would depend on export sales of the aircraft.
France has, however, failed to find a foreign buyer since the plane went on the market several years ago. Libya, the United Arab Emirates, Greece and Switzerland were interested in the fighter but no orders had been placed yet, officials said.
There was less clarity on the delayed A400M heavylift cargo plane, Europe's most expensive military project, made by Airbus parent company EADS (EAD.PA: Quote, Profile, Research, Stock Buzz).
France had signalled it wanted to charge penalties for any late deliveries, but Morin said he would keep an open mind.
"I told (EADS CEO Louis) Gallois I agreed to look at things with regard to penalties. With the explicit condition that if one day we were ready to close our eyes to a certain number of penalties, EADS commits itself to a precise, firm and definitive delivery date," he told reporters.
France has announced that several barracks will close as part of the defence shake-up, and the draft law provides for the sale of defence sites, including some locations in Paris.
The bill also includes 280 million euros to update the fleet of planes used by Sarkozy and some ministers. Sarkozy is due to acquire a second-hand A330 passenger plane so the president can have an "Air Force One"-type carrier. Two smaller Dassault Falcon 7X private jets are also due to be bought. (Writing by Francois Murphy and Brian Rohan; editing by Andrew Roche)
Source
http://www.reuters.com/article/bondsNews/idUSLT38618720081029?sp=true
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