France Downsizes Defense To Compete With US

FRANCE'S long-anticipated defense reforms involve far more than a simple cutback: They signal a new challenge to American dominance in aerospace and weapons sales.

The French move to consolidate its defense industry and create a more mobile Army bolsters its push for a "European pillar" within the NATO alliance. The reforms will create a wholly professional army, a series of shotgun mergers within France's troubled defense industry, and cut the French armed forces from 501,000 to 352,000 over the next six years.

Initially, this will cost tens of thousands of jobs and demand new subsidies to the defense industry. But in the long run, French leaders say the reforms will bring France's military objectives in line with its ability to pay for them.

French President Jacques "Chirac sees it as a package," says Frederic Bozo, a defense analyst with the Paris-based French Institute of International Relations. "France has to reconcile its international goals with its military means. If we insist on being a military leader in Europe, we need a military apparatus that is cost efficient."

Since the end of the cold war, French defense industries have seen exports drop from $11 billion to $2.2 billion. Big-ticket losers, such as Giat Industries, which manufactures the Leclerc tank, ran $2.4 billion in deficits last year. It, along with all other state-owned defense firms, is under review. Defense Minister Charles Millon called Giat a "national catastrophe."

Moreover, France's military is still oriented to a theoretical war where massive armies face off on European soil. Its conscripts, who form the bulk of the Army, are limited by law to fighting only in defense of national territory.

Although polls show that a majority of the French public favors ending the draft and forming a volunteer army, the tradition of a universal national service runs deep in French history.

President Chirac's announcement Thursday of the end of a conscript army coincides with the 80th anniversary of the battle of Verdun, a 10-month World War I battle that killed or wounded 362,000 French soldiers and came to exemplify the slogan on war monuments throughout the nation: "Died for the glory of France."

Yet the French president moved quickly to cut off criticism of his strategy for industry, which includes seeing French defense firms merge with each other before seeking mergers with British or German rivals.

But French moves to privatize electronics giant Thomson, and to merge the state-run Aerospatiale aerospace company and jet-fighter manufacturer Dassault Aviation, are likely to produce sparks.

These are "first steps in a process of establishing France's armaments industry so that stronger French firms can develop alliances with neighbors to develop a credible European industry," Defense Minister Millon said in an interview yesterday in the weekly Journal du Dimanche.

Millon also renewed French calls for Europeans to "buy European."

Yet France's European partners find such talk troubling. This weekend British Prime Minister John Major warned against protectionism on arms sales and insisted on Britain's right to purchase weapons from the United States.

German defense analysts say that French insistence on a more independent European voice within NATO could drive the US out of Europe. "Everyone says we want the US as a partner, but it must be done in a way that the US wants to stay a partner," says a German diplomat.

German analysts also question the credibility of France's quest for an independent European defense. "The desire on the French side is to have parallel with the emergence of a European identity within NATO.... in effect, complete independence from the United States," says Alex Sauder, a specialist on Franco-German relations with the German Society for Foreign Affairs in Bonn. "But even a completely European conglomerate would be too small to complete with Lockheed-Martin."