The Weekly Wire: For Your Situational Awareness 10.18.19

 In Weekly Wire
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Will France’s Next Combat Cloud be 100% French?

Alix Leboulanger, Research Associate

Recently, the French government announced that Dassault Systems and OVH will design the French government’s cloud system. France is more of a follower than a pioneer in this field, compared to the US, UK, Canada, and Australia, yet both firms involved are entirely indigenous suppliers. The extraterritoriality of the internet has complicated the regulatory process scope, with complications in 2018 around both the General Data Protection Regulation (GDPR) and Cloud Act.

In the context of digital transformation, the issue for governments is not always about digitalization, but sometimes about identifying the best contractor with whom to partner. The scarcity (or monopoly) of digital players is one challenge and the lack of local solutions is another. Excluding companies from China (Baidu, Alibaba, Huawei) and from the US (Google, Amazon, Microsoft, IBM and Dell), there aren’t too many leading tech companies left who possess this capability, especially in France.

In this regard, the move toward a one hundred percent sovereign cloud is a daring endeavor that should be closely monitored and not just because of GAFAMs (Google, Apple, Facebook, Amazon, and Microsoft) or geopolitical rivalries. Once a country possesses cloud know-how and dedicated infrastructures, key domains from healthcare to national security will benefit from such tools. The Ministry of Defense is currently looking to integrate a cloud structure for defense purposes, branded the Combat Cloud. If OVH and Dassault Systems succeed in their enterprise, more institutional clients will line up.

Dassault Systems Atos, Sopra Steria, OVH: How do you say GAFAM in French?

Dassault and OVH are not the only digital players clearing the way for government projects. Atos, Sopra Steria, and Cap Gemini are showing up in French military contracts more often than before. For Atos Bull (Atos Defense branch), this is mainly due to its background in high performance computers and data management. It also has a stake with the French Scorpion army program. Sopra Steria is collaborating with Thales for a big data project with the military, dubbed Artemis. The market footprint and track records of both Atos and Sopra Steria are gradually expanding, targeting new business opportunities that were traditionally reserved for defense firms.

The rise of robust digital partners brings many opportunities to defense firms, but this is not necessarily all good news for French defense companies like Airbus, Safran, and Thales. The Big Three are already dealing with intense competition from North American and Asian players in export markets, in addition to complex European programs, and now the GAFAMs. Getting off to a strong start in digitalization is a must for them, and all three firms have already set in motion a plan to gain more traction in the digital landscape. Airbus Aerospace partnered with Palantir in 2018, and Thales acquired Gemalto, Guavus, and Psibernetix from 2018-2019 to create a consistent and ready-to-deploy product portfolio across the Internet of Things, artificial intelligence, and big data analytics.

This race for new markets and technologies is not specific to France. The US defense industry has also witnessed startups and unicorns (tech firms valued above $1 billion) discreetly playing in their backyards and that suddenly come across some of their core business, as seen in 2016 when Raytheon competed against Palantir for the new version of the Distributed Common Ground System for the US Army. A couple of years later in 2018, when the US Department of Defense launched the Joint Enterprise Defense Infrastructure contract, contenders only came from civil providers: AWS, Microsoft, Google, Oracle, and IBM.

In France, could Atos, OVH, Dassault Systems and start-ups be the only prime bidders for the MoD’s fully indigenous Combat Cloud? Understanding the revolution behind these new technologies, business models, and competition is a step that must be taken urgently to thrive in the upcoming military 4.0 era, which will see some of the biggest market opportunities.

Kuwait

In the wake of a $1.7 billion deal in late 2016 for the recapitalization of its existing 218 M1 Abrams tanks, the Defense Security Cooperation Agency approved a $281 million Foreign Military Sale of M88A2 HERCULES (Heavy Equipment Recovery Combat Utility Lifting Extraction System). As the newest variant of the venerable US armored vehicle recovery vehicle family, the M88A2 HERCULES would allow Kuwait to retain its indigenous battlefield recovery and rescue capabilities for heavy armored vehicles, as the newest M1A2 variants SWAP increases have outpaced legacy armored recovery systems. BAE Systems in York, Pennsylvania will serve as the prime contractor on this program.

South Korea

On October 10, Democratic Party Chairman Choi Jae-sung stated that the National Assembly had been considering two proposals for an aircraft carrier that would enter service around 2033. The $2.61 billion (KRW 3.1 trillion) “light” option featured a 41,500-ton carrier at full load that can carry 12 fixed wing aircraft and eight helicopters. The $4.55 billion (KRW 5.4 trillion) “medium” option featured a 71,400-ton carrier at full load that can carry 32 fixed wing aircraft and eight helicopters. Both options are significantly larger than the initial proposal, which was a 30,000-ton amphibious assault ship that could support fixed wing aircraft, similar to the Italian LHD Trieste.

It is uncertain whether two larger proposals would have the amphibious capability of the preceding Dokdo-class LPH. The “light” option is similar in size and aircraft loadout to the Wasp-class amphibious assault ship, while the “medium” option is similar in size and loadout to the Queen Elizabeth-class carrier. The South Korean Navy also revealed that it was studying potential construction of a nuclear-powered attack submarine. South Korea has aspired to build such submarines since at least 2003 but has usually been pressured by the US as well as domestic political forces to not move forward with the nuclear submarines. But with North Korean advances in submarine launched ballistic missiles, as well as the construction of a new ballistic missile submarine, South Korean planners are certainly returning to the idea of a nuclear-powered attack submarine with more urgency than before. South Korea has shown interest in the French 5,300-ton Barracuda-class attack submarine.

South Korean shipbuilders are currently in the middle of building nine 3,000-ton Chang Bogo-III class diesel-electric submarines, which will be delivered in batches to 2031. If a nuclear-powered submarine option is approved, it’s likely that the first submarine would not enter service until after the Chang Bogo-III build is completed, due to the inherent technical challenges.

Greece

On October 10, Greek defense minister Nikos Panagiotopoulos announced his intentions to purchase two Belharra-class frigates from France during his visit to the country. Defense Minister Panagiotopoulos and French Defense Minister Florence Parly signed a statement of intent regarding the potential acquisition, though a contract is unlikely to be signed before 2020. Greece has been in talks with France over acquiring frigates for the last few years, but both French and Greek news sources have at times contradicted each other. The most recent contradiction occurred in 2018 when Greece announced its plans to lease two FREMM frigates from France over a five-year period as an interim solution, but French officials denied anything was signed.

Prior to this, Greece planned to replace its Elli-class frigates with six FREMM frigates, but limited defense spending due to the financial crisis delayed the purchase. At the time, France was willing to forgo payment for the frigates for five years, but outcry from other European countries caused the deal to be canceled. It is unclear how much Greece is currently looking to spend on the future frigates, but their defense spending is already limited over the next few years due to the costly upgrades to its F-16 fleet.

Tunisia

On October 10, the US Department of State approved the possible sale of 12 T-6C Texan trainer aircraft to Tunisia to replace their aging fleet and improve Tunisia’s ability to train pilots. The estimated value of the sale is $234 million and includes support material. The US also hopes this sale will lead to additional cooperation with Tunisia. However, the sale has not yet been finalized, and the details could change in the interim.

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