The Weekly Wire: For Your Situational Awareness 9.20.19

 In Weekly Wire

French Defense Budget 2020: What to Expect?

In a few weeks, French MPs will begin to review next year’s defense budget. The FY2020 defense budget (or Year II of the Loi de Programmation Militaire – LPM), is expected to pursue a gradual growth path towards 2% of GDP by 2024, as planned by President Emmanuel Macron and his government to meet NATO requirements.

In this regard, the FY2020 defense budget will account for 1.82 % of the French GDP against 1.79 % in 2017. Additionally, the Ministry of Defense is among the few ministries in 2020 to receive the planned funding as per the LPM with €37.6 billion ($41.6 billion) in equipment and operations.

In other words, this is more than €1.7 billion ($1.8 billion) larger than FY2019, however it is still far off the €3.0 billion ($3.3 billion) per year planned by the LPM from 2022 until 2025. Given this, the current situation could cast a shadow on France’s ability to spend more on new equipment and upgrades:

  • External and domestic operations continue to cost more than expected, and €1.1 billion has been allocated in FY2020 to military operations, instead of €850 million in FY2019, but any further funds required will have to be financed by other ministries, though this has yet to be confirmed.
  • Sluggish economic growth (revised to 1.3 % instead of 1.4% according to the Banque de France), impacted by the Yellow Vests movement, could have long term effects on GDP growth rates in the coming years.
  • Slow deliveries in new programs (Griffon vehicles for instance) have been voiced, while other programs are becoming urgent. For example, the long-awaited Offshore Patrol Vessels for overseas deployments are still waiting to be contracted. While the stealth frigate life extension program is becoming highly necessary to patch maritime capabilities shortages.
  • The shift towards more environmentally friendly engines for the Army is also expected to trigger additional operational expenses. The French Military Fuel Service expect a 20% rise in fuel consumption each year, especially since these new vehicles are much heavier than the older generation.
  • Finally, and somehow more worryingly, the government still needs to pay more than €50 billion to honor past orders, accounting for nearly half of unpaid state investments programs (€110 billion).

This begs the question if France can afford to significantly increase its military budget. There is no doubt that more financial incentives are required to maintain France’s military ambitions and it is almost certain that the FY2020 and FY2021 budgets will meet their expected increases, but it is much less clear for FY2022 and beyond.


On September 16, the Australian Department of Defence down-selected Hanwha Defense Australia and Rheinmetall Defence Australia for the LAND 400 Phase 3 Program. LAND 400 Phase 3 will acquire 450 infantry fighting vehicle (IFV) for an estimated $7.5 billion to replace the M113 armored personnel carrier.

Rheinmetall is offering the KF41 Lynx, while Hanwha is offering the AS21 Redback based on the K21 being produced for South Korea. Although the Department of Defence says that it is simply looking for the best capability, there can be no doubt that logistics and maintenance considerations will be a positive that Rheinmetall will emphasize, thanks to its award for LAND 400 Phase 2.

Hanwha is trying to position itself by advertising commonality with a future self-propelled howitzer that Australia plans to purchase. Hanwha’s K9 Thunder has already several significant export victories including

  • India,
  • Poland, and
  • Turkey.

While Rheinmetall can leverage its production line in Queensland, Hanwha is committed to produce the AS21 and potential future self-propelled howitzer in Victoria. Hanwha is likely aware of the intense inter-state rivalry that occurred between Queensland and Victoria during the LAND 400 Phase 2 competition.

While the Department of Defence must say that it is simply looking for the best capability, it is impossible to deny that there will be political influences at play regarding jobs in the winning state. Rheinmetall has not only won the LAND 400 Phase 2 competition with the Boxer IFV, it is also building over $1 billion worth of trucks and logistics vehicles.

These programs will provide work at its Queensland production line until about 2026. Victoria is currently the site of the Hawkei production, which should complete deliveries around 2022. LAND 400 Phase 3 is anticipated to be awarded in 2022, with final operating capability is currently projected for 2030.


The Dutch Ministry of Defense put forth an outline of the 2020 defense budget, which seeks to allocate a total of €11.03 billion ($12.2 billion) towards defense.

Despite the Netherlands being part of the NATO alliance, which aims for each of its members to spend 2% of GDP on defense by 2024, it continues to only allocate 1.35% of its GDP towards defense, maintaining the status quo.

The defense plan states that it will likely maintain defense spending at 1.35% through 2024, despite admitting that “further investments in security is needed.”

Under the proposed 2020 plan, the Netherlands will acquire an additional nine F-35s on top of its current order of 36, upgrade its four air-defense and command frigates with new radars and sensors, replenish ammunition stocks, replace its fleet of PC-7 aircraft, and upgrade its NH90 fleet.

Outside of procuring and modifying the Dutch Armed Forces equipment, the Ministry of Defense will also pursue a new IT infrastructure, invest in personnel changes to help with retention, and conduct various maintenance on military infrastructure.


As the deadline for the first round of submissions for the Canadian Future Fighter Program approaches later this month, Airbus has followed Dassault’s decision to not bid on the competition, and Saab is also giving serious weight to a no-bid decision.

The companies’ decisions primarily center around the security requirements of the future fighter platform.

While almost all combat aircraft feature some level of security and cryptography requirements, those fielded by the US and Canada are held to a specific standard in order to integrate with the “Two Eyes” intelligence network that links the two countries’ air-defense networks under NORAD.

Canada was aware of the potential challenges for non-American contractors to meet this requirement, and thus structured the competition to allow early, non-binding reviews of the contractor’s security solution to allow for updates ahead of bids due in Winter 2020.

However, both Dassault and Airbus announced that they would be unable to meet this fundamental component of the Canadian air-defense mission without significant costs.

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