B. MAKE INTERNATIONAL COOPERATION SMOOTHER
1. A different ranking of political, operational and industrial priorities
By developing a future combat air system, the three current partners are pursuing objectives that are partly convergent, but which also differ in certain aspects.
Thus, the main objectives that France is pursuing are:
- politically, a deepening of Franco-German and Franco-Spanish cooperation,
- in terms of capability, a renewal of its capabilities for 2040-2050 to support and then gradually replace the future versions of the Rafale,
- operationally, adapting to new threats, including denial of access (current and future air defences), cyber capabilities used even by second-rank powers, the FCAS competitors' systems of weapon systems; being able to continue to carry out all the missions on the spectrum with a system that can be adapted to naval use and the ability to project power in interventions anywhere in the world with an international mandate and to protect France's interests abroad,
- on the industrial level, preserve and develop France and Europe's strategic autonomy and their DTIB,
- concerning interoperability, the FCAS system's ability to dialogue with NATO and French allies' systems,
The main objectives that Germany is pursuing are partly similar, but their order of precedence differs somewhat:
- politically, the same desire to move forward by deepening Franco-German cooperation,
- industrially, strengthen and improve the skills of the military aviation, civil aviation and aerospace industries. After all, whoever dominates combat aviation technologies also dominates civil aviation technologies. Progress in aviation is perceived as a way to gradually make up for a potential slowdown in Germany's traditional strength in automobiles,
- in terms of cooperation, continuing to make a first-rate contribution to NATO missions in close cooperation with the United States,
- a relative increase in strategic autonomy to make up for the United States' relative disinvestment and less-smooth relations between the US and Germany.
For its part, Spain wants to:
- increase Spanish industry's technological level by increasing research and developing in aviation,
- continue its tradition of cooperation with European countries in defence programmes, particularly in aviation,
- renew the Spanish Air Force's capabilities.
All these motivations are good reasons to move forward with the FCAS programme, but some of them may conflict with certain aspects of the programme or with the motivations of other partners. The desire to increase skills in certain areas is not necessarily compatible with the "Best Athlete" principle, which entrusts an aspect to the manufacturer who best knows how to do it. Similarly, the desire to continue to be a first-rate actor within NATO can lead to taking decisions that do not favour a programme that works towards Europe's strategic autonomy. From a German point of view, France's desire for strategic autonomy could also conflict with the desire to share the programme's benefits for industry equally. Thus, a compromise must be found between strategic autonomy, which is above all desired by France, and Germany's desire to develop its aviation industry.
Furthermore, each of the partners does not see the FCAS programme in exactly the same way . For France, the FCAS is essential for large manufacturers who cannot allow themselves to remain without a project for a combat aircraft or a combat aircraft engine. German and Spanish manufacturers are not in the exact same situations: for them, it is more an opportunity to gain skills in these areas. However, the simultaneous MGCS programme is essential to German industry, and Bundestag MPs consequently want to see it progress at the same rate as the FCAS.
2. Different strategic approaches for France and Germany
The nuances in the approaches to the FCAS programme also recall deeper differences.
a) Different strategic approaches
First, beyond certain misunderstandings and different priorities in how to act in a crisis, there are differences in these two countries' strategic ambitions . According to Christophe Strassel, 26 ( * ) comparing the French, British and German white papers helps us identify global ambitions for the first two countries, contrary to Germany who is limited to a Europe and near-abroad vision: " Whereas France and the United Kingdom affirm a global vocation and true strategic autonomy, Germany remains focused on its regional role and does not question the traditional framework of its defence policy within the Atlantic alliance ." The ambition of global influence, or at least the political display of it, is not present in Germany's strategy. The Weissbuch (the German white paper) does not discuss this issue, whereas France highlights its " global responsibilities " and the United Kingdom its role as a " key global power in terms of soft power " and a " global " country Caroline Hertling also underscores this difference in approach and ambition: " the German government's international ambitions are weak, whereas Germany often considers France to be a chronic interventionist ". 27 ( * )
France and Germany do not share the same military ambitions, and their understanding of threats is different . Germany's priority is almost exclusively the protection of its territory and national population, whereas France tends to identify threats in distant theatres that could have national repercussions. Germany takes into greater account the threat that Russia can represent while agreeing that it is an essential partner for Europe. These separate military objectives result in different needs in terms of capability which complicates bilateral collaboration on industrial weapons programmes, since the equipment designed does not have the same intended uses. In this way, France's specifications for the equipment used by land forces exposed to a high level of risk are more specific than Germany's, whose soldiers are exposed to a lesser extent . Similarly, concerning Europe's future drone MALE, Germany expressed a desire for a drone that could be used for observation and intelligence, while France wanted a drone that was capable of combat.
We should also note that, in Germany, the armed forces commissioner's report published in April 2018 pointed to a number of shortcomings in the German army : a real lack of financial resources despite the announced increase in military spending, a gap in manpower and the difficulties the army had in recruitment, as well as serious deficiencies in equipment. The readiness rates of military assets are among the lowest in NATO.
Budgetary approaches also differ. In its 2019-2025 military programming act, France set a target for military spending of 2% GDP, as required by NATO, up from 1.77% in 2017. Germany has lower budgetary ambitions. Germany wants to reach 1.5% of GDP in 2024 and 2% in 2031 (from 1.39% in 2019).
b) "Cultural" misunderstandings between the two partners
While Germany and France ultimately came to an agreement in less than three years to proceed through the FCAS's initial stages, the negotiations between the two countries were not without difficulties. These difficulties were due to differences that were both cultural and institutional, which led to misunderstandings and disagreements.
In a study 28 ( * ) published by the Institut des relations internationales et stratégiques (IRIS) on 14 January 2020, Jean-Pierre Maulny, Deputy Director of the IRIS, who gave testimony to the mission, and Christian Mölling, Director of Research at the German Council on Foreign Relations (DGAP), analysed these challenges. They noted the existence of areas of agreement (a strong political will on both sides to move forward with the project) and areas of disagreement where negotiation was possible (threat perception, the issue of arms exports) but also issues where the two countries "do not speak the same language". These are the issues that lead to the most significant challenges .
First, Germany is accustomed to seeing their position as institutionally disadvantaged compared to France. They consider that this is characterised by the close cooperation between the French government and industry, significant support from the former to the latter within the framework of a true strategy, whereas this support and this strategy are both lacking in Germany . Additionally, Germany sees the French concept of national strategic autonomy as somewhat contradictory with, on the one hand, the idea of European strategic autonomy and, on the other, the desire to engage in industrial cooperation. Germany must also submit to procurement rules and processes to which French industry is not accustomed.
Government-defence industry relationships that are very different in the two countries
In Germany, the government maintains a distance in designing weapons programmes, which is ultimately delegated to national manufacturers. Since the federal government and the chiefs of staff provide fewer directives than in France, the industrial sector predominates in defining military needs and enjoys greater freedom.
Since 2000, the Customer Product Management (CPM) is in charge of designing procurement after a reform ended the EBMat ( Entwicklung und Beschaffung von Wehrmaterial ). This restructuring removed prerogatives from the new body responsible for procurement. Thus, skills disappeared and were transferred to industry, which involved itself more in development tasks . The army now only takes charge of a reduced number of trials and experiments on very specific products. The CPM requires a prototype or demonstrator from manufacturers to verify that the equipment indeed meets the requirements. Nevertheless, the directives remain fairly broad. The BAAINBw, the German equivalent of the DGA and the German army's central purchaser, gathers proposals that are more or less detailed and more or less costly from manufacturers before choosing which company will produce the equipment requested. According to Gaëlle Winter, 29 ( * ) this operating method " reinforces the Defence Ministry's dependency on the private sector and deprives it of its capability to drive strategy and expertise to guide its maintenance of critical technological skills and the emergence of new sectors ".
In France, the Direction Générale de l'Armement , which possesses technological knowledge, defines the required equipment according to a very specific, centralised procedure in collaboration with the Armed Forces Staff. These are then implemented by defence companies. The French method for developing new equipment is "capability-based and effect-based", and the definition of operational needs and the specifications, which is very thorough in France, does not exist to the same extent in Germany. Similarly, the Chief of Armed Forces Staff has greater influence in the design of programmes than their German counterpart, the Bundeswehr Inspector General.
The German government's lesser involvement in the process for designing equipment can be explained in part by legal factors .
The BAAINBw, which is responsible for defence procurement, takes great care to avoid any political influence in the process given the liberal-inspired public procurement regulations. Gaëlle Winter highlights the " constant concern for being legally beyond reproach in the choices made ". Thus, the General Legal Affairs Department scrupulously ensures compliance with the law. For Gaëlle Winter, " The BAAINBw's legal formalism is exacerbated by the judicialisation of procurement; the reduction in the number of procurement projects has led companies to increasingly scrutinise the impartiality of decisions, resulting in an increase in the number of complaints to the Federal Chamber of Public Procurement (Vergabekammer des Bundes) ". Indeed, the cases where manufacturers were successful and where the programmes were sanctioned by the courts are " those who had been most politically influenced ".
Germany's paradigm of limited government intervention in the arms industry's affairs is also cultural. The government's role is contested by German manufacturers who see themselves as independent entrepreneurs and who feel that additional rules would represent increased costs and lead times. Gaëlle Winter explains that " the prevailing economic discourse is mostly reticent about strong sectoral plans " for three reasons. Firstly, " politicians do not have a better understanding of future technologies than private investors ", particularly since the CMP has lost skills. Secondly, " political decision makers are worse than private investors at stopping unsuccessful projects at the right time ". Finally, " there is the danger that politically influential and established companies will take advantage of industrial policy to obtain privileges at the expense of competitors, taxpayers and consumers ".
However, while manufacturers opposed the plan presented by Economy Minister Peter Altmaier in February 2019 which would facilitate government participation, the German government is trying to increase its influence somewhat . From 2013 to 2017, the Social Democrats had tried to steer industry in a concerted manner by holding industry dialogues in sectors considered strategic, including the arms industry. Above all, government efforts have been made in protecting national industries. To protect and support them, the executive branch defined five "key national technologies" in July 2015 . Germany also strengthened its supervisory mechanisms in merger control and tightened its control over foreign investment. For example, following the sale of Airbus' defence electronics business, under the name Hensoldt, to the US investment fund KKR, the government invested in the company, concluded a security agreement and appointed two government representatives to the Board of Directors. Thus, Germany is monitoring its national strategic interests.
German manufacturers are asking for better support, but not support that would be intrusive . They want an increase in the defence budget allocated to procurement and research, lighter parliamentary scrutiny (via an increase in the project approval threshold which is currently set at €25 million), better support for exports and to be more closely involved in decision making while excluding direct government control.
For their part, French players feel that German defence players do not have the same perception of threats that they do , and that Germany's processes are less well adapted to providing the armed forces with the equipment they need. This perception is based on the fact that the French army has a specific view of what it needs given its much more frequent engagement in real combat and that the process for meeting these needs through the interactions between the Armed Forces Staff and the DGA are very smooth. French players feel it is necessary to develop a European strategic autonomy, which implies keeping the production of certain equipment within its borders, guaranteeing the procurement of that which cannot be produced and to protect companies from foreign investment. France wants Germany to draw up its own defence industry policy.
French players interpret German manufacturers' reluctance to work with their potential French partners, itself due to the German view that the French government has too much influence, as a desire to develop Germany's national industry instead of strengthening Europe's industry and defence base.
Thus, there is a series of misunderstandings that hinder cooperation on defence . According to Jean-Pierre Maulny, while the FCAS programme has indeed made progress in the three years thanks to a strong will on both sides, the conditions for continuing to advance smoothly are not in place . There is a risk that the programme will fall too far behind schedule.
These difficulties require specific responses. Players on both sides must clarify their strategy and objectives. For France, it is necessary to explain and educate that the French government is acting to maintain a strong technology base and national and European sovereignty. For this, it must be more transparent, potentially by writing out France's strategy for the defence industry, similar to what the United Kingdom does. It is also important to undertake small-scale projects without hesitation to recreate habits of cooperation and build trust.
To go further, consideration could be given to drafting a joint document laying out the two countries' defence industry strategy and its shared aspects as well as a provisional planning of industrial cooperation projects so that the two countries can further commit to their future cooperation and avoid recurring obstacles. Later on, this document could also include Spain so as to build a base for smoother cooperation in the future between the three countries.
Proposal : Improve reciprocal understanding between the three partners; identify and publish a "joint industrial defence strategy" that includes a forecast schedule of the joint projects.
c) A more complex German decision-making process
The German executive branch is traversed by deep fractures not just between the coalition parties, but within each party itself. This affects the Franco-German defence relationship, in particular industrial cooperation, and it can also suffer from the Bundestag's desire to increase its involvement in the decision-making process, as the mission observed during its trip to Berlin.
The German parliament's very significant role in the army and defence programmes
In Germany, the Parliament has very strict supervisory powers over the army . By approving military engagements with a simple majority vote, it plays a much more consequential role in the national defence strategy. The Bundestag decides on the amount of forces deployed as well as the duration those forces are deployed. Article 87a of the German Basic Law stipulates that the " employment of the Armed Forces shall be discontinued if the Bundestag or the Bundesrat so demands ". Members of parliament define the directives of Germany's defence and security policy. The requirement for their approval for any foreign engagement of German forces has led to the notion of a German "parliamentary army".
Given Germany's more constraining rules of engagement and the legal issues related to the application of labour laws, the Franco-German Brigade has consequently been used very little.
The German parliament does not hesitate to contest the guidelines given by the federal government . For example, this is illustrated by the attempt to include surface buildings in the five key national technologies that the government had identified in July 2015, even though they had been deliberately excluded by the Defence Ministry. In addition, a Parliamentary Commissioner for the Armed Forces, a senior civil servant elected by the Bundestag for five years, is responsible for inspecting the internal command as well as the respect for human rights within the troops. They publish an annual report of their investigations, which is often critical of the armed forces' operations.
The German parliament can also exercise influence over capabilities through its power to approve any military programme that exceeds €25 million . The Bundestag's Budget Committee is in charge of this approval, a prerogative that does not exist in France. German manufacturers are calling to relax this rule by increasing the threshold for draft contract approval. The FCAS and MGCS programmes, supported jointly by France, have been blocked by the Budget Committee. German MPs are also able to force the federal government to change a contract: this is how the German order for the A400M, which was initially for 60 units in 2002, was ultimately lowered to 40 units in January 2011.
Furthermore, while arms export controls by members of parliament are made ex post facto in France and Germany, German MPs are more involved in defining export policies .
Furthermore, the mission saw in Berlin that German politicians remain reluctant towards initiatives that seem to them susceptible of competing with NATO . Despite American criticism sometimes targeting Germany (the low defence budget, Nord Stream 2, the Huawei 5G network), Germany takes utmost care to preserve the Alliance. Within the Alliance, the German Framework Nations Concept allows it to play a leading role in developing capabilities, encouraging cooperation with its immediate neighbours (Poland, Netherlands).
Above all, to accept the German share of the R&D contract on 12 February 2020 (€77.5 million), Bundestag MPs laid out six conditions : a report from the Defence Ministry on the MGCS project and, more specifically, on the consolidation of the German land industry sector (Rheinmetall and Krauss-Maffei Wegmann), the implementation of an inter-ministerial management to supervise the FCAS and MGCS projects as well as the publication of quarterly reports so that members of the budget and defence committees can monitor both projects' progress, the definition by the government of the key national technologies for the two projects and the guarantee that measures will be taken so that their design, production, and availability to Germany will be guaranteed . These are technologies resulting from Germany's participation as prime contractor or main partner in the national and international projects in technological and demonstrator programmes. For R&T that can be used in civilian industry, similar measures must be taken by the Defence Ministry, the Economy Ministry, and the Research & Development Ministry. Furthermore, the German parliament wants the agreement concluded in 2013 between Airbus (EADS at the time) and the German government on the protection of essential security interests to be updated with regards to the FCAS project.
These conditions, in particular the conditions relating to key technologies, seem quite restrictive, especially since the Bundestag can block any new investment of more than €25 million.
d) The need for a longer-term commitment to avoid any repeated stalls to the programme
Eric Trappier, CEO of Dassault, insisted on this point during his hearing; France and Germany may be strongly committed to the programme, but not to amounts that would make it irreversible.
There are now many reasons in favour of moving to a scale of one billion with a framework agreement that covers all the operations needed to produce the demonstrator, at least until 2024 and ideally in 2026 , thus breaking with the "small slices" strategy. Each delay represents a loss of time and money since the project teams are inactive. It would no doubt be preferable that this framework agreement be signed before the coalition in power in Germany is elected in September 2021, since the election will open a period of uncertainty that will likely be unfavourable to moving forward with large projects.
Proposal : Prioritise signing an overall framework agreement at the start of 2021 to continue developing the FCAS demonstrator through 2025/2026 rather than a succession of contracts requiring repeated political approval.
3. The FCAS's exportability: an essential issue
The European market alone will not be enough to make major Franco-German and European equipment projects such as the future tank or the FCAS economically efficient: credible possibilities for export based on clear, predictable rules is an essential condition for the sustainability of the European defence industry . Remember that Germany, like France, is one of the largest exporters of defence equipment in the world: €6.24 billion in 2017, of which €3.7 billion to third countries outside NATO and the EU, compared to €6.9 billion for France and €4.35 billion for Spain.
The European market is one of the most open in the world, unlike the United States, but in the absence of a European preference for the procurement of military equipment within Europe--many Member States prefer to buy non-European equipment--its reduced size makes it difficult to see a return on investment in defence without exporting the equipment produced to outside markets. Thus, exports are necessary to allow industry to provide equipment to the armed forces at an affordable unit cost. Furthermore, it participates fully in developing strategic global security partnerships with partners outside the European Union.
a) Germany's specific approach to arms exports.
Starting in 2013 with the new guidelines contained in the coalition contract and the growing politicisation of the debate in public opinion, Germany's policy towards the scrutiny of exports has become more unpredictable. Germany is applying a more restrictive policy by toughening rules and curbing sales to countries outside the EU or NATO or to those countries that do not have similar standards.
Weapons exports: a sensitive issue for German public opinion
The arms industry has a bad image in Germany. Above all, it is the export of weapons judged "unethical" that have been subject to criticism since the end of the 1960s. German society is truly mobilised on this issue, and it has found a relay in two institutions: the Catholic and Protestant churches and union organisations. Today, criticism focuses more on controlling exports than on the exports themselves, this control accused of being too lax and lacking transparency. The executive branch has therefore adopted a restrictive posture to this type of exportation.
Foreign manufacturers, the French among them, are encountering increasing difficulty in obtaining export licences for German components that are integrated into their products , even though sometimes they only make up a small part of the system. The processing time for licence requests, sometimes taking more than a year, has led to certain cases of companies having to pay heavy late fees or losing contracts. This reinforces the sentiment that Germany's rules are not so much restrictive as they are subject to change according to Germany's internal politics, and not just a rigorous application of European criteria and treaty provisions. This situation has even encouraged French manufacturers to design German-free materials without German components, which places a risk to our bilateral defence cooperation and for the construction of European sovereignty.
The similarities between the French and German defence industries should encourage a return to an application of the principle of mutual trust, which had been the rule for decades and which France has never stopped applying.
b) Towards pragmatic solutions within the framework of the Aachen Treaty.
France and Germany included a clause in the Aachen Treaty signed on 22 January 2019 stipulating that " the two countries will develop a common approach on arms exports with regards to joint projects ".
The Debré-Schmidt agreements in December 1971-January 1972 already stipulated that, unless there is a major issue, the partner's exportation projects would be looked upon favourably . However, these texts were somewhat "forgotten"; after a wave of cooperation in the 1980s, there were fewer programmes in the 1990s-2000s, and there have been many misunderstandings since 2016.
The two parties finally reached a new legally binding agreement, which was the subject of an exchange of letters between the governments on 23 October 2019 . 30 ( * ) This text stipulates that France and Germany will continue to fulfil their obligations with regards to the European Common Position of 2008 and the treaty on the arms trade and of acting with respect to their respective national legislation.
On this basis, the two countries agreed on the applicable principles:
Article 1. For programmes developed jointly:
• mutual information about projects for exportation before negotiations open,
• a principle of "exportability" except for " exceptionally, when this transfer or export harms its direct interests or national security ",
• notice within no more than two months of their intention to oppose a transfer or exportation and the immediate organisation of high-level consultations to share analyses and find suitable solutions, the opposing Contracting Party making every effort to propose replacement solutions.
The future tank (MGCS) and the FCAS are explicitly held up in the document as examples of programmes developed jointly.
Article 2. The same principles apply to defence-related products resulting from industrial cooperation.
Article 3. For defence-related products developed by a manufacturer in one of the Contracting Parties that falls outside the scope of application of the above provisions (programmes developed jointly and defence-related products resulting from industrial cooperation), a de minimis threshold applies.
When equipment produced by one of the two countries includes a portion of components produced by companies in the other under a certain threshold (generally 20%), the country producing the bulk of the equipment is responsible for controlling its export. According to the de minimis principle, " when the share of the products intended to be integrated by the manufacturers in one of the Contracting Parties in the end systems transferred or exported by the other Contracting Party remains less than a percentage stipulated beforehand by mutual agreement, the Contracting Party approached will deliver the corresponding authorisations for export or transfer without delay, unless, exceptionally, this transfer or export harms its direct interests or its national security ". This clause seeks to correct the current situation, where integrating a simple engine gasket or switch from Germany into a piece of equipment gives Germany a statutory right to veto the export of this product, even if the bulk of this project is French.
Thus, Articles 1 and 2 of the treaty are more focused on the future of Franco-German cooperation and arms programs that could be exported in the future, including the FCAS , and Article 3 more on the present and current issues. For France, the proper application of Article 3 is a sort of test of Germany's good will. However, there has been a complication concerning Article 3. While the parties had agreed that it applied to current contracts (i.e. spare parts intended for equipment that had already been sold: it was not about retroactivity, strictly speaking), the German side corrected its interpretation and now considered that the agreement was only valid for the future.
However, Germany finally granted a dispensation from this interpretation to a significant share of the licences needed to export equipment (spare parts) for contracts that had already been signed. 31 ( * ) Nevertheless, one can note that a rather significant number of arms and munitions are excluded from this de minimis principle under Annex 2 of the treaty.
Finally, the agreement provides for a standing committee to consult on all issues governed by the agreement. This committee has already met twice.
Thus, the new agreement seems to settle the case of joint programmes such as the FCAS on the one hand and, on the other, set a framework for arms exports that will take place in the coming years to avoid tensions that could have spilled over into the FCAS programme.
Now, it seems necessary to find a legal solution so that Spain can join this agreement . More specifically, Germany should be encouraged to sign a similar agreement with Spain so that Spain no longer encounters, as it does currently, the same problems as France when exporting equipment with German-origin components.
Proposal : Invite our German partners to sign an agreement on arms exports with Spain similar to the one signed with France.
* 26 L'Allemagne peut-elle (et veut-elle) redevenir une puissance militaire ? Christophe Strassel, Hérodote 2019/4 (no. 175).
* 27 Le désamour franco-allemand et l'Europe de la défense, Caroline Hertlings, Revue internationale et stratégique 2014/1 (no. 93).
* 28 Consent, dissent, misunderstandings. The Problem Landscape of Franco-German Defense Industrial Cooperation, 14 January 2020
* 29 Gaëlle Winter, "La politique industrielle de défense de l'Allemagne : l'Etat pris dans un jeu de perles de verre", Note de la Fondation pour la Recherche Stratégique no. 18/2019, 16 September 2019
* 30 Decree No. 2019-1168 of 13 November 2019 publishing the Agreement in the form of an Exchange of Letters between the Government of the French Republic and the Government of the Federal Republic of Germany on Defence Export Controls.
* 31 The German side was also waiting for a general licence to be published to apply the de minimis ; the licence was published in May 2020.