AviationWeek.com/awst AVIATION WEEK & SPACE TECHNOLOGY/NOVEMBER 3/10, 2014 31Amy Svitak Paris‘Trust Me’
French lawmakers balk at defense ministry plan
to shore up 2015 budget shortfall
W
ith France under enormous
pressure to reduce mount-
ing debt and the nation’s
armed forces taking on more opera-
tional commitments, lawmakers wor-
ry a six-year, €190 billion ($240 billion)
military spending plan will collapse if
anticipated one-time revenue sources
fail to materialize next year.
In October, French Defense Min-
ister Jean-Yves Le Drian took sharp
questioning from lawmakers—in-
cluding some strong supporters of
defense—over the credibility of his
proposed 2015 budget, which upholds
President Francois Hollande’s 2013
commitment to spend €31.4 billion on
defense next year but relies heavily on
sketchy sources of funding.
Those sources, which are needed
to fi ll a €2.1 billion budgetary shortfall
in 2015, will be derived from one-time
revenue windfalls, including the sale
of government assets, as well as mon-ey that could be available through a
public bond issue and the sale of state
equity in public companies.
Le Drian said he is confi dent these
sources of cash will come through.
Their timing and the exact amount
of funding they will yield are unclear
but include revenue expected from
a government auction next year of
700-MHz-frequency band spectrum
to telecommunications operators.
“We are not sure of the levy from
this sale in 2015,” Le Drian said, al-
though he noted that the ministry
has surmounted similar challenges in
meeting budgetary shortfalls in the re-
cent past, and he is confi dent 2015 will
be no dif erent.
“This is the way it was in 2014 and
2013, in terms of one-time revenue
gains,” he said. “I am sure these funds
will be there in 2015, as they were over
the past two years.”
As part of his funding proposal, LeDrian says the ministry will use a legal
tool that allows some of the proceeds
from the sale of state assets to estab-
lish an outside entity, a public-private
company set up with the sole purpose
of purchasing defense equipment and
leasing it back to the military.
“The solution is to create a proj-
ect company, and part of the capital
would be provided by the state from
the proceeds of the sale of govern-
ment interests,” he said. “The com-
pany would buy military equipment
and lease it to the state.”
The idea is not new in France, Le
Drian says, acknowledging that many
questions remain as to the legal regime
under which such a company would
operate. He says it is not yet clear
whether the new entity would be fully
or partly private, involve non-French
shareholders or be allowed to go into
debt. To explore these issues, the min-
istry recently issued two requests for
proposals from consulting fi rms that
would help establish the company’s le-
gal and fi nancial framework, he notes.
By mid-2015, the ministry will have
a better idea of available funding from
the sale of frequency spectrum and
other one-time revenue sources, he
says. In addition to offering cost-
saving benefits to the state, such a
scheme could bring the potential for
export opportunities as well. “I amFrench forces could lease equip-
ment such as the A400M airlifter
or MRTT refueling tanker under a
proposed cost-savings plan.AIRBUS
http://www.wescoair.com http://www.haasgroupintl.comWesco Aircraft and Haas Group
International off er comprehensive
supply chain management
services to the global aerospace
industry. We simplify sourcing
and implement lean logistics to
help customers reduce costs and
improve effi ciencies.t One-stop-shop for wide range of products,
including chemicals, hardware, electrical
products, machined parts and tooling
t Just in Time (JIT) Delivery
t Point of Use Management
t Chemical Communication Management
t Kitting ServicesSimplifi ed Sourcing + Lean Logistics
Visit us at
MRO Asia 2014
November 4-6
SingEx, Singapore
Stand 324圀漀爀氀搀䴀愀最猀⸀渀攀琀圀漀爀氀搀䴀愀最猀⸀渀攀琀
圀漀爀氀搀䴀愀最猀⸀渀攀琀