a compass for defense investment – ​​Areion24.news

In 2018, France passed a military programming law (LPM) that provides for €172.8 billion in investment for military equipment for 2019-2025 (out of a total of €295 billion for the armies). This law was a strong commitment to Emmanuel Macron and an important goal for Florence Parly. Are these government spending legitimate? Why does the defense sector benefit from a planning law?

The LPM is a multi-year planning tool for public expenditure. It gives visibility to armies and their industrial partners. The construction of a defense instrument takes time and therefore requires a continuous effort over several years: this is the meaning of an LPM, the duration of which can vary from four to seven years. This visibility enables industry to develop programs and industrial capabilities to provide the armed forces with the right equipment at the right time and at the right pace.

If France is to continue its active involvement in international peace, it is important to maintain the LPM as an instrument of its strategic autonomy. Without a national industry, our soldiers would depend on the goodwill of the producing countries to equip themselves and even to determine the conditions of use of this equipment. This is the lesson of the purchases in the United States of Reaper drones (usable only in the Sahelo-Saharan strip for the first devices delivered to France) or of Javelin missiles (the use of which is limited to Afghanistan). The LPM thus makes it possible to guarantee the defense of France by providing our soldiers with equipment that will allow them to carry out their missions efficiently and with a good level of protection.

However, the existence of a multi-year budgetary commitment might come as a surprise. Indeed, the state budget must respect the principle of the annual budgetary budget, which allows parliamentary control over public expenditure. This principle is nevertheless incompatible with the need to forecast certain public expenditures, such as defense investments, in the medium and long term. Article 34 of the 1958 Constitution makes it possible to amend this principle by adopting laws establishing multi-annual guidelines for public finances. It thus gives the opportunity to plan defense policy despite the annual budgetary duration. Importantly, however, the parliament still has to approve the expenditure necessary to implement the LPMs annually.

Thus, France has been organizing the development of its defense instrument through multi-year budget planning since the 1960s. The concept of LPM itself appeared in 1977 to determine the orientation of equipment appropriations, and its scope gradually expanded all military spending. However, and this is a subtlety to keep in mind, the LPM is not prescriptive in nature. It must therefore be converted into the Initial Financial Act (LFI) every year. The implementation of the LPM therefore depends on the goodwill of the government present.

The current LPM offsets the 2014-2019 LPM, described as “survival LPM”. Lacking sufficient resources, the latter did not make it possible to increase the numbers and renew the equipment of the armies as would have been desirable. However, our soldiers have never been so sought after by external (“Barkhane”, “Chammal”…) and internal (“Sentinel”). While capital expenditures will increase by 80% during the current LPM, it should not be forgotten that they fell by 21% between 2008 and 2012 as a result of the financial crisis of subprime, and that they remained at a fairly low level through 2019. So the increase is actually a catch-up. The increase in defense effort is significant, but reflects unavoidable needs in manpower, operational preparation and equipment.

LPM 2019-2025

However, the LPM foresees a very significant increase in spending after the presidential election. However, it is questionable whether these ambitious targets can be achieved. A retrospective analysis shows that the actual expenditure incurred is often below the targets of the LPMs, and even below the appropriations authorized by Parliament in the original budget law. During the budget year, expenditure on external operations or personnel may in fact be higher than estimated. It is tempting for decision makers to defer capital expenditures to balance a budget in the year in question, especially since the short-term consequences are not noticeable. Nevertheless, such compromises will weaken the long-term consistency of defense industrial policy and with it the proper equipment of the militaries.

Since 1985, the actual expenditure often differs from the programming. Indeed, there is a permanent tension between the objectives of strategic autonomy and sound management of public finances. This was especially true between the late 1980s and early 2000s, when the spending deficit represented the loss of about a year of investment over an average six-year duration for an LPM. As Friederike Richter points out (1), the LPM’s main mission of anticipating and ensuring a credible defense is therefore rarely fulfilled.

The fact that the situation with regard to the implementation of LPMs has improved since 2003 is also due to the fact that the ambitions have been much more modest than announced in the current law. In spite of everything, military spending and, even more so, spending on military equipment was often an adjustment variable in the face of budgetary difficulties or to respond to other state priorities. Significantly, the implementation of the 2009-2014 LPM was quickly jeopardized by the impact of the 2008 financial crisis, as evidenced by its incomplete implementation.

However, decisions that allow for a short-term balance of the state budget entail long-term costs for the militaries. In order to control annual expenditures, the duration of the programs is often extended from the original schedule, leading to uncertainties for the militaries about the deployment of this equipment, and the delivery targets are revised downwards, reducing the in the end their unit costs.

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