Germany’s Special Fund for Bundeswehr or Aesop’s Tongues for France
(Source: special to; posted April 06, 2022)

By Alistair Davidson
Generally viewed both in Paris and in Berlin as a positive leap forward for the co-operation with France, the massive increase of the investment budget of the Bundeswehr could be also analysed as a dangerous tool which could have a boomerang effect on bilateral projects.

The best after three major disappointments…?

In the speech delivered by Mr. Scholz on the 27th of February, the projects with France are described as top priorities: “That's why it's so important to me, for example, that we build the next generation of combat aircraft and tanks together with European partners, and especially France, here in Europe. These projects are our top priority.”

This is the first time the new coalition has expressed such feelings towards France. In the coalition contract, France was mentioned in passing, with no mention at all of the key bilateral programs, and just before other powerful partners such as Netherlands and Norway or closest neighbours such Poland or Balkan states (see page 136).

These comments came after many major disappointments:

-- The surprising choice of the P-8 “Poseidon” as a transitional solution for the maritime surveillance capability, viewed in Paris as a betrayal of the bilateral cooperation already on track with the “MAWS” program. The technical plateau set-up by Thales and Hensoldt in Velizy was dismantled shortly after the FMS case; so far, the Bundestag has agreed to validate the P-8 purchase (5 aircraft for €1.43 Bn), while taking care to specify that it is a “transitional solution” …

-- The long-awaited “Eurodrone” program has been delayed by the German MoD and weighed down by its two (American) engines, which will increase the costs while reducing its export market.

-- The choice of the F-35A “Lightning” for the NATO nuclear sharing mission was not really a surprise, especially for our readers, but was a very unpleasant confirmation. Initially limited to 18 aircraft to appease France, the order has been then expanded to 35 fighter-bombers. No surprise in the order: the F-35A was the SOLE fighter capable of carrying the tactical bomb B-61-12; no surprise at all in the additional order: 35 units was the figure already planned when the Super-Hornet was planned instead of the F-35. Given the technical maintenance, the low availability of the fighter and the attrition to expect from such missions (dropping a gravity nuclear bomb), the exact and correct number is between 35 and 40.

Viewed from Paris, these German choices are perfectly logic, but fully disturbing.

The American tropism of the German MoD is well-known and should not be considered as new or surprising. But what is new and unpleasant is the fact that German has opted for two U.S. platforms which are NOT transitional solutions.

The P-8 “Poseidon” and the F-35A “Lightning” are, each in its category, the best spearheads of the U.S industry not only for U.S armed forces but also for the export market. Equipped with these platforms which are both NATO standards in their category, the German forces will have solutions which can last for the next thirty-five years to come…Everybody can see that this is not exactly the very definition of a “provisional solution”.

The “Eurodrone” is different: this program shed a harsh light on the ponderous bureaucracy of the German defence procurement agency (i.e, the BAAinBw) and its inability to stick to basic rules in handling a procurement program: cost, specifications and export perspectives.

The cost has increased to insane figures, the twin engines will weigh down the UAV and the export market will be badly addressed given the cost of the vehicle, the choice of GE/Avio propulsion solution and the delays of the program which will come too late to seduce any customer, especially with American, Israeli and Turkish competitors already well positioned on foreign markets.

So, with this background in mind, can we expect that the Chancellor has drawn the conclusion that France should to be spared after so many choices directed against the interests of its partner?

The worst yet to come? Three more reasons to be worried

A closer analysis of the statements of Mr. Scholz and of the German industrial and political stage leads to think that the disappointments will continue for France.

First, the largest flow of money expected to come from annual defence budget and the Special Fund will likely be directed to the sole German defence industry. After so many years of cash shortage, this sudden abundance is widely expected to be invested mostly in the German industrial “Standort” to preserve jobs and develop national technologies that have been twice protected (in 2015 and in 2019) by new regulations.

The industrial policy of protection of key national prime contractor (KMW, Rheinmetall, Hensoldt, Diehl, OHB, TKMS and Lürssen) should continue and will be boosted by the Special Fund.

It is no coincidence that Rheinmetall has proposed a €42 Bn (nearly half of the Special Fund!) package made up of its own solutions (ammunition, armoured vehicles, drones, radars and air defence).

ThyssenKrupp has also suspended its planned spin-off of its naval subsidiary TKMS, and it is no coincidence that TKMS is now looking at new production facilities (at MV Werften)….

It is likely that other German companies are doing the same to capture as big a share of the Special Fund as they can… During the initial conferences between the MoD and the industrialists, few were French…

Secondly, the development of a “ECR-SEAD” version of the Eurofighter (which is an ineptitude for a fighter designed only as an interceptor by the way…), more ambitious than initially expected, should eventually encourage Airbus Defence & Space to make new demands regarding the FCAS/NGF program.

In our view, the new technological design works on the ECR-SEAD version of the EF-2000 should lead to new technological advances at Manching, and therefore to a new posture for Airbus in its negotiations with Dassault Aviation on the FCAS/NGF.

Thirdly and finally, a new complexity could emerge for joint programs with France, given the ever-increasing number of interfaces between different systems acquired without any coherence from various manufacturers, not necessarily European…

These three new factors will certainly upset the fine balance of fragile bilateral co-operation.

The new financial surge in Germany is not necessarily good news for France. Besides, no clear indication has been registered in other areas of possible co-operation with France: on the Tiger-3 upgrade program, Germany has not sent any positive signal, especially on the weapon systems, but Airbus has partnered with Boeing for the replacement of the heavy helicopters…

On the maritime surveillance side, a crucial segment for France given its role in deterrence and foreign operations, the last we can expect from Germany is the order of the P-8 “Poseidon” whose budget - €1.43Bn- crushes any possibility of rapidly resurrecting the MAWS.

On space, Germany has broken the Schwerin agreement by ordering two optical spy-satellites launches by SpaceX and has set-up its own space command, with no regard to that one based in Toulouse for NATO…

On the land systems, Rheinmetall continues to be the trouble-maker in the MGCS program, largely imposed by the Bundestag and the German Government, while pursuing a deep co-operation with competitor BAE Systems in land systems and trying to purchase Oto Melara in Italy with Fincantieri as partner.

In all these domains, France is junior or a minor partner, certainly not a top-priority. That is why the Special Fund, far from given a new boost to the vanishing co-operation, could in fact bury it.


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