June 2022. In front of an audience of defense industrialists gathered north of Paris, Emmanuel Macron decrees France’s “entry into a war economy”, four months after the start of the Russian invasion in Ukraine. In two years, the idea has widely taken root. Some people are making it the new state of affairs in international relations. In Brussels, the former boss of Atos who became internal market commissioner proclaimed himself defense commissioner. Draped in his new finery, Thierry Breton relays the injunction of the head of the French executive to anyone who will listen. Behind the immense doors of the Hôtel de Brienne in Paris, against the calm of this building surrounded by trees, the Ministry of the Armed Forces hums with the mantra.
At each trip, Sébastien Lecornu monitors the progress made. The minister is watching closely, because the State has taken its share of the burden. Adopted last year to cover the period from 2024 to 2030, the military programming law (LPM) has a tidy envelope of 413 billion euros. Last year, 20 billion euros in orders were placed with industry leaders such as Airbus Defense & Space, Dassault and MBDA. Enough to indirectly irrigate the 4,000 companies in the French defense industrial and technological base, promises the executive.
Opposite, the industrialists seem to have put themselves in working order. Here, the delivery time for Caesar cannons has been halved. There, the manufacture of 155 mm shells increases. France aims to produce 100,000 in 2024. More than three-quarters will be intended for Ukraine, which is in dire need of them: it must be said that each month, Russia produces 250,000 artillery shells according to information from the NATO, a rate which brings it to around 3 million per year. More than double what Europe and the United States are capable of providing to Ukraine…
During the Eurosatory exhibition organized in mid-June north of Paris – the same one which saw the re-emergence of the concept of war economy in 2022 – Thales also announced that it would quadruple its production of munitions by 2026 At the same time, powder production is reviving in France, after having evaporated in the mid-2000s. And this, thanks to the relocation of the activity undertaken by the company Eurenco, 100% owned by the State. French, at its factory in Bergerac in Dordogne. “Our investment plan of 500 million euros over three years will help to double our production capacity,” says Eurenco CEO Thierry Francou.
Spending at 2% of GDP
Two years after the mobilization sounded by Emmanuel Macron, has France switched to a war economy? By expert consensus, the answer is no. Despite the intense communication orchestrated by the executive, France remains far from such an objective. “Entering a war economy would imply fundamental changes, with the transition to a mobilization of a significant part of the economy in the service of the armies. Civilian industry would for its part be integrated into more or less authoritarian planning for the war effort”, summarizes Renaud Bellais. According to the co-director of the Defense Observatory of the Jean Jaurès foundation, “the State has given itself the means to carry out requisitions within the framework of the military programming law, but it is more of a transformation of the legal framework as well as an operational reality. And to agree that the use of the expression war economy constitutes “a form of abuse of language”.
A glance in the rearview mirror of History allows us to measure the efforts that France would have to make if it were to switch to a war economy. Financially, the resources committed in the last century were colossal. Between 1914 and 1918, the budget devoted to defense represented 55% of the French gross domestic product (GDP), according to calculations by Josselin Droff and Julien Malizard, members of the Research Group in Theoretical and Applied Economics, a unit of the CNRS and from the University of Bordeaux. When the Second World War broke out, this share jumped to 70% of GDP.
Currently, only Ukraine logically reaches such levels of spending on the Old Continent. Last year, the country spent almost 40% of its GDP on its defense. If they remain higher than in previous decades, France’s efforts will simply allow it to rise to 2% of its GDP, in accordance with the commitments made within the framework of the Military Programming Law. Far from the 3% it spent during the decade of the 1980s, at the end of the Cold War.
“A two-speed war economy”
But the war economy as imagined by Emmanuel Macron cannot be read in the light of the past, according to its promoters. “It is, above all, putting production issues at the heart of the life of defense companies. It is increasing production rates, reducing production times, regaining sovereignty”, we defend at the Hôtel de Brienne. The fact remains that Sébastien Lecornu had to recognize in March that “there was a two-speed war economy”. The situation is due to the difficulties encountered by defense companies – especially small and medium-sized companies – in terms of financing, supply or recruitment… But not only that. “The increase in the LPM budget is due to inflation as well as the structural increase in the costs of materials whose level of equipment is increasing, such as in terms of on-board electronics. Apart from the specific case of missiles and artillery, the LPM actually foresees relatively few new orders, if at all”, notes Julien Malizard at the Defense Economics Chair at the Institute of Advanced National Defense Studies.
For the researcher, the law allows “to improve the future without changing gear quantitatively on the size of the French armed forces”. It is not easy for industrialists dependent on state orders to increase their capacities in such a context, concludes Léo Péria-Peigné, at the French Institute of International Relations. “Purchases of military equipment have even been delayed. 300 Jaguar armored vehicles were expected in 2030: there will only be 250 on that date. The rest will arrive in 2035. We deplore the reluctance of the industry, but it does not have no guarantee that its investments will be useful if the State orders or exports do not follow, they will be at their expense”, considers this specialist in defense industry issues.
A year ago, the production lines of the armored vehicle manufacturer Arquus – which assemble the famous Jaguars, but also the Griffon models – were running at minimum capacity, despite the stated wish of its manager to participate in the collective effort. Today, the French champion is about to enter the fold of the Belgian conglomerate John Cockerill. A consolidation operation in a European defense industry which remains extremely fragmented. However, “efforts towards the massification of production can only be thought of on an inter-allied scale, with NATO or on the scale of the EU without the United States. The question which seems fundamental to me lies in the ability to set up a form of coalition capable of building mass when the need arises”, highlights Julien Malizard.
It remains to be seen how the subject will be approached by the new forces present at the French and European level, at a time when budgetary constraints are becoming more pressing. The concept of war economy dear to Emmanuel Macron may well come out in chaos.
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