Obstacles remain for European defence-industrial rationalisation, but the current Franco-German drive could provide a new impetus.

France and Germany defence cooperation

By Lucie Béraud-Sudreau, Research fellow for Defence Economics and Procurement, and Bastian Giegerich, Director and Defence and Military Analysis

Just over a year apart, France and Germany published defence-policy documents: a white paper in the case of Germany (in July 2016) and a strategic review for France (in October 2017). In light of their recent rapprochements on joint armament programmes – and with renewed EU-level efforts to create political and financial incentives for cooperative defence research and development and procurement – a key question is whether the German and French visions are compatible when it comes to stronger defence-industrial collaboration and rationalisation.

While there is clear convergence between the two policy documents, one difference is obvious: how to deal with arms exports. Germany calls for further harmonisation of EU export-control guidelines, essentially seeking a level playing field, whereas France stresses its attachment to national export controls. Although arms-export controls could become a major hurdle further down the road, both countries acknowledge that the development of a common European defence technological and industrial base (DTIB) is a solution to overcoming the problem of limited resources, and is a way to support greater military cooperation. France and Germany also recognise that, for such a European DTIB to mature, states need to move towards shared sovereignty and mutual interdependence in certain technology areas. But are these technology areas the same for the two governments?

In 2016, the German white paper called for further restructuring and consolidation of Europe’s defence industries. To this end, it offered a new approach to multinational armaments cooperation, drawing on the lessons of experiences such as the Airbus A400M heavy transport aircraft. Specifically, the paper suggested (as explained in a previous Military Balance blog post), harmonised requirements, the designation of a lead nation in charge of developing a project, exploiting comparative advantages for production, rather than adopting ‘juste retour’ principles, and joint maintenance, repair and operations support were the key ingredients. However, as admitted in the white paper, this new approach involves participating countries prioritising mutual interdependence over independence.

When these ideas were discussed at a Franco-German Track 1.5 meeting in Berlin in 2016, the French participants expressed that it was unlikely France could accept foreign defence-industrial leadership. But, some 12 months later, the French Strategic Review opened the door to mutual interdependence, even though it does not explicitly respond to the German proposition. France distinguishes between four types of cooperation (or non-cooperation). Only one of them encompasses sectors that should be entirely maintained at the national level, to preserve strategic autonomy or maintain operational superiority.

Beyond these sovereign capabilities, three levels of cooperation are possible, with priority given to European partnerships:

  • ‘Cooperation while retaining competences in France’ for equipment where shared sovereignty can be contemplated;
  • ‘Cooperation with mutual dependence’, meaning cooperation with partners, where each agrees to abandon certain competences and shares its retained competences, for example, the One MBDA project with the United Kingdom;
  • Off-the-shelf purchases, which should be used for dual-use goods (e.g. cyber) or where there already is a large existing market (e.g. ammunition).

The only areas where France does not envision any cooperation are stealth capabilities (across all domains), sensors in the air domain, and ‘core communication and network’ systems essential to military operations (e.g. Syracuse satellites). According to the strategic review, everything else, in principle, can be discussed with potential partners. Indeed, land and aerospace platforms are not subject to sovereignty restrictions, but some naval platforms will remain under national industrial control.

In principle, this logic is very close to the ‘key technologies’ approach Germany adopted in a 2015 policy paper on defence-industrial strategy. The paper argued that sovereign national technological capabilities need to be seen in the context of moves to develop a more cohesive European defence industry. It considered essential crypto-technology/encryption for secure command and control; sensors for reconnaissance, armour and underwater platforms; and defensive combat-support measures as areas in which Germany should maintain sovereign national technological capability. For other capability areas, Germany considers European and global (read primarily transatlantic) cooperation as suitable. There was no built-in European preference in the 2015 document.

France and Germany: sovereign technology areas. ©IISS

Sources: Revue Stratégique (p.69); Strategiepapier der Bundesregierung zur Starkung der Verteidigungsindustrie in Deutschland (p.4).

National lists can, of course, change and require regular review. However, it seems as if both France and Germany are using the process of defining national sovereign technologies as an opportunity to position themselves for future workshares in a European DTIB. While there is overlap based on preferences stated in the two countries’ strategy documents that will be complicated to disentangle, there is also room for each side to protect core interests. The fact that they indicate at the same time readiness to collaborate in many areas makes this more palatable for other European states.

Attempts at European DTIB rationalisation are not new – 2018 will see the twentieth anniversary of the Letter of Intent, signed in 1998 by the six leading European defence producers. As these past 20 years have shown, there remain obvious obstacles along the road of rationalisation. Both Berlin and Paris still view each other with suspicion when it comes to defence-industrial and -procurement decisions. When the German government signed a contract with Bremen-based company OHB in November for an electro-optical reconnaissance-satellite system, some French observers accused Berlin of walking back on Franco-German agreements. Previously, in the run up to the December 2015 decision by Nexter and KMW, two of Europe’s main land-systems manufacturers, to form a joint holding company, leading politicians in Berlin were worried about losing jobs and technological prowess to Paris as a result of an eventual merger.

Nonetheless, the current Franco-German drive could provide a new impetus. Beyond France and Germany, if EU (and NATO) member states with significant DTIBs were to provide similar information on their preferences for cooperation, it would allow EU-level actors to focus their financial and regulatory incentives in support of cooperation in areas identified. A recent report suggested that the Letter of Intent model could also be used to drive a top-down approach to defence industrial planning in Europe and specifically provide a platform to agree defence industrial consolidation targets. Both consolidation and cooperation start with efficiency and effectiveness arguments and require government to have a conversation about their national goals and red lines. Such information could, for instance, be integrated in the new European Defence Agency (EDA) instrument ‘Coordinated Annual Review on Defence’, which is currently at the trial stage. This would provide a strong signal to other actors (the European Commission, the EDA and the defence industry) as to where to move forward with the energy and resources for increased defence-industrial cooperation.


This analysis originally featured on the Military Balance+, the new IISS online database that enables users in government, the armed forces and the private sector, as well as academia and the media, to make faster and better-informed decisions. The Military Balance+ allows users to customise, view, compare and download data instantly, anywhere, anytime.

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