Franco-German Disagreements Need Mending—the defense issue

Despite favorable circumstances, France and Germany are at loggerheads on a set of critical issues. National industrial interest and distrust stand in the way of leap in European defense integration.

·      With France run by the most pro-European President in 60 years and Germany governed by a coalition that has vowed to turn Europe into a federal state, there should not be a more auspicious moment for Europe. Yet, beyond the grandstanding, long standing disagreements between France and Germany are now turning particularly acrimonious, fed by character issues between Chancellor Scholz and President Macron, and profound disagreements on defense and energy policy.

·       Macron and Scholz’s last bilateral meeting attempted to correct course by setting out new working groups in order to reach positive conclusions by the time of the 60th anniversary of the Elysée Treaty in January. While this has increased the stakes, there is no visible movement in sight.

·       Though these issues are concerning, they are however not a major obstacle to short-term economic and fiscal progress, notably on fiscal rules or common debt issuance plans in response to the energy crisis.

·       Franco-German tensions, which have been simmering for a while, broke into the open after the October 2022 announcement that Germany and 15 countries would work to establish a common air defense system.  The bilateral meeting between Chancellor Scholz and Macron on October 26, in lieu of a Franco-German Council of Ministers meeting unilaterally cancelled by Macron, has not been the occasion of to make up for a souring relationship.

·       France and Germany still don’t see eye to eye on a number of issues and couldn’t even agree to a modicum of common steps worthy of hosting a common press conference. Behind the scenes, the two leaders agreed to set up working groups notably on energy and defense and to aim for steps that could be announced during a Franco-German council of ministers also marking the 60th anniversary of the Elysée bilateral cooperation Franco German Treaty now scheduled for January 22, 2023.

It is on defense that the simmering tensions have flared more recently and need a resolution.  While Scholz’ Zeitenwende speech on February 27, 2022 had given some hopes of a new engagement and investments in common European defense projects, there has been no progress whatsoever since, in fact quite the contrary.

Table 1: A series of defense projects in limbo

Despite the large number of frustrated projects, in the absence of clear rejection or discussions, France continued to hope for progress and paid little attention to the subliminal German messages on the matter.

·       Indeed, on February 27, Scholz committed €100 bn to defense spending; in March, the government announced the first defense deal since the beginning of the war in Ukraine, the purchase of 35 Lockheed F-35 fighter jets.

·       In August, Scholz declared in his speech in Prague : “We have a lot of catching up to do in Europe when it comes to defense against airborne and space-based threats” [...] “Germany will be investing very significantly in our air defense”[...]”Germany will design that future air defense in such a way that our European neighbors can be involved if desired [...] Not only would a jointly developed air defense system in Europe be more efficient and cost-effective than if each of us built our own costly and highly complex systems; it would also be a security gain for Europe as a whole.”

·       This declaration was music to France’s ears, which had been developing for years a system with Italy.  But it quickly emerged that what Scholz meant by a jointly developed system in Europe was fundamentally different from what Macron had in mind:

·       On September 12, Israeli Prime Minister Yair Lapid, declared that Germany was in talks to buy the Arrow 3 missile defense system.

·       Under the stewardship of Germany, on October 13, 15 European countries (Belgium, Bulgaria, Czechia, Estonia, Finland, Germany, Hungary, Latvia, Lithuania, the Netherlands, Norway, Slovakia, Slovenia, Romania, the United Kingdom) signed a Letter of Intent for the development of an air and missile defense system known as the “European Sky Shield Initiative.” Austria has since expressed interest in joining the initiative. The neglect of Southern Europe and France from the effort was a real blow in Paris, similar in intensity to the Australian AUKUS submarine turnaround.

·       Discussions regarding the exact systems to be integrated in the project are still ongoing. Several options are on the table including the Norwegian short-to medium-range NASAMS system, the German IRIS-T short-range system, the US Patriot medium-range system, and the Israeli-US Arrow-3 long-range anti-ballistic missile defense system. (The US still has to approve the sale — it would be the first time Washington would consent to such an arms deal, it previously refused to sell it to South Korea).

·       How the systems could be interconnected, and work together is still to be discussed (See Table 2 for current surface-to-air missile systems in the EU).  Regarding Arrow 3, if the US approves the sale, Germany will buy the complete radar system and centralise its operation, while countries on the Eastern flank could just buy the interceptor missile batteries.

The defense and political implications of the European Sky Shield Initiative are far-reaching.

·       The Letter of Intent is not very detailed, and even if the wording insists on cooperation and coordination, fundamentally, it involves the joint purchase of new weaponry, without putting the emphasis on the European preference, or European armament programs (the emphasis is rather on “off-the-shelf solutions”).

·       This illustrates how the war in Ukraine is changing equilibrium at the European level. France, which for years has advocated for European strategic autonomy and common defense, strangely enough is witnessing the possibility of the creation of a common defense system around Germany with American technology rather than France with European technology.

·       These efforts should also be put into perspective with Macron’s recent statements regarding the evolution of France’s nuclear doctrine. Macron insisted in Toulon on November 9 on the importance of the European dimension of France’s strategic interest; a welcome evolution and useful course correction after his off-the-cuff remark that France’s interest “would not be directly affected if there was a ballistic nuclear attack on Ukraine, or in the region,” which had sent shockwaves across eastern Europe and certainly encouraged continued engagement with US armaments rather than European ones.

As it stands, these tensions on defense issues seem hard to resolve also because the two leaders do not seem ready to compromise.

·       France could easily make important concessions by indicating its willingness to engage more genuinely in the creation of European defense champions along the model of Airbus.

·       Germany could commit to buy European armaments and be fully engaged in the development of European programs.

·       In the absence of such a quid pro quo, it seems difficult to imagine a breakthrough on the defense front other than face-saving and fig leaf statements.  In our view, a middle ground could easily be achieved by creating a European or at least Franco-German defense conglomerate champion and by Germany undertaking short-term purchases of US military equipment but committing to build a medium to long-term European solution on anti-ballistic shields, for example.

Conclusion

There has been in recent weeks some progress on the SCAF project and in particular an agreement on phase 1b. This is encouraging in the short term but is unlikely to carry through to the rest of the project given how unbalanced in favour of Dassault this phase is. Germany has felt compelled to make a concession to buy some quiet in the short-term but is far from fully on board.

All in all, European defense remains something that France dreams about and that Germany is reluctantly backed into. This will remain an area of Franco-German tensions and disagreements with no breakthrough in sight.

Table 2. Surface-to-air missile systems in the EU