Julian Moxon/paris

France's recently elected socialist Government has made it clear that there will have to be major cuts in the five-year defence plan approved by the previous Government, to pay for planned social programmes.

Lionel Jospin, the French prime minister, has yet to identify which programmes will be cut. He warns, however, that spending on equipment is likely to be reduced by around Fr10 billion ($1.6 billion) in 1998, from the original figure of Fr90 billion called for in the 1997-2002 defence plan.

Sources says that this may affect the multi-year procurement of 48 Dassault Rafale fighters agreed by the previous Government.

Spending on defence is being targeted more than any other department's as the Government prepares its 1998 budget.

It has already reduced 1997 expenditure by Fr2 billion, bringing the equipment budget for this year down to Fr84.9 billion. Most of this has been achieved by reducing purchasing of munitions and day-to-day running costs.

Share-prices for Dassault Aviation and two of its main suppliers, Thomson-CSF and Dassault Electronique, were hit by the rumours of a cut in Rafale procurement, although the Government has remained silent on its actual plans, promising only to "maintain" all of the major planned weapons procurements, including the Eurocopter Tiger anti-tank helicopter, the NH Industries NH90 utility transport helicopter and the Future Large Aircraft.

It has, however, been made clear that Jospin does not necessarily support the previous Government's plan to introduce multi-year procurement, demanded by industry to ease long-term planning.

Sources say that the government is concerned that this would limit its flexibility to "massage" certain programmes according to other budget demands - a reflection of the lower priority now being given to defence spending.

The Government is expected to detail its plans for the 1998 budget at the beginning of September. Observers are also awaiting the outcome of its deliberations on the planned merger of Aerospatiale and Dassault.

Rumours that the Government intends to retain Aerospatiale as a state-owned entity have led to speculation that the merger may not go ahead, since privatisation was one of the principal conditions set for a merger by Dassault president Serge Dassault.


Source: Flight International