Identifier
Created
Classification
Origin
06PARIS720
2006-02-03 10:20:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Paris
Cable title:  

EMBASSY PARIS SUBMISSION TO THE 2005/2006 REPORT

Tags:  PREL MARR MCAP FR 
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UNCLAS SECTION 01 OF 12 PARIS 000720

SIPDIS

SENSITIVE

STATE FOR PM/SNA, EUR/WE; OSD FOR OSD/PA&E, OASD/ISA/EUR,
OASD/ISA/NP, OASD/ISA/AP, OASD/ISA/NESA AND OASD/ISA/BTF

E.O. 12958: N/A
TAGS: PREL MARR MCAP FR
SUBJECT: EMBASSY PARIS SUBMISSION TO THE 2005/2006 REPORT
TO CONGRESS ON ALLIED CONTRIBUTIONS TO THE COMMON DEFENSE

REF: A. STATE 223383


B. PARIS 000005


This message is sensitive but unclassified. Not for
Internet dissemination.

Due to its length, this is the final part of a
three part message.


80. (U) In support of the tsumani relief in Sout-East
Asia, the French Gendarmerie provided serveral investigators
to assist in the identification of victims.


81. (U) Other humanitarian efforts. In 2004, during the
annual Jeanne D'Arc training cruise 9000 vaccinations were
given, 519 tons of humanitarian supplies were delivered.
During a deployment of the Dupleix, 180 tons of
humanitarian supplies were delivered.


-------------- --------------
Subparagraph D. Capacity Building: Strengthening
Governance in the World.
-------------- --------------


82. (U) The major part of France's efforts at capacity
building in the world is focused on Africa. France relies
on its forces stationed in seven nations to conduct most of
its capacity building operations. These include Cameroon,
TOGO, the Central African Republic, the Gulf of Guinea,
Haiti, and Cote d'Ivoire. Additionally, France uses
forward presence forces; those stationed through bilateral
defense agreements, for capacity building operations.
Foreign presence forces are in Gabon, Djibouti, Senegal,
the Indian Ocean, and the Pacific Ocean. The table on
French Force Disposition and Exterior Operations presents
the detailed numbers of personnel in each location and the
additional expenditures of each operation. In total, these
capacity building measures cost France 650 million Euros in
2004 (approximately USD 790 million).


83. (U) The RECAMP (Reinforcing the Capabilities of
Africans to Maintain Peace) program remains France's
flagship strategy for defense and military cooperation in
Africa. The goal of RECAMP is to support an autonomous
African security capability. It is also a multinational
program to support the stability of Africa. RECAMP is
based on three pillars: cooperation, training, and support
of African operational engagements. To support operations,
France provides African forces with the materials and

equipment necessary to deploy from three French battalion-
size RECAMP depots. These depots are located in Dakar,
Libreville, and Djibouti. France has offered to make these
depots available for USG use. The French Military
Cooperation Directorate has a 100 million Euro annual
budget and manages a network of 220 French military
personnel located at African military schools and training
centers.


84. (U) In the last cycle for RECAMP IV in West Africa
(Benin) in 2004 -2005, there were 14 African and 16 non-
African participating states, including the United States.
France seeks the participation of all African states in
RECAMP and solicits participation bilaterally and through
the African Union and sub-regional organizations. France
also seeks multinational participation in the form of donor
states and an increasing role of the European Union (EU).
The program's present orientation focuses at the strategic-
level and seeks to prepare the African sub-regional
organizations and eventually the African Standby Forces
(ASF) for peacekeeping, humanitarian assistance, and
disaster relief operations.


85. (U) Additional Capacity Building Examples: During
2005 in Chad, more than 300 French air force aviators
conducted security and reconnaissance missions within the
framework of the humanitarian operation Darfur.


86. (U) French Gendarmerie has taken the lead in the
development of the European Gendarmerie Force. The initial
commander of the force in the development of the
headquarters is a French Gendarme General and the first
headquarters exercise was conducted in France. The
Gendarmerie has been consistently been asked to provide
general and specialized training to other Gendarme forces
or police forces throughout the world and particularly in
the middle east and Africa. In fact, one French military
police detachment is deployed in support of the United
Nations Interim Force in Lebanon (UNIFIL)


87. (U) In Haiti, 40 Gendarme personnel supported the
Multinational Stabilization Force (MINUSTAH) as part of
the 1,000-man contingent of French personnel.

88 (U) Over 150 Gendarme personnel provided international
police support for the United Nations Mission to Cote
D'Ivoire (UNOCI) and to support French intervention during
operation Licorne. This contingent helped protect and
guard functions for diplomatic and disarmament missions of
the Joint Tactics Group.


89. (U) In both 2004 and 2005 French Gendarmerie supported
International Police Missions with detachments of officers
and Gendarmes in the Democratic Republic of the Congo,
Chad, and the Central Africa Republic. In 2004, French
Gendarmes conducted training for the establishment of a
European Union Integrated Police Unit in Kinshasa, Kenya.
In the years 2004 and 2005 approximately 600 French
National Gendarmes were deployed outside France in support
of operations or as reinforcements to diplomatic missions.
Although the numbers fluctuate between the years, the
approximate strengths provided reflect France's general
willingness to contribute gendarme personnel and forces in
support of international efforts.


90. (U) In the summer of 2004, the French began a joint
fighter pilot training school in Cazeaux, France. Spain,
Germany, Singapore, Greece, Switzerland and Poland have
indicated interest in joining. The French also completed
air policing agreements with Spain, Germany, Switzerland,
and Italy allowing greater effectiveness of cross border
air defense.

-------------- --------------
Subpara E: Counterproliferation Contributions and other
GWOT contributions
-------------- --------------


91. (U) As a nuclear state, France endorses deterrence
theory and holds to long-standing NATO doctrines. It has
consistently supported international arms control regimes
as a means of bolstering stability and transparency. It
worked closely with the U.S. leading up to the 2000
Nonproliferation Treaty review conference, and was actively
involved with U.S. experts in preparing for the 2004
prepcom. Although the French remain concerned over
cessation of U.S. efforts to achieve ratification of the
Comprehensive Test Ban Treaty (CTBT),French officials have
also endorsed the need for updating international strategic
doctrine to include protections such as missile defense, as
well as deterrence and regulatory measures.


92. (U) France serves effectively as permanent secretariat
for the Missile Technology Control Regime (MTCR) and
participates actively in the Australia Group for the
control of chemicals, bio-agents/toxins, and technologies
related to CBW, as well as the Nuclear Suppliers Group
(NSG) for controlling nuclear-related, dual-use
technologies. France strongly supports U.S.-initiated
Global Threat Security Initiative efforts, and pursuant to
that initiative hosted a major conference in Bordeaux in
June 2005 on identifying radiological sources. It has
worked closely with the United States on several transfer
cases involving French companies under the Proliferation
Security Initiative. France has encouraged continued work
within the UN Conference on Disarmament (CD) to help
develop guidelines for a fissile material cutoff treaty
regime, and supports activities of that body with respect
to small arms and unexploded ordnance. It coordinates
closely with the U.S. on enforcement of the Chemical
Weapons Convention at the OPCW in The Hague, and on
implementation of the Biological Weapons Convention in
Geneva.


93. (SBU) France accepted the U.S.-proposed G8
architecture that would allow more effective use of the
forum, as well as better management of ongoing G8 projects
including those aimed at reducing stocks of weapons-grade
plutonium in Russia. (France also has a bilateral programs
aimed at helping Russia destroy CW holdings.) France has
supported efforts to single out North Korea and Iran as
states of particular concern on the proliferation front.
The French support bringing North Korea before the UNSC for
its violations of international nonproliferation
obligations. The French share U.S. concerns over Iran's
pursuit of nuclear weapons; and with their British and
German colleagues pursued EU3 negotiations to obtain
Iranian compliance with Iran's Safeguard Agreement
commitments. EU3 efforts led to the signing of the Paris
Agreement in November 2004, under which Iran suspended its
nuclear conversion and enrichment efforts during ongoing
negotiations on Iran's nuclear program. Iranian resumption
of conversion in August 2005, and research on enrichment in
December 2005, led to suspension of Paris Agreement
discussions. France and its EU partners, with U.S.
support, continue to pursue efforts to convince Iran to
suspend its nuclear ambitions.


94. (U) The French military continues to maintain strong
contacts with the U.S. and other NATO countries for
contingency planning. During 2004 and 2005, France
conducted planning and exchanges with EUCOM and CENTCOM.
French and U.S. analysts and planners share information on
terrorism and WMD proliferation as well as political-
military developments. From the beginning of operations in
Afghanistan (both OEF and ISAF),and the Lebanon crisis,
French and U.S. planners have continued to work together to
produce effective, timely results. French forces
permanently or temporarily stationed in Africa and Central
Asia have assisted U.S. operations in the EUCOM and CENTCOM
theater of operations.


95. (U) The French government also provides overflight
clearance and landing assistance to US counter-narcotic
operations in the SOUTHCOM theater of operations. France
maintains a liaison officer with the Joint Interagency Task
Force-South, and provides access to French overseas
territories for U.S. counter-narcotic operations.


96. (U) Since July 1, 2005 the French Armed Forces have an
entirely deployable NBC defense regiment (2nd Dragoon
regiment),which is equipped with specific tools to combat
radiation, nuclear, biological and chemical risks. This
regiment's missions are to prevent and handle military or
technological incidents as well as restore the operational
capacities of the forces deployed.


--------------
--------------
REF A PARA 13:
PFP AND NATO ENLARGEMENT
--------------
--------------



97. (U) Since the inauguration of the Partnership for
Peace (PfP) in 1994, France has supported the program and
participated in its exercises. France believes that PfP
has increased awareness of NATO policies, procedures and
standards among both aspirants and nonmembers that do not
seek membership but that nevertheless wish to participate
in collective security arrangements. France believes that
the involvement of Central Asian and Caucasus states in PfP
has directly increased their willingness to assist in the
war on terrorism. France was an early supporter of the
broad-based invitation list accepted at the Prague Summit.
France favors continued MAP-related assistance to
Macedonia, Albania, and Croatia, and essentially shares
U.S. perspectives on eventual PfP membership for Bosnia-
Herzegovina and Serbia-Montenegro. France favors extending
PfP-like benefits to states in the current Mediterranean
Dialogue.


--------------
GENERAL DATA ON THE FRENCH MILITARY
--------------


98. (U) French Force Dispositions and External Operations:
As of December
LOCATION/ 2004 2005 TYPE 2004
OPERATION Per # Per # Mission
Cost/M
Euros
Haiti/MINUSTAH 42 42 CB Na
Gulf Guinea/CORYMBE 103 230 CB 6.23
Cote d'Ivoire/LICORNE 5455 4166 CB 186.0
Cameroon 50 49 CB 2.99
TOGO/Gabon/LICORNE 268 99 CB Na
CAR/BOALI/FOMUC 213 217 CB 7.7
Chad 1066 1086 CB Na
Macedonia/ARYM 27 17 IM 4.56
Bosnia/EUFOR/EUPM 598 476 IM 67.9
Kosovo/KFOR/MINUK 3267 2239 IM 146.5
Georgia/MONUG 3 3 IM Na
Lebanon/Israel/UN 209 200 IM Na
Palestine 0 3 IM Na
Sinai/FMO 15 15 IM Na
Afghan/OEF/ISAF 1270 1047 IM 99.3
Afghan/BAHRAL 0 49 IM Na
OEF/CJTF150 +HOA 290 681 IM Na
BERYX 0 10 IM Na
Ethiopia/MINUEE 1 1 IM .1
Sudan-Darfur/DORCA 4 9 IM Na
Burundi/MONUC 3 1 IM Na
DROC/MONUC 17 16 IM 2.3
Liberia/UNMIL 2 1 IM Na

W. Sahara/MINURSO 25 24 IM 1.2
Pacific Ocean 182 176 FP Na
Senegal 1107 1226 FP Na
Djibouti 2873 2831 FP Na
Gabon 648 722 FP Na
Indian Ocean 390 466 FP Na
French Guiana 3257 3353 SF Na
Antilles 4201 4202 SF Na
Reunion-Mayotte 3983 4133 SF Na
New Caledonia 2654 2757 SF Na
Polynesia 2592 2153 SF Na
St Pierre/Miquelon 77 68 SF Na

Total 34,947 32,798
CB: Capacity Building Forces
IM: International Mandate Forces
FP: Forward Presence Forces
SF: Sovereignty Forces



Army: Major Equipment Deliveries 2004-2005
--------------

Intelligence:
-18 UAV
Command and Control:
-60 2nd Generation Tactical and Intelligence Systems
Aviation:
-10 Tiger Helicopters
Armored Vehicle Systems:
-60 LECLERC Tanks
-8 Tank Recovery vehicles
-32 AMX 10RC Armored Personnel Carrier upgraded
-660 VAB Wheeled Armored Personnel Vehicles
-130 VB2L Command and Control Vehicles
Artillery and Counter-Fire Systems:
-38 canons 155mm AUF 1 TA
-6 radars COBRA
-5 systems ATLAS
Transportation:
-1,000 GBC 180 Trucks



Navy: Major Equipment Deliveries 2004-2005
--------------

Intelligence:
-1 Intelligence collection ship
Submarines:
-1 Ballistic missile submarine
Ships:
-4 Minesweepers
-1 Ocean going Tug
-1 Research Vessel
Missiles:
-80 Mica Air to Air
-40 Crotale (marine)
-50 Aster Ground to Air
-20 Scalp-EG Cruise Missile
-50 Torpedoes


Air Force: Major Equipment Deliveries 2004-2005
-------------- ---

Aircraft:
-10 Rafale fighter aircraft
-3 UAV's
-1 A-310 Transport
-7 NH-90 helicopters
Missiles:
-150 Mica Air to Air
-50 Scalp-EG Cruise Missiles
-40 AS-30 Laser Missiles
Satellite: -1 Syracuse Military Comm

FRENCH MILITARY PERSONNEL 2004-2005
--------------

TYPE Army Air Force Navy
Officer 16,500
6,875 5,100
Enlisted 117,500
52,600 40,100
Civilian 27,500
6,500 9,600
Total 161,500 65,975
54,800




--------------
MAJOR ECONOMIC DEVELOPMENTS
--------------


99. (U) Please note that the new French presentation of
budgetary information (the LOLF, first mentioned in
paragraph 29) is sufficiently complicated to compel embassy
Paris to include more detail on this new means of reporting
economic information (see paragraphs 111-113).


100. (U) France is presently the fifth largest industrial
economy in the world, with a USD 2 trillion annual Gross
Domestic Product (GDP),about one sixth the size of the GDP
of the United States in 2005. France is the fifth-largest
exporter and the fourth-largest importer in the world
merchandise trade, and is a global leader in high
technology, defense, agricultural products and services.
France is the ninth-largest trading partner of the United
States and our third largest in Europe (after Germany and
the UK).

Economic Growth
--------------


101. (U) Real GPD in France rebounded to 2.1% in 2004,
compared to 0.9% in 2003, thanks to reviving domestic
demand, which turned in one of the best performances in the
EU-15. Nonetheless, economic recovery became less robust
under the shocks of oil price hikes and the rise in value
of the euro against the dollar. The government realized
early in 2005 that achieving its 2.5% GDP growth objective
would be hard to achieve without taking some action. In
February, May, and June 2005, the government announced
measures to encourage consumption, stimulate activity of
companies, boost exports, and tackle unemployment. Most of
these measures are not likely to have immediate impacts.
The "No" vote in France's May 29, 2005 referendum on
Europe's new constitution was widely interpreted as a sign
of French voters' deep-rooted unease with France's economic
and social malaise. Public-sector unions' demonstrations
against government plans to reduce the size of the
government (e.g., cut jobs),as part of France's European
commitment to reduce the budget deficit to below 3% of GDP
in 2005, fed public fears of outsourcing, enlargement of
the European Union, immigration, deregulation of European
markets and further deterioration in the labor situation.
After the referendum vote, the French government underwent
a cabinet shake-up, and in September 2005, the government
unveiled its plan for a "social economy", the key feature
of which is the retention of the French social model.


102. (U) Despite government measures, real GDP growth
weakened in 2005, and the government had to revise its GDP
growth target from 2.5% to 2.0%, and later shift to a GDP
growth target range of 1.5 to 2%. Nonetheless, in January
2006, the government said that it was confident 2005 GDP
growth would fall within the 1.5-2.0% range, predicting a
2.0-2.4% (annualized) growth in the fourth quarter.
Economists, members of the Consensus Group of 17 banks and
institutions, forecast GDP growth to range from 1.8% to
2.1% in 2005. Two thirds of them forecast GDP to increase
at least 2% in 2006. That is the bottom of the 2.0-2.5%
range the government has forecast for 2006.

Inflation
--------------


103. (U) Inflation in France remains low and under
control, despite oil price increases. Wage increase
requests remained moderate in 2004 and 2005 due to the weak
labor situation. Consumer prices increased 1.5% in
December 2005 on a year-over-year basis, compared with 2.1%
in December 2004.

Labor Situation
--------------


104. (U) The unemployment rate remained unchanged at 10%
throughout 2004. Unemployment decreased to 9.6% in
November 2005 after peaking at 10.2% in March 2005, a 5-
year high. It remained higher than the government objective
of 9% for a variety of reasons, including low job creation
in the private sector, despite a decrease in persons
looking for work and government measures introduced in 2005
for job creation, including government-subsidized
contracts. With the 2007 presidential elections in mind,
the government has chosen to subsidize job creation, rather
than press for economic reforms to address structural
causes of unemployment. In January 2006, the government
announced the creation of another new employment program
aimed at boosting youth employment, since the youth
unemployment rate remained high (22.8% in November 2005).
Prior to this announcement, private-sector economists had
projected the unemployment rate to decrease only slightly
in 2006 due to modest job creation in the private sector.

Budget Deficit, Public Debt and the EU Stability and Growth
Pact
-------------- --------------


105. (U) In 2004, France broke the EU stability and growth
pact limit with a budget deficit over 3% of GDP for the
third straight year. The 2004 overall budget deficit
including central government, social security and local
authorities exceeded 3.6% of GDP in 2004, falling from 4.2%
in 2003 due lower growth in central government spending.
The deficit remained above 3% of GDP mainly due to a rise
in social security expenditures, notably health insurance.
The government has been struggling to reduce the budget
deficit in the face of lower-than-expected economic growth.
Reducing the budget deficit depends on high tax receipts
(thus on solid economic growth),finding ways to check
social spending, particularly for health care, and sticking
to a "zero budget growth" policy among all ministries,
while being mindful of opposition politicians and unions'
resistance to reforms.


106. (U) In January 2006, Finance Minister Thierry Breton
said that the economy's vigor in the second half of 2005,
combined with strict control of central government budget
spending, made him confident that France would finally
respect the 3%-of-GDP ceiling in 2005. Higher than
expected tax receipts at year-end 2005, notably due to an
earlier collection of the corporate income tax downpayment,
allowed the government to project a budget deficit of 2.9%
in 2005. Nonetheless, the overall deficit is still overly
dependent on progress tackling the public sector health
insurance deficit.


107. (U) France's public debt continued to significantly
exceed the EU's stability and growth pact limit of 60% of
GDP, amounting to 64.7% of GDP in 2004, and an estimated
66.2% of GDP in 2005. To fund its debt and repay maturing
debt, the government will sell 125 billion euros in notes
and bonds in 2006. In 2005, much of the financing of the
public debt came from payments by the state-owned company
Electricite de France, in exchange for the government
assuming pension liabilities. The government will be
considering other proposals to reduce the public debt, and
is earmarking privatization proceeds for debt reduction.

Reforms
--------------


108. (U) France has to pursue efforts on structural
reforms to achieve its full economic potential and to
improve its competitiveness. Prime areas for reform
include continued tax and government spending reduction,
increased flexibility of labor markets, and further
deregulation of goods and services sectors. The
government, formed after presidential and legislative
elections in spring 2002, has undertaken reforms slowly.
President Chirac appears determined to keep electoral
promises, such as tax cuts. The French benefited from five
per cent income tax cuts in 2002, one percent in 2003, and
another three per cent in 2004. However, the government in
2005 had to stop cutting taxes due to its ballooning budget
deficit. On the positive side, France has responded to
competitive pressures by implementing market-oriented
economic reforms of its pension and health insurance
systems, simplifying administrative procedures, and
offering a variety of investment incentives. France is
changing its historic tendency of centralization in favor
of transferring more power to its regional territories, to
free the territories' energies, to eliminate redundant
structures, and to make productivity gains at the national
and local levels. In 2005, the government made labor
regulations more flexible to facilitate lay-offs, modified
the law to make the 35-hour workweek more flexible and
created new hiring contracts which limit minimum lay-off
procedures for companies of less than 20 employees.
Negotiations between businesses and employees
representatives begun in December 2005 might result in a
reduction of unemployment benefits. The government has
indicated its intention to continue reforms: reforming the
tax structure, eliminating labor market rigidities, and
scaling back the role of the state in the economy.
Regarding privatizations, the government announced
preliminary plans in 2002, but the subsequent global slump
in air transportation and equity markets put a brake in
privatizations through the sale of shares. In 2003 and
2004, the government reduced its stakes in large companies
such as Air France-KLM (to 44.6 from 54.0 percent),France
Telecom (to 42.2 from 54.5 percent),Thales (formerly
Thomson CSF, to 31.3 from 33.3 percent),Renault (to 15.6
from 26.0 percent),and Thomson (to 2.0 from 20.8 percent
through TSA). Smaller projects were carried out, such as
the privatizations of SAPRR (Paris-Rhin-Rhone highway
company),and of the electricity company SNET. In 2005,
the government sold shares in the energy sector companies
EDF and GDF, retaining a 85.9% stake in EDF and a 79% stake
in GDF, but postponed the privatization of the nuclear
energy company, Areva. After a long process in 2005, the
sale of toll-road companies ASF, APRR and Sanef will be
effective in early 2006. Capital openings for employees of
Aeroports de Paris and EDF are planned for 2006. The
government still has stakes in Bull and Safran (renamed
after Sagem merged with Snecma),and in 1,280 other firms,
and has stated its intention to continue privatization.

Defense Spending - Defense budgets - 2006 Highlights
-------------- --------------


109. (U) The French central government budget process
operates on a different cycle and with different precepts
than the U.S. system. Budgets for the year ahead are
adopted on or about December 30 of a given calendar year,
and may be adjusted one or more times in the course of the
year during which spending occurs. The 2004 initial
defense budget (E 41.6 billion including pensions or USD
51.7 billion) was adjusted to include additional spending
and cancellations. The adjustment cancelled 471 million
euros or USD 586 million to credit payments, and allotted
870 million euros or USD 1,082 million to credit payments
for military operating spending, including for external
operations (608 million euros or USD 756 million).
Similarly, the initial 2005 budget was modified, notably
allotting 467 million euros (USD 581 million) to credit
payments for external operations in 2005.


110. (U) The following tables trace the evolution of
overall defense budgets from 2003 to 2006 in millions of
euros. Percentages reflect nominal changes, not/not
corrected for inflation. Post provides separate charts for
planned and actual expenditures in order to demonstrate
that within-year adjustments (use of support funds
appropriations),as well as changes in appropriations and
in the way they are allocated are the norm for France, and
to emphasize that France increased its commitment to
defense significantly beginning in 2003. In 2004, defense
spending increased 0.25% to 11.42% of the central
government budget, and 0.5% to 2.01% of GDP. Based on
initial government data, defense spending in 2005 accounted
for 14.7% of the central government budget, and 2.5% of
GDP.

Planned Actual
Defense per cent. Defense per
cent
Budgets change Spending change
(INCL. pensions) (EXCL. Pensions)

(euro millions) (euro millions)

2003 39,964 6.1 30,176 3.3


2004 41,565 4.0 31,328 3.8

2005 42,424 2.1 n.a.
n.a.

(Note: Military pensions come under the defense budget in
the planned budget, but are considered as civilian
expenditures when the budget comes to execution.)

--------------
Evolution of Defense Budgets
--------------

(euro millions)

CY03 CY04 CY05
-------------- -------------- --------------

Title III 17,426 17,504 17,725
(Operations)
Credit Payments


Title V & VI 13,644 14,898 15,198
(Procurement
and Debt Service)


Total Credit 31,070 32,402 32,923
Payments


Title V & VI 15,300 16,769 15,315
(Program
authorizations)


Pensions 9,810 9,910 10,062



2006 New Presentation
--------------


111. (U) Beginning in 2006, the government modified
greatly its budget presentation pursuant to the August 1,
2001 Law pertaining to financial bills ("Loi Organique de
Loi de Finances - LOLF"). In an effort to improve
transparency, the central government budget now shows
spending categorized by missions and programs, no longer by
ministry. The 2006 CG budget includes 34 missions (nine of
which are inter-ministerial),including the defense
mission.


112. (U) The new budget presentation has modified the
content of titles. Former titles showed spending as
follows: Title I (Debt service),Title II (Public
Authorities),Title III (Operating expenses),Title IV
Government-backed measures and Title V and VI (Investment
and investment subsidies). The new Title 2 regroups wages,
pensions and social contributions. The new Title 3
(operations) corresponds to the former title III excluding
wages, pensions and social contributions, and includes a
portion of expenditures of the former title V (research and
prospects, and maintenance and acquisition of ammunitions).
The new Title 5 is reduced to one fifth of its former
scope. The new Title 6 is totally different from the
former title VI. It now includes transfers to
international organizations (NATO, the European defense
Agency),foreign countries (Djibouti),and local
authorities and social action organizations.

(euro millions)

CY05 CY06
-------------- --------------
Credit Payments
Total 35,635 36,060
Of which
Staff 18,068 17,829
Operating Expenses 6,808 7,327
Investment 10,584 10,679
Intervention 174 224

Commitment Authorizations (1)
Total 35,813 36,972
Of which
Staff 18,068 17,829
Operating Expenses 7,352 8,211
Investment 10,227 10,698
Intervention 166 232

(1) In the new budget architecture, commitment
authorizations ("autorisations d'engagement") that concern
all kinds of budget expenditures are annual. They are not
carried over. Thus, they are cancelled when they are not
used. This is the major difference with program
authorizations, which had no duration limit. Program
authorizations concerned capital expenditures, excluding
maintenance of military equipment.


113. (U) More importantly, the new budget presentation
provides the defense budget with four programs:
-the defense mission, which accounts for the bulk of the
former defense budget;
-the security inter-ministerial mission, which regroups
credits for police and "gendarmerie." ("Gendarmerie"
accounted for 15% of the former defense budget);
-the research and higher education inter-ministerial
mission, in which the defense ministry is participating in
dual-use research (200 million euros);
-the "veterans-memory and links with the nation" mission
(300 million euros). The preparation and employment of
forces program and the equipment of forces program together
account for 87% of the mission's credits.

(euro millions)

Planned Defense Mission, Security, Veterans, Research
And Higher Education

2005 45,819 n.a.

2006 46,828 2.2
of which
Defense Mission 36,061
Security 6,669
Veterans 3,898
Research and
Higher Education 200

(euro millions)

Planned Defense Mission Budget

CY05 CY06
-------------- --------------
Credit Payments:
Total 35,635 36,060
Of which
Environment and prospect 1,618 1,643

Preparation and employment
of forces 21,167 20,900
Equipment of forces 10,015 10,610
Support of defense policy 2,836 2,908


Commitment Authorizations
Total 35,813 36,972
Of which

Environment and prospect 1,465 1,794
Preparation and employment
of forces 21,774 21,605
Equipment of forces 9,825 10,528
Support of defense policy 2,749 3,044


FY 2006 Defense Budget
And Program Highlights
--------------


114. (U) The defense mission remains one of the top budget
priorities in 2006. The 2006 defense mission budget
accounts for the third largest central government category
of discretionary spending (E 36,060 billion) after
Education (E 59.7 billion),and Central Government
Financial Commitments (E 40.9 billion),equaling 11.6% of
the central government budget. The government plans to
increase in 2006 defense mission spending, excluding
pensions, by 3.4%, and defense spending including pensions
by 2.2%. The Minister of Defense has the authority to
spend 47 billion euros including for the defense mission,
security, veterans, research and education and pensions in

2006. The defense mission and security, which ensure
protection of the French, account for 92% of credits
payments available to the Defense Ministry.


115. (U) Defense Minister Michele Alliot-Marie stressed
that the 2006 budget defense would respect the 2003-2008
military programming law for the fourth consecutive year.
Objectives of the law include assuring deployments of
external operations to respect France's commitments to
European Union and NATO, pursuing the achievement of major
armament programs, consolidating professionalization of
army and improving military conditions, and continuing the
reform of the defense ministry. Credit payments to the
2003-2008 military programming law and to the interior
security law ("loi d'orientation et de programmation
relative a la securite interieure") are increased 3% to
15,658 million euros in 2006 compared to 2005 (E 15,198
million) versus 2% in 2005 from 14,900 million euros in

2004. Credit payments to external operations in 2006 are
increased to 250 million euros from 100 million euros in

2005. Since actual expenditures have consistently exceeded
spending as projected in the initial central government
budget, the initial budget represents only about 45% of the
actual expenditures for external operations.


116. (U) Defense Minister Alliot-Marie has stressed that
the year 2006 will be marked by significant deliveries (the
launching of the satellite Syracuse III-B, and the delivery
of 14 Rafale airplanes, missiles SCALP, and 34 Leclerc
tanks) and that the second helicopter carrier Tonnerre will
be operational in 2006. 2006 priorities also include a 60%
increase in credit payments to the gendarmerie, to 200
million euros from 120 million euros for the renewal of
equipment, real estate, and the creation of 2,000 new jobs.
A number of new jobs will be created to improve cryptology
capacity, and health services.


Part D: Grant Aid and Humanitarian Assistance
--------------

117. (U) France abides by President Chirac's commitment in
international summits, notably in Monterrey in 2002, to
strengthen efforts in favor of Official Development
Assistance (ODA, "Aide Publique au Developpement"). France
reaffirmed its full support of the "Millennium Development
Goals" to halve poverty in the world by 2015. France also
intends to find additional budget resources, notably by
creating new international taxes, giving priority to Africa
in providing aid as well as facilitating international
trade, and promoting a global approach to development,
notably by a controlled use of global public resources
(water, air, biological diversity). The government intends
to increase ODA to 0.5% of national gross income in 2007
and 0.7% in 2012. OECD ranks France in third place in
absolute terms among Development Assistance Committee
donors, after the United States (USD 18.9 billion) and
Japan (USD 8.8 billion).


118. (U) Based on provisional data, ODA increased to 0.44%
in 2005 from 0.42% in 2004 (USD 8.5 billion). Bilateral
aid and multilateral aid increased in 2005, totaling 5.6
billion euros and 2.3 billion euros respectively based on
provisional data for the first nine months of 2005, from
4.3 billion euros and 2.3 billion euros, respectively, for
the full year 2004.


119. (U) The French in recent years have given a greater
role to debt cancellation as a means to provide aid, taking
advantage of France's position as one of the main creditors
of developing countries. Debt cancellation increased to a
high of 35.7% of ODA in the first nine months of 2005 (2.8
billion euros) from 21.4% in full year 2004. Regarding
bilateral aid, the six priorities of bilateral aid in 2004
included education, water and purification, health and
fight against AIDS, agriculture and food safety,
development of infrastructure in Sub-Saharan Africa,
protection of environment and biodiversity. Based on the
most recent data (2004) provided by the Government, the
African continent was the main recipient of bilateral aid
(66%). The top ten beneficiaries were: the Congo
Democratic Republic (618 million euros),Senegal (258
million euros),Madagascar (252 million euros),Cameroon
(181 million euros),Morocco (178 million euros),the
French territory of Mayotte (157 million euros),Nigeria
(148 million euros),Algeria (125 million euros),Tunisia
(104 million euros),and Serbia and Montenegro (96 million
euros).


120. (U) ODA is set to increase to 0.47% of national
income (8.2 billion euros) in 2005. France has created an
inter-ministerial ODA mission to help achieve its target.
The mission regroups two programs, the "economic and
financial aid to development" program handled by the
finance ministry, and the "solidarity to developing
countries" program handled by the Foreign Affairs Minister.
The two programs contribute to the implementation of ODA
within the Inter-ministerial Committee for the
International Cooperation and the Development ("Comite
Interministeriel pour la Cooperation Internationale et le
Developpement - CICID.") Major measures planned for 2006
include (1) expanding the French Development Agency's
responsibilities to new sectors including agriculture,
health and environment, (2) increasing France's voluntary
contribution to the United Nations' International
Development Agency where France is the fifth largest
contributor, and to the African Development Funds where
France is the first largest contributor, (3) contributing
to macro economic stabilization of foreign countries by
increasing support to budgets, (4) enhancing the French
contribution to the Global Fund to fight AIDS and (5) the
increase in the French contribution to the European
Development Fund. The government approved a plan announced
by President Chirac to levy a new tax on airline tickets
sold in France, in order to raise funds for development
programs in developing countries, notably the fight against
AIDS. The tax, which should go into effect in July 2006,
will raise around 200 million euros per year by taxing
tickets by 1 to 40 euros. The 2006 budget set bilateral
aid and multilateral aid at 5.2 billion euros and 2.7
billion euros, respectively.

Humanitarian Assistance
--------------

121. (U) The bulk of France's humanitarian assistance
donations (total spending excluding wages and social
contributions) covers "Emergency Humanitarian Assistance"
as well as aid for reconstruction and to support democracy.
France allotted 38.2 million euros to Emergency
Humanitarian Assistance, all of which was channeled through
the Emergency Humanitarian Aid Fund of the Ministry of
Foreign Affairs. Normally, the Fund may be increased on an
extraordinary basis to finance unexpected operations. The
2006 allotment to the Humanitarian Aid Fund, which has been
lower than 10 million euros in the initial budget proposals
in the last five years, has not been specified. In 2004,
the French tapped this fund to help the victims of the
earthquake of Bam in Iran, the refugees in Darfur, the
civil crisis and flooding in Haiti, precarious situations
of population in Iraq, Liberia and Palestine territories,
and invasions of locusts in several sub-Saharan African
countries. In 2005, the fund facilitated humanitarian
emergency operations for the tsunami victims in South-east
Asia, helped alleviate the food crisis in Nigeria, and
provided humanitarian assistance in Darfur. By August
2005, most of the allotment to the fund (10.7 million
euros) had been used up, for assistance to 41 countries.
Additional expenditures through the end of 2005 were very
limited. The aid to the reconstruction and democracy will
benefit from 11.6 million euros in commitment
authorizations and 20.6 million euros in credit payments in

2006.

STAPLETON