* "No more Mali" if France's military budget cut, army says
* Ground forces rely on inexpensive, multi-mission vehicles
* Defence firms warn jobs at stake if military pared back
By Alexandria Sage
CANJUERS ARMY BASE, DRAGUIGNAN, France, April 28 (Reuters) -
E xplosions echo through a valley in southern France, sending up
plumes of smoke as four Caesar self-propelled guns fire at
distant targets in drills that mirror operations in Mali.
It's a show of firepower organised by arms manufacturer
Nexter to demonstrate the guns to the press and which underlines
the role of the army in a conflict that has bolstered France's
standing as a nation that can project military force. Yet the
message may fall on deaf ears in Paris.
France's 31 billion euro ($40 billion) defence budget,
already watered down in recent years, could be on the chopping
block as President Francois Hollande seeks savings to offset a
groaning deficit and weak economic growth.
Cuts could send shockwaves not only through the military but
through the economy itself, where the industry employs 165,000
people and accounts for 2.25 percent of output, according to the
World Bank, compared with 1.3 percent in Germany.
On Monday, the government presents a five-year blueprint for
military strategy that the army fears could cut its staff and
international bases and undermine France's capabilities in
future global conflicts.
"We're right at the edge," a colonel at Canjuers, Western
Europe's biggest army base, told Reuters, asking not to be
quoted by name. "Certainly there wouldn't be any more Malis."
The document delivered on Monday will define the national
security and defence strategy for the coming years, offering
clues as to priorities but no hard figures. The actual 2014-19
military budget will be unveiled in the last quarter of 2013.
The military and defence contractors such as Nexter,
headquartered in Versailles near Paris, say big cuts could
hamper the ability of France, a nuclear power with a permanent
U.N. Security Council seat, to react to international threats.
France intervened in conflicts in Libya and the Ivory Coast
in 2011 and was alone in sending troops into Mali in January to
drive out al Qaeda-linked fighters who had seized large areas of
the West African country.
"EVE OF BATTLE"
The government, battling to find 60 billion euros in savings
over five years, has said it will freeze the
defence budget for 2014 and 2015, amounting to a small reduction
in real terms, but further out things are unclear.
The military's budget is currently 1.5 percent of GDP,
already below the 2.0 percent minimum recommended by NATO, and
some worry it could fall as low as 1.0 percent.
"I sense a bit of an 'eve-of-battle' atmosphere," the head
of France's ground forces, General Bertrand Ract-Madoux, said at
a recent debate on the future of the army.
France, with the world's sixth biggest defence budget, is
not alone in paring back its military. Facing similar challenges
are Britain, and the United States - whose defence budget is 17
times that of France, allowing it to have an army nearly five
times as big.
But while France's population is about that of Britain, its
military budget is already just two-thirds the size.
The prospect of shared defence capabilities in Europe, an
idea promoted by NATO as a way to reduce national budgets while
assuring security, draws laughter at Canjuers.
"The French and the Germans don't even define terms like
'risk' the same way," scoffed one officer.
As 21th century warfare has morphed from boots on the ground
to drones in the air, France's ground forces have had to make
more sacrifices than the air force used in Libya, for example.
Nexter's Caesar is part of a large arsenal of French
equipment in Mali that includes Dassault's Rafale and
Mirage fighters, light Gazelle helicopters and Tiger helicopter
gunship by European group EADS.
The Caesar guns can hit targets up to 40 km (25 miles) away.
Officers say the Caesar is ten times cheaper on average than any
Also bracing for the upcoming military spending plan is
France's 15 billion euro defence industry, Europe's
second-largest behind Britain. Nexter and six other defence
contractors including Thales and Safran wrote
to Hollande in March to warn that workers could lose jobs if
cuts are deep.
"We believe it's important to maintain investment in defence
above a certain threshold to allow the industry to perform not
only on the technological level but also for the economy," said
Ghislain Passebecq, Nexter's head of export sales for the VBCI,
an armoured fighting vehicle.
The defence industry says it employs 165,000 people, not
including thousands more sub-contractors. With 3.2 million
people out of work, such specialized jobs are highly coveted.
Budget Minister Bernard Cazeneuve sought to calm fears this
week, telling BFM TV: "In the crisis, we don't want to add to
the difficulties of a promising sector."
Nexter, which had sales of 742 million euros in 2012, says
its range of products from munitions to tanks relies on 800 to
900 small and medium-sized French suppliers.
At its Roanne factory in central France, on the site of a
World War One munitions plant, successive generations of local
families work on Nexter's VBCI.
The 30-tonne vehicle that can fire through 360 degrees and
reach 60 mph has been used in Afghanistan, Lebanon and now Mali.
France has already ordered 630 VBCIs, which cost less than a
tank, go faster and offer a better ride, soldiers say.
Some at Nexter are sanguine about the budget uncertainty.
"It's a subject that comes up again and again so everyone
keeps it in perspective," said Roanne factory head Alain Marcon.
"We've already been there."